When it comes to making money reliably using all instruments available to retail traders, one such instrument regularly appears among the most commonly mentioned by professionals. Using crypto copy trading is not hard and offers a wide range of options for an investor, whether beginner or experienced. Also using crypto copy trading requires little to no money.
What is social copy trading?
The idea behind this concept is quite simple: follow the best in the industry and copy their actions. Before, it could be done only if you knew someone good at trading personally or subscribed to an investing blog written by someone experienced. Nowadays, we have the power of the internet and social media.
Many contemporary trading platforms operate on the web 2.0 principle meaning that it has user-generated content and social elements. It means that we can monitor the best of the best, given they don’t mind someone looking at their portfolio, and copying their actions.
Automation makes this process even easier. You don’t even need specialized copy trading software. Everything is done in the cloud by service providers. The only thing that you need to do is choose the right one and start making money. Pick a reliable automation vendor and focus on selecting the right traders to follow.
What is the best copy trading platform?
This question does not have a definitive answer. Most advanced automation services have a wide range of instruments including social trading. However, some have unique products and marketplaces that allow them to stand out from the crowd of competition. One such company is Wundertrading, an innovative automation platform offering a diverse lineup of automation products like bots, scriptwriting, and, of course, social trading.
One will struggle to find an easier and more convenient platform to work with. There are just several steps to start enjoying copy trading services. Here is how to start copy trading:
- Go to the main page of the Wundertrading official website.
- Create a new account and link your account to an exchange of your choice.
- Go to the marketplace and filter out exchanges that you are not interested in.
- Browse through a long list of traders and start following those that seem efficient.
- You will be able to manage followed traders in the sidebar.
The only thing that you will be required to do after is make sure that your trading account with an exchange has enough funds to repeat the actions of traders you follow.
How does copy trading work?
The core idea behind this trading technique is to focus on choosing retail traders with exceptional market performance. It works similarly to trust management, but you never forfeit your capital and do not have to give custody of your money to entities that you don’t trust. However, you can still benefit from the philosophy of trust management: allow those who know more than you to make money for you!
There are several factors that you need to consider when using this method of investing:
- Past performance does not guarantee future returns. When you look at the portfolio on the marketplace, you may feel that you found someone who can make you millions. However, their results may reflect only their last streak of luck. It is possible that they lost millions just a couple of years before or on another exchange.
- Many retail traders use high-risk strategies. When it comes to working in the crypto market, many retail traders start losing their heads and focus on ultra-risky strategies which, sometimes, pay off. However, their actions may be profitable only in the short term.
- Choose a wider period for reference. Many investors look at the recent data and think that they have the right manager for the job. However, you should always expand the period reflected in the portfolio to as long as possible. Look how a trader performed a year ago or two years ago. It is often a completely different picture.
What is copy trading in crypto?
While the copy trading definition was coined during the era of Forex, it became popular in the cryptocurrency market. The reason for its popularity is the complexity of the industry. Many tokens are way too complicated for a layman to understand their value.
Top-performing tokens are established coins like BTC, ETH, LTC, DOGE, and others. These are often propped up by macroeconomic factors and have connections to the conventional financial world. However, some up-and-coming startups issuing coins may be of interest to an investor, but finding such gems in the crypto ocean is a challenge even for experienced people.
Another problem is the technology and its intricacies that remain a mystery for many newcomers to the industry. Without a proper dive into the history and details of a tech, becoming a successful trader is quite hard.
Many people choose copy trading for cryptocurrency to start investing in the fastest-growing sector of the hi-tech industry without trying to fully understand its complexity. It is the easiest way for an investor to explore the world of crypto.
Should you try copy trading?
Many people have questions about using social trading as their main investment strategy. While it is not the worst idea out there, you should always remember that diversifying is crucial for the long-term success of your investment endeavors. Dedicate a certain amount of money that you can afford to lose and start investing it using the copy trading technique.
It is also important to diversify within this section of your portfolio. Follow multiple managers and search for reliable traders. Use the marketplace at Wundertrading regularly to look for updated lists of top-performing managers. Add new rising stars to your list of followed traders and remove underperforming ones.
The final decision of whether to start using copy trading or not is a burden that you alone can carry. Choosing the right path to success is a challenge, but we hope that now you have a little bit more information about social trading to make an educated choice.