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Copy trading is all about choosing the right trader and mimicking his trading strategies. It is a tool that can save time and help you learn quickly valuable insights from the market.

Copy trading could be beneficial for beginners that don’t want to spend time researching the market trends or analyzing and figuring out their own trading strategy. They simply have to choose the right software that will automatically copy all the moves of their chosen trader. The system is simple – when one trader invests in a specific cryptocurrency, the copy trader’s software identifies the move and does the same thing.

But this tool could play a huge role for more advanced traders as well. It could be assumed that every experienced professional is an expert at a certain number of projects that he follows closely. To be an expert means that you know how different trends could affect your assets, what could be favorable or not, and how to behave during different circumstances in order to protect your holdings. This is an everyday job and the number of monitored projects can’t be big, so in order to build a more diverse portfolio, copy trading can play a huge role. It could help to learn valuable tips, fulfill the knowledge and use information from other experienced traders focused on different coins.

Moreover, copy trading is one of the most efficient ways to learn about trading. You monitor and preferably analyze and understand the actions of experienced traders in real life. This builds an understanding of trading charts, decision-making according to different market conditions, risk management, and many other important skills.

Copy Trading with Gate.io

Gate.io offers one of the most comprehensive copy trading services. The platform provides everything needed for both beginners and advanced traders. Gate.io keeps track of the most successful and profitable traders and their strategies. All of them are part of the Copy Trading network, which makes it easier to monitor and choose the right traders.

Start Copy Trade with Gate.io at https://www.gate.io/ 

Gate.io’s website has a Strategy Bot section with plenty of strategy trading bots that are easy to understand and use.  The Copy Trading category makes it easy to navigate and choose the best traders for everyone. Copy trading with Gate.io doesn’t require your input and it isn’t tied to any trader which gives you the opportunity to change him whenever you want.

For beginners, there is a Copy Trading School with valuable knowledge including copy-trading tips and guides, copy-trading logic, tips on how to be a good trader, and much more.

Check out the Copy Trading School here: https://www.gate.io/help/quants/copy-trading 

Is Copy Trading right for you?

Maybe the most important skill a person needs in order to succeed in the crypto world is DYOR. For copy trading, this statement couldn’t be more true. Even though copy trading gives the opportunity to start trading without doing any research, the safest way is to always do some research and have a basic understanding.

The first step is to identify your personal level of understanding and knowledge about this industry – are you a beginner or do you consider yourself an advanced trader? Do your research about yourself first – what are your interests, are there some projects that you want to explore, and how much do you actually know about them, do you have a favorite cryptocurrency and all the basic things in order to start? It is valuable to know what your risk-taking attitude is, how much you are willing to risk and under what conditions – this will help to choose a trader with a similar style. It is also good to know your preferred trading markets, trading timelines, and strategies. However, these things become more clear with time and experience.

The second part of the research has to be about traders that you like and possibly will trust. Here is the tricky part that can be a point of failure – because of the current marketing and all possibilities of traders, a person with little understanding can make a mistake easily. Always research and get to know more about each trader’s skills and experience. Some important metrics to consider include the number of funds they manage, years of experience, general results, results during specific circumstances, number of followers, the profitability of trades, and risk-taking behavior.

Choosing the right software is the next important step. At the end of the day, this software will manage your investments and will have full control over them. It is good to monitor them often and act accordingly in a rare cases of a mistake.

Doing all the suggested steps will give you a stable base and confidence in your choice. But before making any decision, you need to consider all the pros and cons and now we will go through them.

What are the advantages of copy trading?

As we already mentioned, copy trading is a tool suitable for everyone – beginners and advanced traders. It gives the opportunity to dive deep into the market, gain a fast understanding of the processes and improve the portfolio.

One of the main advantages is the fact that the investments are managed by statistics and not personal emotions – especially important for beginners. Many traders failed due to panic or FOMO, but the stats show that copy traders make fewer mistakes due to the panic factor. Here comes the next advantage – you follow experienced traders who have built a knowledge of how to behave under any circumstances and there is no need for further learning on how to do it.  Because of the software that does all the work, you have free time.

Along with copying other traders, the process of learning is much faster and more efficient. It is proven that a beginner copy trader learns much faster than a beginner who relies only on himself. Via this tool, a copy trader learns tips and strategies that are not easy to find. However, trading is a full-time job and it takes a lot of work to be in sync with the trends. Experienced and professional traders invest a lot of time in learning about the latest news, testing, and experimenting with different strategies. Even though copy trading allows people to observe the final results, all of the work behind the scenes is hidden. So, quality learning takes much more analyzing and researching than just watching the final results.

Copy trading helps to improve your portfolio quickly and make it more diverse.

Another advantage is that it is much cheaper than working with a personal adviser.

What are the risks of copy trading?

One of the biggest risks is the amount of trust and control you give to someone else and to software. Letting someone else be responsible for your assets and a trading account can be tough. That is why research is always helpful.

Another risk is making a wrong decision. If the decision is not backed by good reasons and research, it might end up losing the assets. This risk is bigger for absolute beginners that haven’t done any investigation. It is easier for them to get confused by the many options for traders and platforms.

When it comes to software, there is always a risk of failure. In order to avoid such outcomes, it is always good to monitor the trading process and, when necessary, exit the positions or make manual decisions to protect the funds.

Even though copy trading is educational, the hard work behind the result is not visible and not accessible. What is public are the results, so it takes personal effort to dive deeper.

When trusting and copying another strategy, we automatically copy the results. It is not possible to achieve more or less when copying – if the trading strategy succeeds, the copied trader succeeds as well. But the same goes for failing.

Conclusion

Copy trading is one of the significant tools of the crypto industry. It has many advantages and could be beneficial for almost everyone. Before proceeding with it, everyone should do at least basic research about the traders, their strategies and attitudes, software, and markets. Choosing the right trader and software are the most important aspects, but knowing all other metrics of the process could make a significant difference in the final result. Copy trading could be very profitable if it is supported by deep research, the right decisions, regular check-ups, and constant learning. Moreover, it could make any beginner a successful crypto trader.

Author: Kristina Micheva, Gate.io Community Manager, Researcher

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