A trading method known as crypto copy trading is one that buys and sells cryptocurrency via the use of automation. It enables you to replicate the strategies of another trader, saving you a significant amount of time and eliminating the requirement for prior expertise. Some people call it “copy and paste crypto trading.” However, the whole process is automated, so you do not have to do the “paste” process yourself, but it’s done by the copy trading platform you use. In this guide, we go over everything you need to know about copy trading, and we will also present you the best crypto copy trading platforms at the end of the article.
Copy trading in cryptocurrency is based on the principle of emulating the behavior of more successful traders by tracking down such traders and copying their trades.
Copy trading is distinct from traditional trading in that it does not prioritize spotting shifts in market sentiment or implementing intricate trading techniques. Instead, the automatic program just observes what one trader is doing and then replicates that behavior.
For instance, if one trader invests 5% of their capital in a certain coin, the duplicate trader’s program will also invest 5% of that trader’s capital in the same currency.
Copy trading is an excellent method for novices since it eliminates the need that them to have their own in-depth knowledge of the market. They may instead benefit from the knowledge and experience of other traders in order to make intelligent choices.
Even if you have a good understanding of the market on your own, copy trading may still be a useful tool.
Copy trading requires less of your direct participation, which means it may free up some of your time. You may learn more about the market and develop methods that are tailored to your requirements if you are able to see how other traders get to their conclusions.
How does crypto copy trading work?
The appropriate software is required for successful crypto copy trading. The initial setup will take some time, but after that, it will operate on its own automatically. In most cases, a copy trade system will behave in a manner that is automatically consistent with that of the lead trader. Luckily, most major cryptocurrency exchanges like BitGet, ByBit and MEXC offer copy trading on their platform without any third party software. Setting up your copy trading account on those exchanges is a lot easier than third party softwares but they offer you the same features.
You have the option of setting it up so that it invests the exact same amount as the lead trader, or you can set it up so that it invests a proportion of your money that is equal to the percentage that the lead trader invests.
Even if your participation in crypto copy trading isn’t required, you are free to participate if you so want. You have the ability to cancel every transaction that is executed by the program, and you also have the option to close a position manually before the lead trader does so.
Since cryptocurrency copy trading is not bound to any one particular trader, you are free to change who you are following at any time you see fit or you can also follow multiple traders at once.
In order for crypto copy trading to function properly, you need to really have access to the transactions that are being made by another individual. How exactly do you go about convincing another trader to go along with this? This is made simple by the majority of copy trading software.
You check through a number of primary traders and narrow down your search to discover someone whose results satisfy you. After that, you use the program to immediately begin automatically imitating that person’s transactions. You can compare trading styles, winrate, fees and profits shares which vary depending on who you follow and which platform you choose for copy trading.
They will take a modest charge, which is often somewhere in the range of 5% to 10% of your total earnings, but the gains from the trades will be given to you.
Advantages of crypto copy trading
There are several benefits associated with copy trading, particularly for traders who are just beginning their trading careers or who wish to dabble in trading without making it their full-time occupation.
However, even more, seasoned investors might profit from it because of its comprehensive nature. The following is a list of some of the benefits that copy trading has:
Since copy trading does not call for any previous understanding of trading, it is an excellent choice for newbie traders. Also, setting up your copy trades on crypto exchanges is very simple and straight forward nowadays. The most important thing is that you carefuly choose who to follow and how to set the copy trading variables.
Gaining knowledge from traders with greater expertise
Learning about the markets and expanding your understanding of them is possible if you observe more professional traders. Copy trading provides you with the opportunity to profit from the market wisdom and knowledge of another trader who has more experience than you have.
Increasing the level of portfolio diversification
Since so many different traders are contributing trading signals to the copy trading platform, you have access to a diverse choice of markets and trading techniques. Even if you are an experienced trader, you may benefit from copy trading since it enables you to enter markets that you are unfamiliar with or know very little about.
More free time for you
You are able to engage in copy trading even if you already have full-time work since the process may be fully automated. You might also make advantage of your spare time to educate yourself on financial markets. You may use that time to focus on your interests or your social life.
Eliminates the need for emotional trading decisions
When you are gambling with your own money, it may be difficult to keep your emotions in check, which is problematic since emotions can lead to foolish and inefficient trading decisions. This problem is eliminated with copy trading since it is physically impossible for your emotions to influence the outcomes of automatic trading.
Risks of copy trading
When deciding whether or not to subscribe to the service, it is important to keep in mind the potential drawbacks associated with crypto copy trading. This is unfortunate news for you if a trader loses money while trading since they were mimicking the incorrect individual.
Even if you have a valid purpose for exchanging copies, you should never do so without first ensuring that you have a backup available in the event that anything goes wrong. It’s possible that cryptocurrency copy trading can wipe out all of your gains or just leave you with losses.
A further danger lies in the fact that copy traders will often take you by surprise. They are able to make transactions that are inconsistent with the way they have previously traded, and some of them may even do anything they want, even if it means losing money in the short term in the hopes of making it up in the long run. In this scenario, you will also suffer a financial loss as a result of them.
Another factor to take into account is the possibility that the trader being copied is receiving payment from a large number of subscribers but is unable to turn a profit for each of them.
