How to Start CopyTrading Crypto and Make Money Today?July 24, 2022
The Best Copy Trading platforms & Apps in 2022August 1, 2022
Trading novices who are interested in capitalising on the expertise of more experienced market participants frequently turn to copy trading as a method of doing so.
On exchanges, where users can broadcast and share their trades with other individuals, a practise known as copy trading takes place. While it is possible to manually replicate the trades of another person, some exchanges (Bitget & Bybit) also include an automated copy-trading tool.
Copy trading is based on the idea that there are other people who are more skilled at trading than you are, and that you have the ability to replicate their trades by “copying” their orders.
You will be able to make a profit even if you have no prior experience trading. If you are someone who has just entered the market and wants to trade right away, it seems that following an expert is preferable to honing the skill yourself over the course of several months, which could result in you missing out on possible earnings.
However, copy trading is not as easy as just following in someone else’s footsteps. How do you choose who to follow and whether or not the other person will continue to be beneficial not only now but also tomorrow? When it comes to investing, there is a significant gap between emulating Warren Buffett and Joe the pizza delivery guy.
How does CopyTrading Works
In contrast to many other trading strategies, copy trading appears to be quite straightforward on paper.
Your objective is to identify a trader who is successful and follow his or her trades. You continue doing this for as long as you like, or for as long as their strategies continue to generate a profit.
By enabling traders to create profiles and establish connections with other users, copy trading platforms have taken on the characteristics of social networks. You are able to talk with other traders, share ideas, discuss trading setups, and view the daily, weekly, monthly, and yearly performance of other traders.
When you imitate someone else’s trades once you’ve started following them, the process goes as follows:
- Trader X makes a buy (long position) of 2 Ethereum at a price of $2000.
- The platform immediately replicate the trade to your account by adjusting the amount according to your copytrading parameters
- Trader X sells the 2 Ethereum long position at $2200
- You make a profit of 10.2 percent on the sale of X ETH at $2000
Alternately, you run the risk of incurring a loss of 10.2 percent if the trader makes a mistake that results in the deal not being successful. But you should give some thought to whether the trader has made a mistake or whether you have made the mistake by following the wrong trader.
Choose The Right Trader to CopyTrade
Copy trading requires doing background checks on other traders, just like many other aspects of life. Conducting a background check is the only way to determine whether or not someone has the potential to earn you money:
- What kind of a record do they have?
- When did they first begin dealing with customers?
- What is the ratio of their wins to their losses?
- Is this their initial foray into the public markets?
- In what kinds of assets do they often put their money?
You don’t want to imitate the methods of just anybody in the business. It’s possible that the other individual is at the same or a lower skill level than you are. Also, if the trader is profitable and made $3,000 this month, you want to know whether or not it was due to a single lucky victory or whether or not they usually make money. Even a faulty clock is accurate to within an hour twice a day.
Consider it in this way: would you trust your sloppy friend with your financial assets and let them trade? If the answer is no, then it’s likely that you won’t allow it to happen with a new person. You should look for someone who is trustworthy, knowledgeable, and skilled in trading bitcoins.
You also need a person who has aims and expectations that are comparable to your own. If you are in the market for the long term, you do not want a scalper or day trader who regularly takes unnecessary financial risks and establishes trading positions with a poor likelihood of success. You will want to follow a trader that has the same level of comfort with risk as you do; otherwise, there is a significant chance that you may incur a loss.
You are not required to place all of your eggs in a single basket. You have the ability to spread out the risk of your copy trading by following different traders. In this approach, even if one trader is unsuccessful, you may still come out ahead overall because to the success of the others. You are also able to take on numerous strategies, including risk-focused and risk-averse ones, after you have diversified your holdings.
Checking out the trader’s long-term track record is something you should do to validate your decision, especially if copy trading is something you want to do for the long haul. It is imperative that you make certain that the trader in question has not only been lucrative this week, but also over the past few months, if not even longer. When somebody have a run of success, it gives them the appearance of being pros. Or, it’s possible that the market conditions at the time were conducive to their trading psyche, which gave the impression that they were always profitable.
The Pros and Cons of Crypto CopyTrading
You need to be aware of the benefits as well as the potential drawbacks of copy trading before you start following a trader on Bitget or Bybit (the two more trusted crypto copytrading platforms). Even though copy trading has many benefits to offer, there are a few drawbacks that you should be aware of before making a final decision.
- Passive income that is accessible to everyone
- Orients you toward fundamentals of trading.
- Excellent opportunity to network with other cryptocurrency traders
- Finding a trader who is consistently lucrative is a challenging task.
- Monitoring is necessary to avoid financial loss when using automated copy trading.
- You are unable to pick and choose which deals to participate in until you fully unfollow the trader.
- Commissions for copy trading are charged by traders.
In short, copy trading is a great strategy for beginners because it requires no interaction from the trader and simultaneously introduces them to trading concepts – if the trader shares charts, ideas, and explanations.
However, the most challenging aspect of copy trading is the initial step, which is to follow a trader.
Because of automation, there is even another issue: you are unable to choose which trades you want to carry out in their entirety. Most of the time you’ll have to unfollow the trader. If you wish to win money, you need be prepared to pay commissions to traders, as they do charge for their services.
Is Copy Trading a Good Option For You?
Copy trading is a good way to ease into the world of trading because it’s similar to learning to ride a bike with training wheels. You will mimic the trades of a good trader, study how they respond to varying market conditions, gain insight into how successful traders think, and become familiar with fundamental chart patterns. It is comparable to making a commitment to trade while devoting a small amount of time and effort to the endeavour, at least up until the point where you are financially independent.
If you are new to trading as well as crypto, giving yourself a little bit more time will serve you well.
You’ll be able to learn new ideas without feeling overloaded, and you’ll be able to gradually incorporate yourself into the crypto community. On top of that, the dangers you face are cut down to a minimum because there is always someone there to guide you and protect you along the route.
Feel free to give Bitget copy trading feature a shot if you’re looking for a reliable copy trading platform to use in your trading. You will be able to follow traders and mimic their portfolios in an automated and uncomplicated manner if you make use of this function.
To learn more about how to copytrade on Bitget, I recommend reading the following article: