What is Copy Trading?
Copy trading gives traders the ability to copy the positions opened by one or multiple traders automatically. Both traders accounts are linked, which means any trade is executed across both traders’ accounts.
The copying trader has the option to manage the copied trade however he sees fit.
There are many platforms and apps for copy trading. These platforms allow their users to use a wide range of tools to minimize their risks. In this article, we will review some of these platforms.
Why is Copy Trading popular among newbie traders?
Crypto trading requires a lot of research and time. For instance, traders need to find the best crypto projects or “hidden gems” as the crypto community likes to call them. Traders also need to monitor their trades and keep track of what’s going in the market. Good knowledge in technical analysis is important as well.
Obviously, building up these skills and doing this research will take a lot of time. Newbie traders are using copy trading because it allows them to earn money while investing a little of their time and effort. Copy trading can also help novices
Best 10 cryptocurrency copy trading platforms for beginners:
Gate.io is a cryptocurrency exchange that allows its users to use copy trading on its platforms in order to maximize their gains.
The copy trading platform features are:
Gate.io’s blog always posts updates about new products and features added for the platform. Having consistent updates is important because it enhances the user experience and the platform’s performance overall.
Multiple strategies to choose from
You can choose from various types of strategies such as: double moving average, dual average-RSI, MACD-RSI, future grids, MACD(Moving Average Convergence/Divergence).
Add to that, Gate.io enables users to choose the estimated returning time and rate of return.
This copy trading platform has a backtesting feature. Basically, this feature allows you to use historical market data to determine how the strategies offered by the platform would have performed in the past.
Copy trading on Gate.io is as easy as it is on the other platforms we mentioned earlier. You proceed by signing up and depositing crypto, then pick a strategy that best suits your needs. Finally, you click on “copy” to start copying that strategy.
PrimeXBT’s covesting has established itself as one of the most reliable copy trading platforms. It has won the 2020 best cryptocurrency margin trading award from ADVFN.
The most notable benefits of the platform are:
Variety of markets
PrimeXBT Covesting provides a wide range of markets and products for investors to choose from. It offers more than fifty trading instruments and enables you to diversify your strategies by investing into forex, commodities, cryptocurrency, and indices markets.
The COV token
This platform has its own native token called “COV” that was created by Covesting, which is PrimeXBT’s partner. Users who hold or stake COV will get an up to 75% discount on their trading fees.
You will be able to start copy trading on PrimeXBT’s Covesting by following this quick sign-up process:
- Register on the copy trading platform and make a deposit using Bitcoin or your credit card. The minimum deposit is 0.001 BTC.
- Explore the platform’s available strategies. You can compare their trading performance and pick a trader that fits your criteria.
- Start copy trading by clicking “follow” on the strategy that best suits your needs. You’ll start getting the same gains or losses as the trader you have followed, so make sure to select an experienced trader with low risk and strong performance. Make sure to diversify your risk as well by following multiple strategies.
CYBO Robot – AI Based Auto Trader
CYBO Robot is an AI-powered bot that was built by NAGA Trader which is a stocks trading platform that recently ventured into the cryptocurrency market. This bot provides various features that help traders trade in a convenient way:
A comprehensive set of trading tools
This copy trading platform provides powerful charting tools to its users. It also has its own wallet which supports a limited number of digital assets.
Demo trading account
Like many competitors, CYBO gives its users the possibility to try the platform for free on the demo mode. You can decide later whether you would like to fund the bot with real money or not.
The use of AI(Artificial intelligence)
The use of AI algorithms makes this copy trading bot more reliable, since it can consistently improve its performance and provide a better experience for its users.
Transparent pricing policy
eToro’s pricing is based entirely on spreads. Spreads are the fees collected by eToro which relies on the difference between the bid and the offer price. These fees may vary depending on the market conditions
The platform has a transparent pricing policy. Apart from the trading fees listed here, it doesn’t charge anything. There are no commissions, hidden fees, or withdrawal fees.
A thriving community
In addition to being a crypto copy trading platform, eToro is building a collaborative community for crypto traders. The platform gives seasoned traders the ability to share their ideas and strategies. This feature benefits both copy traders and traders.
eToro offers the option to view other traders’ stats, risk scores and portfolios. You can chat with them and benefit from their experience.
A demo mode
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While using eToro’s CopyTrader, you still have complete control over your funds and positions. You can copy up to 100 traders and stop copying the trade, pause it, and add or remove funds whenever you like.
The process of copy trading on eToro is very straightforward. All you need to do is to choose the Popular Investor whom you would like to copy, choose the amount you wish to allocate to copying the trader and click “Copy”. You’ll start mirroring their positions automatically. You are free to stop copying a trader at any time.
eToro also gives its users the ability to copy a trader’s entire portfolio or new positions. To copy a user’s existing positions, check the “Copy Open Trades” box.
The minimum amount to copy a trader on eToro is $200. The platform has set the minimum amount for a copied position at $1.
Wunderbit is a crypto exchange and social trading network that allows its users to trade on the platform, build their own trading bot using TradingView or copy-trade the most professional crypto traders.
Some features offered by the platform include:
A transparent marketplace
Wunderbit’s marketplace has very detailed statistics regarding all crypto bots or traders on the platform. You can check their trade history and track their performance.
Image source: https://allcryptobots.com/explore/wunderbit/
All of Wunderbit’s copy trading is processed on the platform using your exchange’s API keys. That means your funds are less likely to be stolen compared to other copy trading platforms.
In order to start copy trading on WunderBit, you should register on the platform and connect to your exchange using an API key. Then visit their marketplace, where you can find traders and bots and select those that you want to follow.
Coinmatics is another copy trading platform that offers its users a catalog where they can find all kinds of crypto trading strategies. This copy trading platform offers various features such as:
Traders with verified track record
Coinmatics verifies the track records of its traders and carefully selects them to make sure that copy traders have a good success rate.
Like Wunderbit, this platform doesn’t have a direct access to your funds. It operates using your exchange’s API keys, which makes it very secure since there isn’t an option to withdraw your funds.
Coinmatics also allows its users to control the risk level of any strategy you follow.
You can start copy trading on Coinmatics by following three simple steps:
- Connect your Coinmatics account to you exchange
- Choose the strategy you would like to follow
- Track your gains in a seamless manner
Jet-Bot for Binance Copy Trading
Jet-Bot is an official broker of the popular Binance exchange. This cloud-based bot allows investors to copy and follow the strategies of the best traders on its platform. Some perks of using this platform include:
This bot requires a powerful password to register on its copy trading platform. Your password needs to contain uppercase and lowercase letters, numbers and symbols. Jet-Bot also enables users to activate two-factor authentication on their accounts. Add to that, this copy trading platform doesn’t have direct access to your funds and can’t withdraw them.
The bot has a customer support team that can assist you should you encounter any problems while using its copy trading platform. It is highly responsive and you can reach them either by submitting your request on the website or through the live chat option on the platform.
You’ll be able to test the platform with a $100.00 virtual portfolio and see how much money you can make.
The bot features on its website the top profitable traders and bots of the month. You can find PNL (The profit as a percentage of the used margin for deals) stats for the most profitable bots as well.
In order to start using this bot, proceed through these four easy steps:
- Connect your exchange to Jet-Bot
- Choose the most profitable traders on the platform and start copying their trades.
- Connect your Telegram account to the bot in order to receive notifications of your trades.
- Join The copy trading platform’s community chat on telegram where you can discuss trading strategies with the platform’s traders and learn from their experience. The bot’s community might also help you with setting up your account.
TradeBattles – Investy’s New Feature
Investy is a relatively small yet powerful copy trading platform. One of their newly implemented features is TradeBattles.
TradeBattles is mainly a game or, rather, a competition between traders. Everyone can participate, and the trader who got the maximum yield during the contest wins 50% of the prize pool. The rest is distributed between the other traders based on their positions.
Zignaly is a crypto copy trading platform that offers digital assets management services as well. Zignaly allows users to copy trade the traders who share their strategies on the platform or follow external crypto signal providers. Some key benefits of Zignaly include:
Trailing stop loss
This strategy is one of the best performing strategies on the market nowadays. It helps investors maximize their gains and minimize their losses. This strategy is, simply put, buying a coin while the price is increasing and selling it gradually as the price starts dropping.
Profit sharing is a unique feature offered by this copy trading platform. It is quite similar to copy trading, but the difference is that whenever the trader you are following makes a profit, you profit with him and pay a small fee. However, when the trader loses money, you aren’t required to pay anything.
The ZIG token
This copy trading platform has its native token “ZIG”. ZIG holders are able to vote on new features that will be added to the platform. Add to that, those who provide liquidity for the ZIG token will be rewarded in NFTs. The token also decreases the fees on the platform overall since it is used to pay for insurance fees, profit sharing services as well as trade commission rebates.
Zignaly provides a trading terminal which can help you automate some tasks on the platform and trade from multiple exchanges once you connect your account to these exchanges.
Some options available for automating your trade are:
- Take Profit
- Order type (Limit/ Market)
- DCA(Dollar Cost Averaging)
- Stop Loss and Trailing Stop Loss
- Entry Order Expiration
- Time-Based Autoclose Option
Pros & Cons of Copy Trading:
Making money on autopilot
Copy trading allows traders, whether experienced or not, to grow their portfolios without spending much time or effort. All they need to do is to monitor the strategies they are copying from time to time, and change those that are either not making enough gains.
Compared to the average trader who needs to keep an eye on the market, make a technical analysis of the coins he has invested in, and do a lot of research about other crypto projects and tokens, copy trading is considered a passive income. The more successful the strategies you are copying, the more money you can make while you’re sleeping.
Doesn’t require a huge threshold
The average copy trading platform charges a few hundred dollars for getting started with copy trading. For instance, eToro’s minimum balance that you need to start copy trading is $200.
Makes traders less likely to rely on themselves
Copy trading is sure a great way to earn some gains on your crypto without doing much work or research. However, it doesn’t provide a good incentive for traders to enhance their strategies and do their own market research.
By constantly relying on copy trading, the trader might be missing out on a significant sum of money because he might be able to grow his portfolio by himself without having to pay for commissions or fess for copy trading bots or platforms.
Not always profitable
Investing in copy trading carries less risk for newbie traders because they are still learning the basics of trading. But relying on copy trading can still bring losses. As a copy trader, you should split your portfolio between various successful traders so that your portfolio doesn’t suffer significant losses even when one or two traders you are copying make a mistake or get beat by the market.
❓ Is Copy Trading legal?
While Copy Trading is completely legal, some users, especially US residents, may have some inconveniences while copy trading due to the regulations and laws imposed by their government.
For example, US residents who use eToro can only copy trade other US traders. Meanwhile, users from other countries can copy trade any trader, regardless of his country of residence.
⚡ How Does Copy Trading Work?
Image source: http://icons8.com
Copy trading allows you to make the same percentage of profits or losses a trader makes by connecting your portfolio to his portfolio. Whenever the trader you are copying opens or closes any of his positions, these actions get automatically copied to your account, in real time.
💲 Can you make money copying trades?
In order to make money copying trades, multiple factors should be considered, such as:
The strategies you are copying:
You need to make sure that the trader whom trades you are copying has a good success rate and a strong trading performance. Try to stick to the most popular ones on the platform you are using, since those traders are less likely to use black hat (Illegal) methods to manipulate you or the market.
Moreover, as we mentioned earlier, diversification is important to reduce the risks of losing money while copy trading.
The fees charged by the copy trading platform or bot:
Most platforms would charge fees on every position opened or closed by the trader you are following. However, the swing pricing system used by eToro is much better because they make money from the spread and don’t charge you for copy trading. The Profit Sharing feature offered by Zignaly should also be a good choice since the platform won’t charge you for any position that wasn’t profitable.
Add to that, you should be always look out for any hidden costs or fees. Sometimes copy trading platforms will charge you withdrawal fees, which can be really high in case you are copy trading a strategy on Ethereum for example.
👉 What is the difference between copy trading, social trading, and mirror trading?
Both copy trading and mirror trading are aspects of social trading. They all include copying another trader’s strategies, but are different when it comes to implementing them.
Social trading is a way for newbie traders to learn trading by interacting with experienced traders, discussing their strategies and sharing technical analysis between each other through social media.
Copy trading however doesn’t necessarily involve socializing with other traders. Novice traders directly copy a trader’s positions and try to grow their portfolio by copying the trades of more experienced traders, usually selected by a copy trading platform.
Mirror trading, meanwhile, is the concept of copying another trader’s trades. While copy traders have the freedom to opt out of any strategy thatwasn’t profitable enough, mirror trading doesn’t require any intervention from the user. An experienced trader will handle your trades and all you need to do is to check out your account balance once a week or whenever you have free time.
🏅 How to choose the best Copy Trading Platform?
Choosing the best copy trading platform usually depends on your needs as a trader and how much you are willing to invest in copy trading.
For instance, if you want to learn trading while copy trading, you should choose a copy trading platform that gives its users the ability to communicate with each other and discuss their strategies such as Jet-Bot and eToro. These platforms will help you improve your trading skills and eventually come up with your own successful trading strategies.
Another important thing to consider when choosing a copy trading platform is safety. In case the platform uses API keys to connect your exchange to the copy trading account, then feel free to proceed with them because they don’t have direct access to your funds.
No one will be able to withdraw your funds from the copy trading account. If it doesn’t, then you should make sure that the platform is highly trusted, because you’ll have to deposit your funds into your copy trading account, which involves a risk of getting them stolen.
How to Choose Traders to Copy?
You should choose the traders to copy based on their trading performance and stats.
The copy trading platform you are using will usually show you how many people have copied a specific trader’s trades and how much money they have invested in his/her strategies. If a trader has a lot of users copying his trades and allocating a lot of money to his strategies, then he is most likely trusted.
Various platforms allow users to rank traders by AUM, which means the amount of money invested in those traders.
You should also select traders who have a large amount of closed trades (+100 for example) and check their average returns.
Add to that, consider the trader’s risk score and try to stick with those who have a low one (between 0 and 5).
What is the minimum copy trading investment?
It depends on the copy trading platform, but $200 or more should be good enough.
How can I do copy trading on Binance?
How can I do copy trading on Kucoin?
CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com