Making investments is one of the safest ways to avoid inflation. Many people are turning to crypto copy trading as it allows you to grow your investment portfolio by over 1000%. However, it also comes with high risks. You can lose everything in your wallet in a few minutes, the same way you can make a massive profit in minutes.
Novices hurry to follow as popular traders go on various social platforms like Reddit and Twitter to talk about how much they amass in crypto trading. But, following every financial advice you see online is a major error.
So to help people avoid these errors, certain developers came up with trading platforms. If you have been in the dark for a long time in the cryptocurrency space, this article is for you. It will guide you if you are new to the financial market trading space and wonder what crypto copy trading is and how to leverage it.
Table of Contents
What is Crypto Copy Trading?
This type of trading allows traders to copy positions opened by specific investors. It enables you to get signals from your expert traders and reciprocate whatever trade they have open. This form of trading allows novices to connect their accounts to experts’, reflecting whatever change is made.
You can stop trades you have already copied and manage them as a copy trader. This feature also allows you to stop a copy-trading relationship whenever you deem fit. It helps you learn trade patterns that will come in handy because you can’t completely rely on others for your investments.
You may be wondering, what exactly do these expert traders gain by allowing you to copy all their trade patterns? The trading platform compensates them through monthly subscriptions.
The Two Types of Traders?
If you want to understand how copy trading works, you need to understand the two types of traders.
Firstly, there are traders that we will refer to as original investors. They put in the effort and time to research and learn as much as possible on efficient trading strategies, new trends, and how to improve their skills.
The second kind of traders are interested in making a profit from the cryptocurrency space but are unwilling to pay for classes or gather information. Most of their focus is on income generation without the effort that comes with it.
The second class of traders finds copy trading a safe option because they will be under expert traders. However, it’s important to note that even the most knowledgeable traders also use this means. This form of crypto trading also helps them feel convenient and safe since they know that they are not following a particular signal alone.
So, it’s important to note that copy trading isn’t for only beginners as experts also leverage it to conduct market research. Then, they channel their energy and time to other productive activities.
Now that you understand the two types of crypto traders and how they operate, let’s look at how copy trading works.
How Copy Trading Works
Copy-trading functions are based on the behavior of traders and now the information they share. In the former parts of this article, we explained that this trading system enables traders to copy the patterns of other traders. However, you must use the software to ensure that the process counts as official.
A part of your portfolio will be connected to another user’s account when you do copy trading. So whenever they open a trade, your portfolio will pick the signal and open the same transaction. Your broker will also reciprocate any other future actions on your portfolio.
As a crypto copy trader, you decide how much you want to invest in the trade you are copying. If you are a novice, it’s important to use 10% of whatever is in your portfolio. It’s important to note that you can’t invest more than 20% of your portfolio in a copy trade.
However, if the original investor trades above the percentage you intend to trade, the system will make automatic adjustments based on your preferences.
Pros of Copy Trading
Crypto copy trading is an interesting way to trade because you don’t have to put in a lot of effort to make profit. If you still have doubts about using this system to trade, here are some of its advantages.
It is beginner-friendly
If you are a newbie to crypto trading, it is ideal to start with copy trading. It gives you the field experience, making it easier for you to understand when you want to learn theoretically. In addition, you can make a profit even if you don’t know much about the crypto space, which makes it easier for those who see cryptocurrencies as passive income. While the researchers do their job, you can commit to other things and allow your money to work for you.
You can diversify your portfolio.
One of the mistakes that beginners to crypto trading make is trying out one kind of trade. After its success, they stick to it without finding new ways to earn more. But with copy-trading platforms, you can automatically test different forms of trades that you never knew existed and make more passive income.
It saves time
Not everybody has the luxury of time to study charts, patterns, and signals to come up with the perfect trading strategy. Sometimes, it takes years or even months to do so, and not everybody can wait. On the other hand, copy-trading allows you to be under people who have the necessary experience and make money from their knowledge.
Cons of copy trading
Even for something as straightforward as copy-trading, it still comes with risks. So, here are some of its disadvantages.
You will experience higher-risks
Expert crypto traders are risk-takers. Once they discover a new market, they make moves to leverage it to its full potential. One of their favorite phrases is, “no risk, no gain.”
As much as taking risks helps them earn more revenue, there is no perfect trader. So whenever they make a wrong move, you can lose everything, including your profit and capital.
You depend completely on technology
Technology is supposed to make life easier for humans. Using technology for copy trading in the crypto space is a great decision. However, remember that technology has shortcomings, like power outages and server crashes. It takes one server crash for an original investor to miss a trade that can affect your portfolio.
If you want to save time, copy-trading is your go-to option. It allows you to follow the trading footsteps of expert crypto traders without breaking a sweat. So, hop on this bandwagon and get in touch with us today to show you how to do well with your passive income.
It might seem complicated for newbies to select who to copy a trade from; however, BlockWiz is an agency that links you up with an expert trader from who you can copy. So, why not get going to reach to the top?