Since Bitcoin’s value first exceeded $1000 in 2017, the interest in this new asset and other cryptocurrencies has grown rapidly. However, there is a problem: an increasing number of inexperienced people are trying to invest in the market, hoping to strike it rich as early investors did. As more and more people join this growing market, the number of individuals who have no idea what they are doing rises daily, leaving many wondering what to do.

This should not be surprising, as cryptocurrencies and blockchain technology are complex subjects. For example, with stocks, it is easy to understand that when you own a stock, you own a portion of a particular company, and the price depends on the company’s success. However, cryptocurrencies are digital products that are not backed by any hard assets, making it challenging for newcomers to navigate and understand this market, especially when they only know that cryptocurrencies can be an easy way to make money. Many platforms have started offering copy trading to help individuals who need to learn how to trade crypto effectively. But what is copy trading exactly?

What is Copy Trading?

Copy Trading is an automated trading strategy that allows you to make trades based on someone else’s trading activity. It is a more straightforward scheme than using trading bots, which require you to indicate a trading strategy for the bot to trade automatically. Copy trading is especially helpful for newcomers and those needing more time to monitor the markets.

When you browse a platform that supports crypto copy trading, you will see a list of traders who offer their services. The list shows how many people are already following the trader, the amount of capital they are trading with, how much profit they have made, and other useful information.

When you find a trader that you like, you can start following them. On your platform, you can link your account with a supported crypto exchange or other accepted trading platform. Anytime the trader makes a trade, your account will automatically execute the same trade.

Should we use Copy Trading?

Some might have reservations about copy trading since their success is tied to someone else’s performance. If the trader you’re copying makes unprofitable trades, you’ll lose money, too. However, this does not mean that copy trading should be completely avoided. For those new to trading, it’s best to learn how to trade on your own. However, copy trading is a great way to get started for those with regular jobs who need enough free time to learn about the crypto market.

The key is to choose a good trader to follow and remember they are trading with their own money. So, it means that there won’t be anyone intentionally making bad trades. Once you’ve found a trader to follow, keep an eye on their activity. This way, you’ll know how things are going, and if you see that you’re losing money, you can stop following the trader. Some copy trading platforms even allow you to set the maximum loss you can tolerate. You will automatically stop following this trader if the losses exceed this limit.

Other alternatives

If you lack trading experience or need more time to monitor the market for successful trading, you can try other methods instead of copy trading.

One of the best alternatives to copy trading is using automated trading bots. You can find various automated trading bots, both free and paid, to suit your trading needs. These bots are programs you can customize for your trades, including trading amounts and strategies. Once you set up your bot, you can watch as it does everything for you. There are also trading bots with pre-programmed strategies; you can choose the one that suits you best. For instance, Bitsgap, one of the most popular automated trading bot providers, offers bots that can use strategies such as GRID, DCA, and more.

FAQs on Crypto Copy Trading

Is crypto copy trading profitable?

Crypto copy trading can be a profitable strategy. The success of this strategy depends on the profitability of the trader you are copying. While the trader may experience losses on some trades, they could also have long streaks of successful trades, resulting in substantial profits. Therefore, the key to profitable copy trading is to select the right trader to follow.

How do I start copy trading?

To initiate copy trading, first, you need to choose a platform where you can find traders to copy. Once you have selected a platform, you can browse through different traders and make a comparison. For comparison purposes, you can consider their trading strategies, drawdown, trading capital, profit, and other similar information. Then, select the trader you prefer and start following them. If the platform you are using is also a broker or exchange, you will trade on the same platform. However, if you are using a platform solely to find traders to copy, you will need to connect them to your trading platform to automate your trading.