Anyone who is somehow involved in the world of cryptocurrencies has at some point been interested in crypto trading. However, we know it isn’t an easy process, especially when you don’t have much experience. Well, copy trading is a great strategy for anyone who wants to get into crypto, but doesn’t have the required experience in trading.
What is copy trading?
Copy trading in crypto is an automated process, allowing investors to replicate the actions of other traders in real time. This happens by renting the trader’s trading bots. This way, investors are able to take advantage of the expertise and experience of other traders.
What is so great about automated trading strategies, is that they offer both great efficiency and speed. They reduce the risk of making emotional decisions, as their actions are based on historical data.
It is important to say that copy trading is not the same as automated crypto trading. While the automated trading strategy requires investors to set risk tolerance parameters, in copy trading traders benefit from other traders' experience and success, without extra work.
How does it work?
There are different types of copy trading in crypto. Exact copying, for example, is a type of copy trading where the volume of the copy trade matches that of the other traders. As a result, if a trader opens up a deal with ten lots, the investor will have an identical volume in the account.
This type of copy trading allows for a more accurate replication of the trader’s actions, and ensures that the investor can benefit from the decisions.
3 types of copy trading in crypto
A Look at fixed-size
Fixed-size copying allows investors to reduce the risk, by diversifying their portfolios. It allows traders to mirror a strategy, without worrying about the volume or size of the trade. The investor sets a predefined copy setting that mirrors the initial trade’s volume.
This type of copy trading is useful for investors who don’t have the time or the resources to track the market trends. With fixed-size copying, they can take advantage of a given strategy, without the need of continuously monitoring and adjusting their settings.
Understanding percentage
Percentage copying allows crypto traders to copy the trade volume of another trader, but with a set percentage.
With this type of copy trading, investors are able to choose how much capital they want to allocate toward the copied trades. However, for investors, it is important to pay attention when setting their percentages, as even the slightest change can lead to different outcomes.
Percentage copy trading is a great way for traders to diversify their portfolios, while taking advantage of the strategies of more successful crypto traders.
Exploring fixed share
Fixed share is another copy trading strategy, where investors can ensure to invest the available funds and not over-exposing themselves to risk.
In this copy trading strategy, the equity ratio determines the investor’s strategy, allowing them to adjust the volume of their copied trades according to the available funds.
Conclusion
As we already said, copy trading is a way for investors to manage their investment risk through the strategy of someone with more experience. Of course, you still need to learn how each of these strategies work and do proper research before jumping into trading or investing in crypto.
Don’t forget that cryptocurrencies are highly volatile and can bring you big profits, as well as major losses. That is why we advise you always to do good research and never invest more than you are willing to lose.
Cryptoarbi is an automated crypto trading platform. All you need to do is choose the right subscription plan, and we will do the work for you!