What is Copy Trading?
Copy Trading is a method of trading in which a novice trader chooses a professional trader and does exactly what he or she does. In this article, you will get acquainted with this notion.
What is Copy Trading?
Suppose the trader or traders are bumbling but you know someone who is thousands of dollars. What if you copied his transactions completely? That is, you bought whatever he bought and you sold whatever he sold?
The trader you want does not want to lose, he scrutinizes for his trades and you just do whatever he does. This can be a good way to make a profit. This is achievable today in some online dealers around the world, which is called copy trading.
To better understand this article, the copywriter is referred to as a “trader or follower trader” and the copywriter is referred to as a “major trader or trader”.
At broker sites and exchanges that support copy trading, users can access the trading history and strategy of professional traders. Once the user is sure of the credibility and expertise of a trader, he can link some of his funds to his account so that with each of his trades, the system will automatically register a trader for the following trader.
From then on, whenever a position is created by the main trader. This position will be automatically applied to the following trader’s account. The amount of money invested in a similar transaction depends on two factors:
- The amount of money invested by the following trader
- Percentage of the capital that each trader can use in each transaction, by the policy announced on the platform.
Today, the use of these venues in stock and forex markets is very trendy. Examples include well-known platforms such as Zulu Trade, eToro, and Darwinex. Recent estimations put the significance of annual transactions on the Zulu Trading platform at just over $ 800 billion.
But these platforms have not yet found their appropriate place in the digital currency industry.
The importance of having copy trading platforms in digital currencies
Similar trades (copy trading) means following the methods of a skilled trader
Advertising for investing in different financial markets such as the stock market. Forex and digital currencies have reached their peak these days and in the meantime. Digital currencies can be considered as new members of the financial markets.
But despite all the excitement surrounding it, most people still prefer the stock market and forex to digital currencies because of the risk of high price fluctuations. A concern that, of course, is by no means unfounded. This is the problem that has so far prevented its widespread acceptance among the people.
Aylnar Fatakhvf (Ilnar Fattakhov), Expert Trading, in an interview said :
According to the latest statistics, only 1% of users of digital currency exchanges are active in trading. And the remaining 99%, because they do not have the necessary skills to trade. Only open an account, buy a digital currency and do nothing with it.
He also implied the small size of the digital currency market, saying that this problem makes the market vulnerable to whale manipulation. This vulnerability makes it less reliable to rely on technical analysis in this market. It is always possible for novice traders who do not attach to any risk leadership system to lose their money in these sudden changes.
Of course, as we all know, some traders have a lot of experience in this market. And their knowledge of this market is such that they can not only manage their losses but also make a profit.
This creates the demand for a platform that can provide professional trading services to people who want to keep their currencies. “Working with such a platform would be as simple as pressing a few buttons on the screen,” Fatakhov concluded.
Benefits of a Copy Trading Platform
As said earlier, copy trading means copying the method of a professional trader; In other words, in such a trading method, you are following in the footsteps of another trader. But what are the advantages of such a platform?
- Risk deduction for novice traders
As we have said time and time again, the high volatility of the digital currency market causes many investors to refuse to enter; But if we replace the traditional trading system, in which we rely only on our capabilities and skills, with a mechanism in which a professional with a good track record makes conclusions for us, this market will have a better future.
Many have lost large sums of money due to a lack of understanding of trading skills such as technical analysis, fundamental analysis, and risk management. That is why dividing each person’s funds into several parts and enabling them to be manipulated on a similar trading platform can guarantee their profit and success in the future.
Remember that on such platforms, you can always replace the main and target trader and move on to another trader with a different approach.
Less hassle, more profit, and easier learning
Trading is not easy at all. This difficulty will be exacerbated in volatile markets such as digital currencies.
Adequately designing and executing transactions takes a lot of time, and not everyone has the time to devote time to trading digital currencies or learning them.
But it should not be taken lightly that they can not profit. Novice traders can use this platform to eliminate the aggravation of doing so. On the other hand, it will be possible for them to taste it a little before entering this market completely. All they have to do is give some of the money. They have set aside the deal to the experts; From there, the platform will move things forward.
Of course, this platform will also be very suitable for those who want to learn and want to learn the job of people who copy from their hands, more practically and make more profit.
- Wider acceptance of digital currencies
Easy risk and profit reduction directly through the widespread acceptance of digital currencies Is in touch.
In 2017, with soaring bitcoin prices, many people familiar with digital currencies warned their family and friends that they should be aware of the risks in this market; However, those who were looking for profit knew what to do. These people were the same ones who took big profits.
But now that people have realized the profitability of these currencies. They no longer care about market instabilities and can easily overcome their fears. Similar trading platforms will help make this easier.
Having professional traders equals people counting the digital currency market. When people can use the strategies of knowledgeable people to make money, their chances of joining the ranks of digital currencies will increase.
- Advantages of Copy Trading Platform for Professionals
Most copy trading platforms give small commissions to those who allow others to copy their trades. Thus, the more credible their strategies are, the more people will try to copy their trades. This allows them to earn extra money in addition to their daily work.
Risks and problems of this trading platforms
Copy trading platforms are making their way into the market, but these platforms also have problems.
Remember that copy trading does not mean sleeping and making money. Many situations and situations can cause you great harm.
The trader you follow can sometimes make terrible mistakes. Humans are not immune to error. Sudden news and events can easily change the course of markets.
Copy trading platform settings must be done carefully and all conditions must be considered. For example, the main trader may want to make a heavy trade with high leverage, while for a follower trader with little capital, this can be very risky.
Sometimes the wrong settings in copy trading cause the trader’s inventory to be zero.
Professional trading traders suggest that before taking any action, the trader should be well acquainted with how to do this and how to make copy trading settings on the platform on which he works.
It is also a good idea for novice copy traders to start with a very small amount to identify their flaws with an error test and avoid further losses.
