Copy Trading: A Smart Strategy for Crypto Investors

If you have been following the crypto trading space for any number of years, then you have most likely come across the term copy trading. Although it may not be a new idea, it has really gained popularity recently as the crypto industry became more mainstream. Wondering what "copy trading" is all about? Thankfully, today is your lucky day. In this article, we will explain what crypto copy trading is, its benefits, how it compares to social trading, how to do it right and the potential risks involved. Let's go.

WHAT IS COPY TRADING?

Copy trading is a process that allows one to automatically copy, or in essence, replicate the trades of another crypto trader. That is all copy trading is. It's that simple. Beginner or inexperienced traders who are still at the start of their trading journey usually take advantage to copy trading to make some additional income. Obviously, there are a few things you need to know in order to do crypto copy trading the right way. Before that, let's see how copy trading compares to social trading

COPY TRADING VS SOCIAL TRADING

The difference between copy and social trading is quite simple. In copy trading, the trades are "copied" automatically without your involvement. While in social trading, you have to execute the trades by yourself. Basically, if you have ever been in a community of crypto traders where the experienced members dropped their market analysis with potential trade setups, then you have been a part of social trading. Crypto copy trading, besides your initial setup, doesn't require your involvement. It is more of a set and forget strategy. Suitable for those who don't have the time to spend in front of the charts. Or for those who want to earn while they learn the rope of crypto trading.

HOW TO DO COPY TRADING RIGHT

Now that you have decided to go through with crypto copy trading, how then do you go about doing it the right way? Here’s our step-by-step guide.

• Get a little knowledge: Before you invest, it is advisable that you learn a bit of the industry first, this way, you have a better chance of investing right compared to a complete novice.
• Find a good trader: Next step is to find a good trader with a proven track record. On most crypto copy trading platforms, you can see the track record of every trader whose trade you can copy. Use that information to choose someone who is the right fit for you. Someone whose strategy you understand and whose risk appetite is more to your taste.
• Set it up: Once you have selected a trader, it's now time to dial in your settings. You decide how much of your capital you want to invest and how much you want to risk per trade. After this, you are good to go. Continually review the performance of your trader and make changes as you see fit.

IN CLOSING

Before you go, here's a recommendation for anyone just getting in crypto copy trading. Diversify your portfolio. Instead of investing your entire capital with one trader, consider splitting up your capital. Allocate each portion to different traders who have unique approaches to the market. This way, you reduce your overall risk exposure. Losses made by one trader will be covered by gains from another trader. Cheers.