The Story Of Copy Trading
Copy Trading, as the name suggests, offers investors the option to copy the exact positions taken by another trader. Today, many stock and crypto trading platforms offer the option of copy trading. The function effectively connects the actions of one portfolio to another, allowing investors to copy the positions of another and any further actions taken. If they open or close and win or lose a trade, so will you.
The premise of copy trading is designed to cater to novice traders. The process has become a form of social trading and is gaining popularity in the crypto space. Copy-trading allows users to automatically or manually copy the trades of others using the same platform.
With a growing demand for copy trading, crypto trading platforms are offering a unique take on the approach, as it includes a social networking feature. The use of a social network means that users can subscribe to traders based on various statistics to show their success rate. Each position is tracked, including the specific details of trades (including stop-loss, short positions, etc..). Fortunately, traders aren’t normally tied into the actions of those traders they follow, allowing them to unsubscribe and trade independently at any time.
Pros And Cons Of Copy Trading
The beauty of copy trading is it allows you to profit off the skills of another trader. But, the presence of delay can be frustrating. We’ll look at the benefits and detriments of copy trading, as well as its functionality.
Copy Trading has been around since 2005 and has certainly gained a lot of momentum, more recently among the cryptocurrency community. What started out as copying algorithms designed for automated deals, has become a feature on many modern trading apps. Though this approach to trading isn’t without its critics.
Advantages Of Copy Trading
The beauty of copy trading is it allows you to profit off the skills of another trader. But, the presence of delay can be frustrating. We’ll look at the benefits and detriments of copy trading, as well as its functionality.
The copy trading approach is certainly helpful for novice traders and those that are not confident enough to trade alone. Trading is not something that should be taken lightly, lots of money is at stake and most successful traders have been in the industry for many years. Copy-trading allows you to see the steps top-tier traders take to find success in the market and if you have no experience, this is a great stepping stone.
Another great advantage of copy trading is automation. Any trader will tell you how time-sensitive and time-consuming the process is, so having unique software automating the process is extremely appealing.
Successful trading is reliant on risk management. By using the copy trading methodology, investors will passively analyze statistics, strategies, and other aspects of trading that they may not have understood. This isn’t obligatory, as trades are automated. However, it’s quite common that copy traders to pay close attention to every move the trading account makes. Remember, you’re in control of your losses. If the outcomes aren’t what you expected, you aren’t locked in. Shop around for another trading account to copy.
Disadvantages Of Copy Trading
Copy-trading has an array of benefits, but there are also some downsides. When investors first discover copy trading, it’s hard to ignore the bright and attractive aspects of the approach. However, there are also some disadvantages that exist—some of which are more apparent depending on the trading platform you’re using.
Professional traders are named as such because they are successful enough to make a living out of trading cryptocurrency. Although, this doesn’t mean that they don’t have bad luck and sometimes make the wrong decisions. As such, no matter how successful a trader has been, you may eat away at your funds trying to follow their lead.
One of those is brought about by the time delay experienced by those who are copying the trades of another account. This is often known in trading terms as “slippage”. To be clear, the difference between the order price placed and the order execution price at the point of trade is known as slippage. There are kinds of slippage that can negatively affect the user, as well as a kind that can have a positive effect. As such, when looking for a copy trader account, if possible, it’s worth noting the average slippage per trade.
Sometimes, trading platforms will display the average slippage, which is useful for people executing trades operations on the actions of other brokers.
Time delay is another issue that can vary significantly from one trading platform to another. Take, for example, PrimeXBT and eToro that offer copy portfolios. These accounts are extremely popular and offer first-rate copy trading services, but the copy delay at these exchanges isn’t comparable to MoonXBT, which has negligible levels of delay.
How To Carry Out Copy Trading on MoonXBT
When it comes to copy trading, most online trading platforms will promote the function directly from the website or app. For example, major online crypto trading platforms like MoonXBT promote copy trading from a tab at the top of its homepage.
From there, users will then be presented with various filtering options to help them narrow down the various available copy trading accounts. These options include things such as style, total ROR (Rate of Return), and trading days.
One of the most important criteria is style, which can be broken down into high/low leverage, long/short term, and small/big margin. These kinds of options will allow traders to quickly find the kind of portfolio they want to work with. For ROR, traders can choose from less than 30%, 30-60%, and more than 60%. Finally, trading days, which can be broken down to a specific time period, though generally, the options are less than 30 days, 30-60 days, and more than 30 days.
From there, the top exchange platforms will provide a filtered list of trading accounts. Each account may then show details regarding its ROR % over 30 days, a total ROR %, a win rate %, and finally the total transactions completed on the account. The one thing to keep an eye out for is the number of people following the account, as often there is a limited number of copies per account.
Slippage is usually a common occurrence when Copy Trading. However, because MoonXBT copies the trades at the same price with no delay, investors who Copy Trade with MoonXBT do not have to worry about negative slippage.
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