What is Crypto Copy Trading and How Does It Work?
Crypto trading allows many people to earn money. But to be a successful trader, you need to understand the market well, know it and figure it out. Not all traders have the necessary expertise.
It is especially difficult for beginners because of their lack of experience and necessary knowledge.
In this case, copy trading helps. Copy trading allows traders to copy trades of experienced traders.
How copy trading works
Trading cryptocurrencies requires extensive knowledge of fundamental and technical analysis and the cryptocurrency ecosystem as a whole. It takes a lot of time and sometimes money to acquire this knowledge.
It is impossible to get all the knowledge and skills necessary for successful trading in a short time. Due to the lack of knowledge and understanding of the market, many traders cannot achieve the desired results.
Most traders cannot develop a winning trading strategy. They struggle to master the many skills necessary to become a successful investor and spend a lot of time studying the market, but due to the lack of a common strategy and training system, it is not always possible to achieve success in trading. Trading is a complex skill that requires fundamental knowledge.
Often coming to the market, newcomers find themselves abandoned to the mercy of fate, unable to understand the speculation on prices and sharp fluctuations in the market.
To solve these problems and help newcomers, there are tools that help traders take advantage of the cryptocurrency industry by simplifying overly complex cryptocurrency trading by following experienced traders.
Let's figure out what copy trading of cryptocurrencies is, how it works, its legality and limitations.
Copy trading allows people to copy the trading methods of an experienced trader. This makes it possible to buy and sell crypto assets and make a profit without spending a lot of time on research or acquiring skills in crypto trading.
Copy trading is about identifying qualified traders and literally repeating their actions.
A trader does not need to spend time identifying market trends or learning complex trading methods. The software simply simulates what an experienced trader does.
Copy trading not only helps amateur traders to use the experience of more successful and experienced traders, but also allows them to learn how to make smart investment decisions by following the actions of professionals.
The most important thing for successful copy trading is to choose a qualified copy trader and software.
To achieve success in copy trading, you need to choose the right trader.
The effectiveness of copy trading depends on the skill level of the trader whose actions you copy. It is necessary to carefully study the available traders and analyze their skill level according to certain parameters, such as the profitability of transactions, the total amount of funds they manage, the level of risk, the number of subscribers, etc.
On the dashboard, the user can view a list of various leading traders and select the one that corresponds to the parameters selected by him.
Leading traders are paid a small fee for allowing their trades to be copied. The commission usually ranges around 7% of the profit received. Thus, experienced traders are also interested in having their trades copied, as are beginners who follow them.
Choosing the right software is just as important as choosing the right cryptocurrency trader. Once the trader installs the software, the next step is to set it up. Although it may take some time, it will be easy later since the whole process is automated.
The software can usually be configured to invest the same amount or percentage that the trader whose actions are being copied has.
If a trader is not satisfied with the results of the person whose actions he copies, then he can switch to another trader at any time convenient for him.
Users can also suspend any order made by the software, or decide on your own to close a position without waiting for the actions of the leading trader.
Beginners can also choose several leading traders to diversify their portfolios. However, it is necessary to determine how much of the funds they want to allocate to each leading manager.
Is it legal to copy cryptocurrency transactions
The important question remains how legitimate it is to copy transactions with cryptocurrency. Regulatory bodies such as the Financial Conduct Authority (FCA), a financial regulatory body in the United Kingdom, and the European Securities and Markets Authority (ESMA), the European Union's financial markets regulator, have recognized copy trading.
Conclusion
The effectiveness of the cryptocurrency trading process depends on the choice of platform and the experience of the leading trader. The wrong choice can lead to losses. It is important to make every decision after a thorough analysis.
There are a large number of platforms for copy trading. Choosing the right one can be quite difficult for an amateur trader with little knowledge of this field. A trader who fails to make a well-thought-out decision may lose large sums.
It is important to conduct a detailed study when choosing a trader and a platform, and not just view a person's profile.
All software, no matter how well it is designed, can fail at any moment and start producing unexpected results. A trader needs to carefully monitor the process of trading cryptocurrency to stop copying transactions if he feels that he is incurring permanent losses.
With copy trading, beginners see the actions of an experienced trader in real time, which helps them understand the nuances. They are able to learn, read trading charts and acquire the ability to respond to changing market conditions.
Trading copies can help a beginner become an experienced investor in cryptocurrency. Regular monitoring of the actions of the most experienced traders, supported by training, can help amateur traders hone their skills of investing in cryptocurrency and become experienced traders themselves.