What Is Copy Trading Crypto? Everything You Need To Know
Copy trading can be rightfully called a revolutionary trading approach that is taking the world by storm with the countless opportunities it opens up for all of us, irrespective of our level of knowledge, skills, or experience. This quickly became a popular trading solution for all types of traders, starting from total beginners to novices who are unable to trade on their own due to the limitation of knowledge and skills or simply due to time constraints. The cryptocurrency world is also greatly benefited from this trading style as it gives an easy entrance to the newbies who are keen to explore the volatile crypto space. With this article, we will be covering everything that you need to know about copy trading crypto as a first-time trader.
Here Are the Top Platforms for Crypto Copy Trading That Newbies Can Consider:
ZuluTrade: This is a well-known and trusted copy trading crypto platform with an EU portfolio management from the European Union. The beginner-friendly platform promises a seamless copy trading experience with the automated feature and unique risk management tools offered. They also have an algorithm-based ranking system that constantly ranks top traders with utmost transparency, enabling users to make an informed choice. One requirement to trade on this platform is opening a trading account with any of the forex brokers who support copy trading on the platform. You do get many options to choose from, and the trading cost will depend on the broker you sign up with.
DupliTrade: This popular copy trading platform lists its top traders as strategy providers, and they have to go through an auditing process to secure a place in the ranking. They have also partnered with a number of brokers, and a user has to have an account with any of them to copy the trades on the platform. They also offer services like algorithmic trading and also have an auto-execution mode in which the trades of the strategy providers you follow get automatically mirrored to your own account. The platform also has a simple and user-friendly interface to accommodate novice traders.
Naga: NAGA is an Innovative broker that places a high priority on social or copy trading. The broker distinguishes itself from other brokers by providing a robust copy trading function, called Autocopy, that enables customers to copy other traders' techniques and profit from doing so. Additionally, it offers NAGA Messenger and NAGA Feed, which let traders communicate with one another and exchange ideas and investment methods. The broker offers MT4, MT5, and a feature-rich web-based terminal. It also benefits from the robust regulatory scrutiny provided by CySEC and BaFin, which raises its trust rating. It is a well-known trading and investment platform on a global scale. However, its hefty deposit fees may not be suited for novices.
eToro: Since 2010, eToro has been a leader in copy trading and has earned three licenses from prestigious authorities, including the Financial Conduct Authority (UK), Cyprus Securities and Exchange Commission (CySEC), and the Australian Securities and Investments Commission. These licenses have helped the broker establish a solid image as a reliable broker. The social trading platform offered by the broker makes it possible for both novices and seasoned traders looking for recognition and extra revenue to duplicate trades and exchange information with ease. As one of the largest copy trading networks in the world, it offers new traders the chance to profit at the same rate as experienced traders on the site with no added commission and only spread income.
How to Start Copy Trading Your Favourite Crypto CFDs in 3 Simple Steps?
Yes, you heard it right. The process of copy trading is so simple that anyone can get into it by following the 3 steps mentioned below.
1. Find and Join a Trusted Platform to Copy Trade Crypto
Having a trusted trading platform with a set of copy trading tools is the first step towards attaining success in this venture. There are many popular copy trading platforms that have a number of profitable cryptocurrency traders to choose from. You need to find the best one out of them based on transparency, user-friendliness, customer support, and the cost of trading.
Opting for a cost-effective copy trading platform would be the best course of action for improving your profit potential. You can either go for copy-trading platforms with supported brokers to choose from or platforms owned by brokers/exchanges that offer copy-trading solutions to users. In any case, make sure the platform can meet your requirements and give you an enriching copy trading experience with the potential for higher profits.
2. Open an Account and Find the Best Crypto Trader to Copy
The second step is opening a trading account which is pretty easy once you give all the basic information needed for registering with the platform. The next and most important step you need to take is finding the best crypto trader to copy. You need to consider the top traders listed on the platform and compare them based on their overall performance, profitable trades, risk profile, account drawdown, and more. Then choose one or more traders who happen to be the right fit for your account based on your own risk tolerance and profit expectations.
Most copy trading platforms use an automated feature that copies the trade positions of the trader as soon as you follow them. The trades will get executed in your trading account in real-time automatically, which makes copy trading a feasible option for passive traders. You don’t need to spend a whole lot of time monitoring the markets or planning your trades, as all of it will be done by the trader you follow. You need to make a wise choice, as your success rate in copy trading comes from the experienced trader you choose to trust for the process.
3. Monitor Your Account and Make Adjustments
We have reached the third and final step to complete the copy trading process, but this happens to be an ongoing step which is monitoring your account from time to time and making adjustments. Just copying a profitable trader does not guarantee profitable trading results all the time. You need to monitor your account to take action in case of any deviation in the results. You also need to make some adjustments to manage your risk, even though it’s very low in comparison to manual trading.
Perks of Cryptocurrency Copy Trading:
- You get to shorten the steep learning curve of cryptocurrency trading. Despite being a new trader, you don’t need to learn everything from scratch as you will get a skilled and experienced trader entering trades on your behalf.
- You get market exposure and a chance to earn profits with minimal effort on your part.
- Limited exposure to risk as you won’t make the newbie mistakes that can happen while trading yourself.
- You don’t need to invest time in analyzing complex crypto markets.
- You get some experience by seeing the trades getting executed on your account and can learn how professional traders manage their trades.
- You can minimize the risk by diversifying your portfolio, that is, by following different traders with different trading styles.
- You don’t get much control over your trading activity.
- Past performance does not promise future success.
- Some surface-level knowledge and risk management skills would be needed to get desired trading results with copy trading.
Tips to Increase Your Odds of Success in Copy Trading:
- Follow traders who match your risk profile.
- Follow multiple traders for diversification.
- Use the risk management tools provided by the copy trading platforms.
- If the platform allows, interact and talk to the traders before copying their trades.
So, these were some tips that can take you one step closer to success when it comes to copy trading. With copy trading crypto, you can make up for the knowledge, skills, or time that you lack by connecting with a trader who is capable and able to generate profits. So, take your time to test the waters with copy trading strategies, as that truly transforms the way you approach the cryptocurrency market as you find your footing with the potential to taste success as a trader.