Home Copy Trading Explained: Beginners Guide to Crypto CopyTrading

Copy Trading Explained: Beginners Guide to Crypto CopyTrading

The Coinbase direct listing announcement is heating up the cryptocurrency frenzy once again, following a short correction over the past couple of days. With China launching its digital Yuan and coupled with the widespread adoption of digital currencies, people are increasingly ascertaining a cashless future.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q1 2021 hedge fund letters, conferences and more

While the United States and major European countries have not made significant progress towards launching centralized digital currencies, investors are betting on the decentralized system to be the next industry disruptive technology to revolutionize the global financial markets.

The ongoing crypto-mania has led major currencies such as Bitcoin and Dogecoin to reach record highs in the recent past, attracting investors from around the globe. However, given the complex nature and workings of cryptocurrencies, it might be difficult for a novice investor to read and analyze the market movements on a stand-alone basis.

Following a copy trading investment technique should allow such individuals to book significant profits by leveraging an industry experts knowledge.

Copy Trading 101

As the name suggests, copy trading or mirror trading is a passive investment strategy wherein an investor replicates a particular person’s investment strategy to build his/her own portfolio, leading to near-identical returns. Under this strategy, an investor, who is likely a beginner in this field, chooses an industry expert or seasoned trader, with a history of higher-than-benchmark returns. Copying investors are usually required to pay a subscription fee to get access to the trades of an industry expert.

Given the inherent nature of the trading method, investors typically generate substantial returns on their portfolio, provided they choose an ideal investor. Moreover, beginners having limited knowledge and understanding of the market movements can help multiply their gains through copy trading, without requiring to spend additional time on decoding the markets.

An important point to note here is the timing of trades placed. Ideally, there should be minimal difference between the time a copied investor places a bet and a copy trader replicates it. This is because of the ever-changing nature of the stock markets, as the prices of equities change continuously during trading hours. As cryptocurrencies are also directly traded over the counter, their prices change 24x7.

However, as investors slowly build up their knowledge base and understanding of the markets, they can reduce their reliance on copied traders. While reaching the level of a seasoned trader is expected to take considerable time, copy traders can learn tremendously from how an industry expert identifies an entry or exit point in the stock, based on real-time dynamic market developments.

What's The point?

Cryptocurrency is one of the most complex financial tools, following a decentralized blockchain system for secure transactions globally. Cryptocurrencies need to be mined using intricate software and coding knowledge, which might not be everyone’s forte.

However, the increasing public interest in decentralized currency leading to a stellar rally has caused several investors to enter the markets. The volatility of cryptocurrencies and frequent price fluctuation with sizable momentum has been holding back such relatively risk-averse novice traders.

Copy trading cryptocurrencies is the ideal way to profit off of the bullish market trends with a certain degree of certainty. Several cryptocurrency exchange platforms identifying this market shortcoming have customized their services to offer copy trading, encouraging beginners to gain from the current market trends.

Popular Crypto Copy Trading Platforms

Some of the best copy trading platforms in the international markets include:

Bingbon

Bingbon

Image source: Bingbon.

This user-centered copy trading asset derivative user platform specializes in cryptocurrency and foreign exchange trades. The platform uses Advanced Mark & Index Pricing system for crypto pricing, which is verified from spot exchanges like Huobi, Binance, and OKEx.

All trades and profits are settled in real-time, indicating maximum profits generated from a trade. With competitive trading and withdrawal fees, Bingbon has been turning heads in the cryptocurrency copy trading space.

Bingbon also issues an analog token known as the VST (Virtual USDT) which can be used as margin in copy trading or even a standard contract as well as in demo trading. While the profit generated from VST demo trading has no real value, users can get familiar with standard contract or copy trading without the risk of losing real assets.

Users will be credited with 100,000 VST post registration.

eToro

eToro

Image source: eToro.

eToro CopyTrader TM automatically copies top-performing traders for users, giving investors direct access to potentially high return generating investment bets. eToro platform does not levy a management fee for its services, making it an economical option for copy traders. Additionally, users get access to a collaborative community, allowing them to communicate with other users, which might help them scale their investment portfolio and earnings.

Naga

Naga

Image source: Naga Trader.

Another social trading platform in the crypto space that is gaining traction is Naga which has over 1 million traders. It is a publicly listed company and offers a platform where traders can interact with peers to discuss market conditions and exchange ideas.

NAGA users can invest in over 800 markets including cryptocurrency, forex, stocks, indices, commodities and much more.

Conclusion

Cryptocurrency can be daunting for people with a non-tech background. Even understanding its applications can be challenging at this stage, as people are accustomed to using Bitcoins for Dogecoins as their preferred medium of exchange.

Nonetheless, as the weak reserve currencies and online financial transactions gain traction, major cryptocurrencies are expected to reach fresh highs soon. Copy-trading such decentralized currencies should help investors who want to enter the market but have an elementary understanding of this asset class.

Updated on