Copy trading in cryptocurrency is a trading style where traders replicate trades from professional or expert traders. This progressive feature ensures that new or less experienced traders can access the wisdom and skills of professional traders without having to create their own strategies or conduct market analysis.
In essence, copy trading bridges the gap between novices and professionals by allowing users to follow and replicate the trades of successful traders. It’s an appealing tool in the crypto trading ecosystem, where markets are volatile and prices can move quickly, demanding attention and expertise.
How does copy trading work?
Copy trading works through specific platforms or crypto exchanges that support this feature. Here is a step-by-step breakdown of how it works:
- Platform sign-up: Users register on a crypto exchange or a platform that provides copy trading services.
- Explore traders: Users have access to a list of professional traders, along with their performance parameters, trading history, and risk levels.
- Users choose a trader: Based on their goals, users select a trader to copy, which mainly involves considering ROI, trading preferences, and risk tolerance.
- Invest money: Users allocate a portion of their funds to invest in the selected trader.
- Automatic Execution: When the selected trader places a trade, the same trade is automatically executed in the follower’s account, proportional to their allocated amount.
- Track performance: Users can track the performance of the copied trades and make adjustments to their strategy, including stopping and swapping trades at any point in time.
Benefits of Copy Trading in Cryptocurrency
- Learn by Example: Beginners can follow and replicate the trades of more experienced traders, taking the opportunity to make a profit.
- Low effort: No need to analyze the market; just click buy and sell.
- Saves Time: Trades occur without you having to monitor the markets 24/7.
- Customized: Users can select traders, copy risk levels, specify funds allocated to each, and set risk management settings.
Risks of Copy Trading
- Volatility: Crypto markets are extremely volatile, and anyone (including professional traders) can lose their entire balance with a single trade.
- Reliance on Traders: Performance relies entirely on the success of the copied trader. The result can be a significant loss, if not due to a bad strategy then due to the unpredictable nature of the market.
- Fees & Commissions: Some brokers may charge fees or commissions for copy trading that could reduce overall gains.
Crypto Exchanges and Platforms Supporting Copy Trading
- Binance (Binance was founded in 2017 by Changpeng Zhao (known as CZ) and has since become the most popular and technologically advanced cryptocurrency exchange in the world.).
- Bybit (Bybit is known among the crypto community as an exchange that often holds promotions and gives out rewards.).
- OKX (OKX is user-focused first and foremost. They relied on maximum convenience and speed of the exchange, and OKX does this very well. In addition, OKX has its own and very convenient decentralized wallet to store tokens securely.).
- MEXC (MEXC is an exchange with the best conditions. Low trading commissions, frequent promotions, no KYC when withdrawing up to 10 BTC per day.).
- Gate.io (Gate.io, established in 2013, is one of the most comprehensive cryptocurrency exchanges in the market today.).
- HTX (Huobi) (HTX is a trusted crypto exchange that has been operating since 2013 and has over 47 million users worldwide.).
- BingX (Founded in 2018, BingX has emerged as a popular cryptocurrency exchange, particularly known for its copy trading features and versatile trading options.).
- CoinEx (The CoinEx cryptocurrency exchange was founded in Hong Kong in 2017. Today, it serves over 10 million users worldwide, which speaks to its reliability and popularity.).
- Bitmart (Founded in 2017, BitMart has grown to become a prominent global cryptocurrency exchange, offering services to more than 9 million users across 180+ countries.).
- XT.com (XT.com was founded in 2018 and operates worldwide, but is especially popular in Asia. XT is not just a cryptocurrency exchange where you can trade cryptocurrencies, but an entire ecosystem for trading, earning, and borrowing cryptocurrency.).
- CoinW (Founded in 2017, CoinW has become a significant player in the global cryptocurrency exchange space, serving over 7 million users across more than 120 countries. ).
- Deepcoin (Deepcoin, a cryptocurrency exchange founded in 2018 and headquartered in Singapore, has become popular among 10 million users worldwide.).
- LBank (LBank has gained popularity worldwide, particularly in Asia and Europe.).
- Toobit (Toobit is a relatively young cryptocurrency exchange, founded in 2022. Since then, more than 3 million users have registered on the platform, which is a good sign for a newcomer to the cryptocurrency market.).
