Beginners often want to get into cryptocurrency trading without considering its technical aspects. But the world of cryptocurrencies is confusing. Its high volatility, sudden free falls and scams make the market very risky. If you enter the market without a clear strategy and knowledge, you risk making a bet.
But that doesn’t mean you have to wait until your learning curve is over. Crypto Copy Trading is a way around this problem by allowing you to dive into the cryptocurrency market instantly.
What is cryptocurrency copy trading?
Copy trading is a cryptocurrency trading strategy that allows you to build an automated mechanism for trading. Essentially, you are copying the investment decisions of an expert trader via software.
This frees you from the tedious process of continuously analyzing price charts and following market trends. Also, you don’t necessarily have to learn all the strategies and master the technicalities of the market. Copy trading apps run on autopilot and cover all these things by copying the trader you are following.
It also allows you to start your trading journey as a beginner, potentially earning profits and generating passive income without directly participating in trades.
The copy trading procedure varies from platform to platform. But generally it consists of choosing an expert trader and following his decisions. Then you select an application that will replicate those decisions for you.
These apps work on trained models and can mimic the investment strategies of others. Also, some cryptocurrency trading apps allow you to choose multiple traders. This way you can develop your complete process.
Choose your favorite traders and software, then customize its settings. After that, the copy trading software will be ready to transact cryptocurrencies on your behalf.
4 steps to start copy trading
Here’s how you can start your journey with cryptocurrency exchange apps.
1. Choose a cryptocurrency copy trading app
To start copy trading, you must first choose a reliable and trustworthy copy trading app. 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.
Also, you should look at the intuitive user interface of the app, so that you can manage your portfolio easily. Also check the reviews on the copy trading platform to gauge its performance. Finally, check the authorization status of the platform. Certification by regulatory bodies such as FCA, SEC, ESMA or others ensures the credibility of the platform.
2. Follow an experienced cryptocurrency trader
Once you have chosen the right software, it is often advisable to select and follow up with an experienced trader. This is the most critical part of trade copying because your profits depend on it. For this reason the trader must have the necessary skills to manage investments in cryptocurrencies. You are basically looking for traders who have a history of long-term profits.
Also, it is crucial to understand the cryptocurrency market sentiment and how it works so that you can build a strategy accordingly. Additionally, you must be able to identify bullish and bearish flags and examine the trader’s performance during both markets to recognize their strategies.
3. Prepare copy trading software
Once you have chosen a cryptocurrency copy trading platform and an expert trader to follow, you need to manage the platform settings. While this software is automated, you initially need to provide your details.
For example, you should allocate whatever amount you like for the investment. This can be the same amount as the trader you are following or a percentage of it. It is advisable to set the amount according to your risk taste so that you can tolerate any losses.
4. Track your progress
You can also track the results that copy operations generate for you. This will allow you to keep track of what worked best for you. Observing the progress will also allow you to understand how to backtest cryptocurrency trading strategies.
Also, the copy trading app’s settings panel will give you full control over your assets, even if they run automatically. So if you think a trade move is not good, you can exit at any time.
Why opt for Crypto Copy Trading?
Here is why you should consider copying crypto transactions:
1. A beginner-friendly option
This is an ideal option for novice traders who are not familiar with the digital asset market. It allows them to enter the market immediately while learning trading techniques.
2. Improve your trading knowledge
Copying trades is also a great way to get to grips with cryptocurrency trading quickly. By observing and practicing the investment strategies of others, you understand them more easily. After all, trading platforms usually offer educational content that helps you grow as a trader.
3. Helps with portfolio diversification
Portfolio diversification is another plus point for commercial copying. You can follow different traders who use different mechanisms and invest in different assets. This allows you to implement it in your portfolio for better earnings.
4. Convenience of trading
Following price charts all day can be boring. Copy trading saves you that trouble because it automates your process. Also, you don’t have to develop comprehensive investment strategies yourself.
Is trading cryptocurrency copies safe?
In terms of legal status, copy trading of cryptocurrencies is legal. Several copy trading platforms have obtained approval from financial supervisory bodies such as the European Securities and Markets Authority (ESMA) and the Financial Conduct Authority (FCA) for copy trading. However, like any investment, copy trading has its risks and limitations. One of the obvious risks is that when copying trades you may also lose trades, as this is part of trading.
It’s also expensive, as some platforms may charge high fees. And, if you choose an inexperienced trader, you will have to bear the losses on top of the platform fees.
Also, it can limit your growth as a trader. Since you will be entirely dependent on another person, this may not equip you with the analytical knowledge needed to excel in trading.
Another risk of using cryptocurrency copy trading apps is that they could suffer a system crash or cyber attack at any time. This means that your resources will depend on the performance and security of the software.
Cryptocurrency copy trading made easy
Crypto Copy Trading is an easy way for beginners to start trading. You can do this through self-executing AI-powered software and follow the right trader and the right platform to earn profits. Then you can tailor the trading process to suit your funds and preferences. Finally, you can track results to access strategies.