Beginners often want to get into crypto trading without considering its technical aspects. But the world of crypto is confusing. Its high volatility, sudden freefalls and scams make the market very risky. If you enter the market without a clear strategy and knowledge, you may be making a bet.
But that doesn’t mean you have to wait for the end of your learning curve. Crypto copy trading is a way around this that allows you to dive into the crypto market instantly.
What is Crypto Copy Trading?
The copy trade is one crypto trading strategy which allows you to create an automated mechanism to perform transactions. Essentially, you are copying the investment decisions of a seasoned trader through software.
It frees you from the tedious process of continuously analyzing price charts and following market trends. Also, you don’t necessarily need to learn all the strategies and master the technical aspects of the market. Copy trading apps run on autopilot and cover all of these things by copying the trader you are following.
Also, it allows you to start your trading journey as a beginner, potentially making profits and generating passive income without directly participating in trades.
How does crypto copy trading work?
The procedure for commercial copying varies from platform to platform. But usually it comes down to choosing an experienced trader and following their decisions. You then select an application to replicate those decisions for you.
These apps work on trained models and can mimic the investment strategies of others. Additionally, some crypto copy trading apps allow you to choose multiple traders. This way you can develop your complete process.
Choose your favorite and seasoned trader(s) and software, then customize its settings. After that, the copy trading software will be ready to perform crypto trades on your behalf.
4 steps to start copy trading
Here is how you can start your journey with crypto copy trading apps.
1. Choose a crypto copy trading app
To start copy trading, you must first choose a reliable provider and trusted copies trading application. It is advisable to conduct thorough research on the best options available in the market. For that, you need to check out its tools, leverage ratio, educational content, supported cryptocurrencies, and fees.
Additionally, you should look at the intuitive user interface of the app, so that you can easily manage your wallet. Also check the reviews of the copy trading platform to gauge its performance. Finally, find the permission status of the platform. The certification of regulators such as FCA, SEC, ESMA or others guarantees the credibility of the platform.
2. Follow a seasoned crypto trader
Once you have chosen the right software, selecting and following an experienced trader is often advisable. This is the most critical part of copying trades because your profits depend on it. For this reason, the trader must have the necessary skills to manage cryptocurrency investments. You are basically looking for traders who will have a long-term profit history.
Moreover, it is crucial to understand crypto market sentiment and how it works so you can strategize accordingly. Also you should be able to identify bullish and bearish flags and review the trader’s performance in both markets to recognize their strategies.
3. Preparation of copy trading software
After choosing a crypto copy trading platform and a seasoned trader to follow, you need to manage the platform settings. Although this software is automated, you must first provide your input.
For example, you should allocate your preferred amount for the investment. This can be the same as the trader you are following or a percentage of it. It is advisable to set the amount according to your risk appetite in order to be able to tolerate possible losses.
4. Monitor your progress
You can also monitor the results that copy transactions generate for you. This will allow you to track what has worked best for you. Observing progress will also allow you to understand how to backtest crypto trading strategies.
Also, the copy trading app’s control panel will give you full control over your assets, even if they run automatically. So if you think a trading move is wrong, you can unsubscribe at any time.
Why opt for Crypto Copy Trading?
Here’s why you should consider copying crypto transactions:
1. A beginner-friendly option
It is an ideal option for beginner traders who are unfamiliar with the digital asset market. This allows them to enter the market immediately while learning trading techniques.
2. Improves your trading knowledge
Copying trades is also a great way to get up to speed quickly with cryptocurrency trading. By observing and practicing the investment strategies of others, you easily understand them. After all, trading platforms usually offer educational content that helps you grow as a trader.
3. Helps with portfolio diversification
Portfolio diversification is another benefit of trade copying. You can follow multiple traders who use different mechanisms and invest in various assets. It allows you to implement it in your wallet for better gains.
4. Convenience of trading
Following price charts all day can be tedious. Copy trading saves you that struggle because it automates your process. Moreover, there is no need to develop entire investment strategies independently.
Is crypto copy trading safe?
In terms of legal status, the cryptocurrency copy trade is legitimate. Various copy trading platforms have obtained approval from financial watchdogs such as the European Securities and Markets Authority (ESMA) and the Financial Conduct Authority (FCA) for copy trading. However, it carries its own risks and limits, like any investment. One of the obvious risks is that by copying trades you can also lose trades as this is part of trading.
It is also expensive, as some platforms may charge premium rates. And, if you choose an inexperienced trader, you will have to bear the losses as well as the platform fees.
Additionally, it can limit your growth as a trader. Since you are completely relying on another person, it may not give you the analytical knowledge needed to excel in trading.
Another risk of using crypto copy trading apps is that they may suffer a system crash or cyberattack at any time. This means that your assets will depend on the performance and security of the software.
Crypto Copy Trading Simplified
Crypto copy trading is an easy way for beginners to get started in trading. You can do this through self-executing AI-based software and follow the right trader and the right platform to make profits. Then you can customize the trading procedure according to your funds and preferences. Finally, you can monitor results to access strategies.