It is possible that they may wind up making a profit off of the financial hardships endured by their members, which is not a scenario that benefits anybody concerned. Before subscribing to the service of a copied trader, it would be beneficial to evaluate who the copied trader is and the reasons why they believe they can benefit from their trading ideas.
The third drawback is the erratic market fluctuations that have occurred in recent times. When you go long on a trade, it is crucial to be in the right location at the right time. Making money in this market may be difficult, therefore it is important to be in the right place at the right time.
If you mimic someone who is late with a trade, you run the risk of missing out on a significant portion of the potential gains when they do ultimately materialize.
In general, copy-trading cryptocurrencies may be an amazing technique to generate money even when one is asleep or otherwise occupied. However, there is no assurance that doing so would result in a profit, and it is not always the best option.
Pros of copy trading
Simple to set up on major exchanges like BitGet, ByBit, and MEXC
View the market from an outside perspective
Passive income and more time for you
No emotional trading decisions from your side
Cons of copy trading
Fees and profit shares can eat you up. You must check the costs of your copy trading platform.
Risk of losing your capital in case of a liquidation when the trader you copy is not responsible or makes a mistake
You give away your power, and you have no impact on the trade outcome
You don’t learn from it
How to choose a crypto copy trading platform
Before deciding on a copy trading program to use, you want to give careful consideration to a variety of aspects in order to guarantee that you choose the most suitable option. Before deciding on a crypto copy trading program, you should give careful consideration to the following most significant aspects:
Size of network
When searching for copy trading software, one of the most important aspects to take into consideration is the size of the trader’s network. A large traders network is often indicative of a wide selection of successful traders who may be copied and is a good sign of the quality of the associated software.
In addition to this, you should give careful consideration to the fees that crypto copy trading software or platform charges you in order to use their services. It demonstrates to you how lucrative it can be to mimic the trades of other traders who use that program.
Even though copy trading in crypto may be done for free with some softwares, you should be aware that other software and traders may take a cut of the earnings you make via copy trading. This is not necessarily a negative thing since it encourages traders to put more winning bets; nevertheless, you should be mindful of the inflated expenses associated with certain bets.
Most crypto exchanges that offer copy trading charge you the typical trading fee of 0.02% to 0.06% on average. On top of that, the copy traders usually get profit shares which can range from 1% to 15% of your gains. As each exchange has its own fees and profit share settings, it is best you manually check out the exchange that you want to copy trade on. We found BitGet, ByBit, and MEXC to be the cheapest copy trading networks with a relatively large trading network.
If you want to have a positive experience and ensure that your assets remain secure while using the software in question, you should limit your usage of crypto copy trading programs to those that have a solid reputation in the industry.
Reading reviews written by people who have already used a piece of software is the most effective approach to determining how reliable it is. If a piece of software has a disproportionate number of reviews that are critical, then there is probably something wrong with it.
Supported cryptocurrency exchange integrations
When selecting a crypto copy trading program from a third party, you should make sure to examine whether or not it can be connected with the cryptocurrency exchange you are now using or want to utilize in the future. This could be a reason to just go with exchanges that already offer a copy trading program on their own platform without having to worry about a third party.
How to choose a crypto copy trading platform
Of course, one of the most important questions now is: What is the best crypto copy trading platform? Since it entails doing nothing more than imitating the acts of other, more experienced traders, copy trading is one of the simplest methods to test the waters of the trading world. We researched and tested several copy trading platforms and came to the conclusion that BitGet, BingX, and MEXC offer the best copy trading experience in the cryptocurrency space. Setting up your copy trading account is simple and straightforward on those platforms and can be done with just a few clicks.
It is particularly helpful for rookie traders since it enables them to engage in markets without having previous expertise and also allows them to learn from more experienced traders.
Copy trading may also be beneficial for more experienced traders since it allows them to study and learn from their peers who have more knowledge and experience, and it also allows them to add a passive income to the earnings they get from their normal transactions.
However, just like any other trading method, copy trading is not without its own unique drawbacks and dangers. In the end, you hand over the management of your finances to a person whose identity you do not know.
You will not learn very much if all you do is sit back and watch other people trade without really engaging in the activity yourself. When it comes down to it, if you are someone who is serious about trading, copy trading should not be anything more than a beginning point for you.
After you have gained some understanding of the markets and have accumulated some beginning cash, you should begin trading on your own. After that, you should consider copy trading to be little more than a supplement to the money you get through your own trading.
What is Spot trading in the cryptocurrency space?
When you are trading on the spot market, you actually buy and own the tokens. That means you could also transfer them to your own wallet. On the futures market you do not own any coin, but only a contract representing the underlying asset. So if you want to own Bitcoin (BTC) or any other cryptocurrency, you must buy them on the spot market.
Where can I trade the cryptocurrency spot market?
Is it safe to trade cryptocurrencies on the spot market?
There are no guarantees in trading so we can not say if it is safe or not. We recommend to never trade with more than what you can afford to lose. Especially when you are new to trading you should practice a lot with very little or no money (demo account).
How much does it cost to trade online?
This varies a lot. Some trading platforms like MEXC allow you to trade with 0% maker fees on the spot market. That means the fees for limit orders are 0%. The industry average for the spot market fees is 0.1% maker and 0.1% taker.