Copy Trading: Best Practices & Tips for 2023

Copy trading is the process of communicating with other traders on cryptocurrency exchanges so that you can copy their trades on the cryptocurrency market and make more money as a result. The phenomenon is not completely new; it has been recognized ever since 2007, and it has also earned a great deal of popularity in the bitcoin industry since it benefits both parties equally. Experienced traders receive a share of the profits made by others who duplicate its trades.

What is the Difference Between Social Trading and Copy Trading?

This kind of action is especially helpful for newcomers who haven’t had time to learn about the market and come up with their own strategy. By copying the trades that more seasoned investors make and using tools like copy trading, you may increase your earnings to the same level as more seasoned investors.

In traditional trading, you have to study different markets, charts, and research to make decisions about trading. Copy trading may basically be thought of as a form of passive income.

How copy trade actually works:

• The idea involves no manual labor at all. After the program has been set up correctly, it will automatically copy the trades that a successful trader has made.
• Trading can be set up in many different ways, which are determined by the platform’s features and settings. For instance, you should make sure that the precise amount of each transaction is replicated, as well as the proportion of the overall capital that it represents.
• You can stop the trade at any time by manually closing the position and getting out of the trade.
• The user is not restricted to working with a single dealer, but rather has the ability to toggle between several dealers in search of the one who is currently having the greatest success. There is a list of skilled traders accessible; simply pick one at random from the list.

A brief explanation of the key distinctions between social trading and copy trading. Trading social is not a fully automated solution. In fact, all you have to do is peruse websites and discussion boards that present a variety of viewpoints and predictions. You may even post your own predictions, like and comment on those of others, and so on. Through the process of communicating with one another, traders come to conclusions on how they should modify their approach. TradingView is an example of a platform that enables users to engage in social trading.

Copy trading is a form of automated trading. The user is scarcely need to do anything other than finance the account and pick the trader whose trades they wish to imitate in order to make advantage of this feature. There is no requirement to manually make orders or perform any kind of research.

Advantages and disadvantages

Advantages

• A helpful option for newcomers to the trading market who have no previous expertise.
• The addition of more spare time for other pursuits.
• A selection of predefined settings to facilitate optimal trading.
• A sizable number of sites that are capable of supporting the feature in question.
• The capacity to diversify the holdings of one’s cryptocurrency portfolio.

Disadvantages

• The user will not experience any growth in their own abilities, as this can only be accomplished via the user’s own dedicated practice.
• Up to ten percent of the profit is deducted from the account of the trader who has registered to the service.
• There is always a possibility of incurring a loss because even the most experienced users are prone to making blunders.

What are the Benefits Copy Trading?

Appropriate for individuals who are just starting out and do not yet have a trading plan, as well as those who wish to save time by automating their trading activities.

It is best for a person to engage in their own trading activities if they wish to learn how to trade. Additionally, subscribing to the transactions of another individual, even if they are successful, does not yet provide a one hundred percent assurance of financial gain.

Conclusion

The idea of copy trading is one that has both positives and negatives associated with it, but on the whole, it is an intriguing solution that may be beneficial to users of all skill levels. When it comes to subscribing, you should pay particular attention to the process of formulating a plan.

There, the trading pairs that are utilized, the leverage, and the transaction sizes are decided upon. You have the option of copying the whole value of transactions or only their % contribution to the overall capital. A subscriber’s total number of transactions is subject to both a minimum and a maximum limit. On certain exchanges, you are able to subscribe to leaders without having to go through the verification process. On other exchanges, however, only verified users are able to become leaders; this provides greater assurance to newcomers.