Knowing More What Is Copy Trading Crypto And How Does It Work?

Illustration of cryptocurrencies that are often traded in copy trading (photo: Unsplash)

JAKARTA - The name copy trading is now starting to be known among cryptocurrency traders. Copy trading is a service that allows traders (traders) to automatically imitate cryptocurrency investors' trades from expert traders.

Cryptocurrency trading is a complex skill that requires extensive knowledge of fundamental and technical analysis and the cryptocurrency ecosystem as a whole.

Since there are still many traders who don't have these skills, they struggle to learn many skills with tools that can help them explore the potential of the cryptocurrency industry, simplifying overly complex cryptocurrency trading by following expert traders.

What is Copy Trading Crypto?

Citing from Cointelegraph, cryptocurrency copy trading is an automated strategy that allows one to copy trading methods from experienced traders.

This service allows one to buy and sell crypto assets for profit without spending a lot of time researching or gaining proficiency in crypto trading.

So, a trader does not need to spend time selecting market trends or learning complicated trading methods. They just need software to emulate what expert traders do.

For example, if the trader followed by the copy trading software invests 100 US dollars to buy coin A, then the software will also spend 100 US dollars on the same cryptocurrency.

How Does Copy Trading Crypto Work?

Before you want to become a crypto copy trading, the first and most important thing is to choose a skilled copy trader and software. Here are some explanations on how to start trading cryptocurrency copies:

• Choose the right trader: The first step is to identify the right trader. Copy trading efficiency is always linked to the skill level of the trader being followed. If the trader you follow has expertise, then you will also follow in his footsteps of success and reduce the risk of being unwanted.
• Set up the software: Choosing the right software is just as important as choosing the right cryptocurrency trader. Using the software, you can usually set the same investment amount or percentage as the imitated trader. Most importantly, you can stop any trades made by the software or can decide for yourself about closing a position without waiting for the action of the main trader.
• Take care: As a trader, you can completely rely on the software to work automatically or see for yourself the selection of their partner's portfolio and take trading actions based on their investment goals.

Is Copy Trading Crypto Legal?

There is no need to worry about the legal status of cryptocurrency copy trading, as regulatory bodies such as the Financial Conduct Authority (FCA), the Financial Regulatory Agency in the United Kingdom, and the European Securities and Markets Authority (ESMA), the European Union Financial Markets Regulator and Supervisory Agency, have acknowledged the existence of copy trading.

Crypto Trading Copy Risk

For some copy traders, the efficiency of the trading process depends on the choice of platform and the expertise of the trader being followed. One wrong step, maybe it could be a boomerang for you.

There are so many crypto copy trading platforms for an amateur trader who has little knowledge of cryptocurrency trading. A trader who fails to make informed decisions can result in them losing hundreds or thousands of dollars.

An experienced copy trader will probably compare features across different platforms and review their reviews before coming to a decision.

When looking for a trader, choosing one in the age of social media is challenging. We recommend that you find as much information about the person as possible from all kinds of sources, which are credible and reliable,

A piece of software, will not be 100 percent perfect, it can go wrong at any time and start giving unexpected results. You need to monitor the cryptocurrency trading process continuously to reduce losses.