Getting Started with Copy Trading Cryptocurrency
Copy trading cryptocurrency is getting popular by the day! As more people try their hands at crypto trading, several strategies are doing the rounds – and copy trading is one of these. But there’s plenty to learn before you start. Are you wondering how it works? How to get started? Why it makes sense?
That’s why we’re here today. You’ll learn everything you need to know about trading cryptocurrency here. Stay tuned!
What Does Copy Trading Cryptocurrency Mean?
It’s exactly what it sounds like! Copy trading allows you make the exact same decisions as a skilled trader when choosing to buy or sell your crypto. You simply pick a trader to follow, and when they make a trade, your account makes the same trade in real time. It is a very convenient strategy that lets you quickly start trading crypto – but using another trader’s experience.
Copy trading is one of the strategies for trading that were developed in relation to stocks, shares and currencies. Before advanced technology allowed us to copy trades, you could only learn from expert traders by following complicated information. This meant learning to read graphs, indicators and other market signals. But these days, you can trade like a pro, without having to be one. This makes it a perfect strategy for people who want to save time when trading, and also for beginners.
Only 10% of people confess they have any idea of how crypto works. But most would like to try it. If this is you, then copy trading might be a great way to learn safely, while following in the footsteps of experts.
Copy trading versus social trading
As we mentioned above, copy trading is only one of many trading strategies. Another is social trading. Social trading looks a lot like copy trading. This is because it also involves learning from great traders doing well. But social trading can be much more complicated. It involves learning how successful traders excel in the market, then applying those lessons to your portfolio. This means if you found five great traders to learn from, you have to do so manually, and only one at a time.
But copy trading is usually automatic. You only need to pick an expert trader and set your parameters. Then any trade they make is replicated on your account in real time. No stress, no technicality – and most importantly, no time wasted. Cryptocurrencies are famously volatile. Meaning their value can quickly drop or rise over a short period. For example, in March 2020, the price of Bitcoin dropped sharply by 50% in only eight hours. Due to this volatility, trading needs to be lightning fast. That’s why copy trading works so well since it models great traders automatically.
Apart from this, copy trading and social trading are very similar. Guess what they both need to function well? – a great crypto exchange! Because both strategies depend on finding expert traders. And there’s no better place to find them than an excellent and transparent trading platform. Now that we know what copy trading means, let’s look a bit deeper into how it works.
What are the mechanics? – How Copy Trading Crypto Works
Copy trading may be largely automated, but there’s still a lot for you to do. You still have to find the best traders and determine how you want to copy them. Let’s dive first into how finding a good copy trader works.
Pick a Copy Trading Platform
Copy trading starts with registering on a great platform. Although this seems obvious, this step is sometimes overlooked. The best traders love platforms that are dependable and transparent. You will usually find them on exchanges that offer a diverse range of crypto assets. Besides, certain exchanges are more suited to copy trading than others. They are able to execute trades at very fast speeds, so you can copy while a trade is still hot. CoinMetro is an option for copy trading cryptocurrency at fast, secure speeds.
If you’re not sure how to pick one, have a look at our guide on what makes a great copy trading platform.
Select a Trader That Matches Your Goals
The next step is selecting a trader with the right profile for you. The platform will usually give you a set of tools to pick your best trader. These are referred to as copy trading signals. There are many signals to choose from. These include profitability, number of followers, risk profile or return on investment. You can choose any one of these or a combination. What matters is what works for you.
Lock in Your Investment Amount
Usually, copy trades are set at a percentage of your account. This may be anywhere from 10% to 20%. The reasoning is that all trading is risky. So you don’t want to bet too much on one trader. If you have a balance of $500, you can set 10% of that amount ($50) to copy a trader. You can also spread more funds amongst different traders. This is a great idea as it keeps your portfolio balanced and protects against loss.
Review Your Account
After the above, you’re all set. The copy trading platform will automatically copy the trader’s positions on your own account. If you think they’re doing really well, you can add more funds to copy that trader. It’s important to be careful though, as the market can spring up surprises.
For successful copy trades, no special fees apply except the one you pay to the trader you copy. But you don’t pay a fee if you make a loss.
Want to Start Copy Trading Cryptocurrency?
After learning how copy trading works, your next thought will be how to get started. Here are some tips to help.
How to pick the right trader?
Succeeding in copy trading depends on many factors. One of the most important is selecting a great trader. But there’s no magic secret to picking the right trader. Neither is there an ultimate formula for which copy trading signals are best. A lot of the time, it comes down to what factors are most important to you. Yet, number of followers and return on investment are great signals to start with.
It is important to remember your copy trades do not have to be permanent. You can employ the tools that platforms provide to pick a trader. Then review your selection periodically to be sure you have the right decision.
How to start copy trading safely?
All trading is risky. For this purpose, copy trading crypto is no different from making trades by yourself. You are responsible for your own losses, not the trader you are copying. That’s why it is important to trade securely.
Following the right trading signals can help limit your risk. Setting a stop loss will also automatically stop trades if you lose a pre-set amount. The important thing is to use all the tools available to make the best decision for yourself.
Are you ready to begin copy trading cryptocurrency? Get started today with CoinMetro to learn practical tips on trading. If you have any questions, don’t hesitate to contact our support team for 24/7 help.