Copy trading is a common term in both cryptocurrencies and the traditional trading scene. It is a system that allows crypto traders to copy the trades of other investors. Usually, crypto enthusiasts copy the positions opened by those they feel are high-performing.
With the transparency of the blockchain space, it is easy to check the transactions done by an address. As a result, some traders have grown their crypto holdings tremendously with different strategies.
Copy-trading platforms allow crypto enthusiasts, both new and professional ones, to mirror the activities of highly skilled traders. In most cases, it is automatic, meaning that the wallets of a user are set to immediately copy the trading positions of the chosen trader without any human intervention. The user can decide which traders they want to copy based on the statistics. Highly-skilled traders are paid a periodical fee for allowing others to copy their positions automatically.
Different crypto copy trading platforms exist, and they may have varying features. For example, some come with Stop Loss orders that give users some control over their trades. An advantage of this is that people can mirror the trades of highly performing traders and make a profit if possible. Sometimes, the fee paid is cheaper than what a highly skilled trader may charge if the user asks them to manage the account.
How does crypto copy trading function?
Crypto copy trading allows users to copy the trades of others using an automated system designed by the platform. Usually, a part of the user's crypto holdings is linked to the trader, and it automatically copies the trading positions. The user can then decide on the number of cryptocurrencies they want to use.