What You Need To Know About Copy Trading
What is copy trading?
Copy trading is a trading concept that allows investors in the financial markets to automatically copy the positions taken by another investor. While it has existed for a while in Forex trading, it is relatively new in cryptocurrency. It is a form of investment or portfolio management that allows you as a trader to link your profile with another trader to copy their positions in the market and follow any actions the take on the market. So, if they close a trade, you also close a trade; if the open, you open. Copy-trading other traders helps you gain on the market with their skills. However, if they lose, you also lose.
Copy trading is often confused with social trading and some people use them as synonyms. This is not entirely correct. Copy trading appears to be a strict type of social trading in a sense, but not every type of social trading can be called copy trading. This is because, in social trading, trading information is generated by other investors. You then take action on investments based on the data provided from the analyses provided for others.
Copy-trading, on the other hand, connects your account with another trader’s account. Your account reflects their trades. You do not decide whether you want to open trade or not. The system is fully automated by most platforms and if you do not want to make a trade, you have to stop following the trader. Some other platforms allow you to still manage whether you want to make the trade or not.
Copy Trading Platforms
Social media has been greatly contributory to the popularity and success of copy trading. The availability of market information online, financial news, and market analysis have also promoted the scheme. Copy trading platforms foster copy trading by helping you manage your account.
To copy an expert investor on a copy trading platform, you can search the platform based on their attributes. Editors’ choice, trending, most copied, top investors, and medium risk scores are some of the tags you can use to find expert traders. You can also filter based on nationality or location, currencies they invest in, stocks, indices, and more. Many platforms show you the percent gains of traders over a period of time, the number of followers and copiers the reader has, the top-traded assets of the trader, live feed price data, and performance statistics over time.
There are a lot of trading platforms with various features. Here are some of the best you can get:
Zulutrade provides a platform for copy trading Bitcoins, Etherum, Litecoin, and other cryptocurrencies. You can filter your search based on the cryptocurrency you are trading. The platform permits you to still perform operations on your own while you are copy trading. A unique feature of Zulutrade is that it allows traders to follow their profit share model such that a proportion of the trader’s profit is automatically reinvested.
This platform is often regarded as the overall best copy trading platform. Here are the advantages:
- The layout is seamless and easy to understand
- The community of users in very active
- They provide great resources you can study for learning
- It a very supportive platform and have a resourceful website.
- It is very to set up a demo and live account
- They provide nice bonuses and the startup deposit is low
The major challenge of using eToro as a copy trading platform is the difficulty in finding the best investors because its pool of investors is large. The platform also charges for withdrawals.
FBS Copy Trade affords users the opportunity to run free demo accounts (but for a limited time) to help them learn and garner experiences. It is a German platform with great usability. It is very easy for beginners to use while they try to find their footing. Users can browse through the statistics of the expert investors they can copy. The top traders get incentives to motivate them to trade with great strategies. Although the leverage is decent, it is not available in the US.
With just one account on Covesting, you are allowed multiple roles as soon as you are verified. Its liquidity aggregator prevents delay in trading orders as both buying and selling happen at the same time. Some other advantages include:
- They provide great consumer support
- The interface is user-friendly
It, however, charges a nearly 30% for successful trades which is quite high. Traders can only follow 20 leaders
This offers superb privacy and a variety of filters to allow users to find top traders. It also allows you to follow an infinite number of traders and benefit from their trading strategies.
However, traders stipulate their subscription rate, and only two exchanges are supported by the platforms.
Some other trading platforms are:
After reading this, you might be uncertain of which platform you should run with especially if you are new to trading. You can open multiple demo account with different copy trading brokers. With your experiences with different platforms, you can choose the one to use. Since demo accounts use virtual money, you are not scared of losing money. You learn and gain experience to help you better manage your account you start trading.
Does copy trading work?
It is easy for new traders to lose all their money in a short time when they do not understand how the market works. Copy reading helps new traders to find their foot in a financial market that is deemed complex. Generally, only a percentage of your portfolio is used. In the event that the top trader you copy loses on the financial market, you do not lose all you portfolio.
The scheme also makes experienced traders involved in the market as mentor figures while they still get paid on subscriptions and incentives from some of the platforms. These ensure the system keeps performing at its optimal best. The community formed by users provide ideas and strategies to do better in the financial market.
Most platforms would allow you to copy the portfolio of many top traders (some will allow up to 20) to improve your chances of making profit.
Check out BitForex Social Trading Platform:
BitForex is an exchange service platform that can be classified as one of the Top 10 cryptocurrency exchange services. It is focused on providing millions of users with a digital currency trading and investment tool that is not only safe but also professional and convenient. BitForex has a high customer-oriented culture and state-of-the-art financial technology.
BitForex is programmed in a way that it can quickly adapt to the changes of the Crypto market while introducing new features like margin trading, enhanced trading charts, derivatives, and a host of others. The headquarter of BitForex is located in Hong Kong, while there are branch offices in countries like the United States, South Korea, and Singapore.