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The CopyTrading is a technique that is based on simulating (copying) the way another trader operates, that is, go opening and closing positions as someone else does. Currently there are platforms that specialize in this area, allowing you, not only to make a copy of a trader’s portfolio, but to make automatic live operations , as made by the investor you are copying to.
In this article, we will show you everything you need to know about CopyTrading with bitcoin and cryptocurrencies, along with some of the best platforms that allow you to use it.
What is CopyTrading
Copy or be copied, this is the basic concept of CopyTrading . A form of collective trading in which portfolios or investment strategies are public and can be emulated by other traders. This technique has been around since the stock market was created. It is not something new. However, at the beginning, manual operations were carried out, that is, you had to create one by one the operations of the trader you copied. At present, with the boom of the Internet, the CopyTrading was evolving until having platforms that allow you to copy live each movement .
Of course, you too can become a celebrity in the world of CopyTrading , and be the one copied . Fame is generally earned based on how profitable your portfolio is. Also, some platforms pay you just for having a number of active “ copiers ”.
Types of CopyTrading
Within the CopyTrading there are two variants. The first is handled as if you were hiring portfolio managers. All movements are copied as a single set. The portfolio of the trader you are copying to is considered an asset. This means that the profits or losses of the copy, depend on the profitability of the trader’s total portfolio from the moment we decide to copy. In other words, individual positions are not copied.
The other variant is through external platforms that link to exchanges and copy the positions that a trader places one by one. This allows more autonomy over a copied portfolio, since you can close or open positions individually , that is, modify internal positions of the copy, which in the first type is not possible. Thus, the overall return of the copy is the sum of the individual returns of each position.
CopyTrading and SocialTrading Are they the same?
Both concepts go hand in hand. We have already defined what CopyTrading is; the SocialTrading is sharing information about a market with a group that shares interests . It may well be a Facebook group, Telegram, or even exclusive platforms for this: trading social networks. Trade is conducted on the sidelines; each individual will decide, based on what has been learned within a group, whether or not to open a position.
At SocialTrading there is a collective learning, but the choice to trade or copy the analysis of another user is individual. Instead, the CopyTrading , you can take the knowledge base generated in a group of SocialTrading and apply it by copying the strategies shared in said group. So the SocialTrading exists without the need for the CopyTrading , but the latter is a branch of the former. This can be seen in that, by doing CopyTrading , you can understand or not what each of the positions that the trader has in his portfolio means, since your interest only is projected towards the profitability that this merchant generates.
One of the platforms of SocialTrading the most famous is TradingView, in it you can do market analysis and share them with the community. You can even develop custom indicators, since TradingView has its own programming language, and share them with all users.
In contrast, there are hybrid platforms that combine these two concepts very well, such as is eToro. This trading platform allows you to do social trading thanks to the fact that its operation is basically through the social network structure. There you can share analysis, opinions, positions, even your complete investment portfolio. Within this network, it is possible to follow your favorite trader, as if it were Twitter, and copy it if you wish.
Is CopyTrading profitable?
First of all, profitability is subjective. This varies depending on the trader you copy from. So the point is how to calculate profitability?
The first thing to keep in mind is that profitability is calculated from the moment you start to copy. Also, it will vary depending on the variant of CopyTrading you use; be handled as an asset or individual.
For example: you have decided to copy a trader who has 3 open positions that, before starting to copy, offer a total return of 20%. The platform you are using allows you to use CopyTrading handling it as an asset. Now, if two of these three positions present losses of 10% each, but the third one has a profit of 20%, all this after starting to copy, your global profitability will be 0%, since the general portfolio does not present profits .
For the variant case with individual positions, things change a bit. First of all, you can modify the positions, close or open them according to your convenience. If you do not modify anything at all, profitability can be calculated globally .
Now, something important with Regarding profitability: imagine that a trader you are copying has opened a BTC buy position at 20,000 USD. But, at the time of copying, said price is over 25,000 USD. If you decide to copy, you will open a buy position at this price. If there is a market reversal, suppose that BTC returns to USD 22,000, the trader you copy can close his position and have a profit of approximately 10%, since he originally bought at USD 20,000. On the other hand, when you are copying, you will automatically close your position with a loss of more than 10%. This means that the trader you copy will present profits, but in your personal copy you will have losses.
To mitigate this a bit, some platforms offer the option to copy positions only after copying has started . That is, you will not open positions in which the trader was previously, only future movements.
Advantages of CopyTrading
One of the main advantages, which perhaps goes hand in hand with a very hackneyed phrase, is “learn from the experts” . Doing CopyTrading allows you to know how a professional trader moves in the world of trading with bitcoin and cryptocurrencies, emulating each position. Along with this, if you want to take advantage of it, there are platforms that offer you a demo account with play money, but that operates in the real market. This will allow you to place orders from CopyTrading to real traders, with real profitability, as well as being able to see their portfolio and the way they manage it.
Another advantage is portfolio diversification. This strategy, depending on the variant you choose, allows you to have another way to generate passive income. Of course, remember that it is not just betting money on a trader that shows profitability (which is calculated from the moment you decide to copy, and may suffer fluctuations), but, there must be an analysis of said profitability, and assume all the considerations and risks before opening a position of CopyTrading .
On the other hand, an advantage that comes hand in hand with CopyTrading is to become the trader who is copied. Some platforms offer you dividends just for having followers who copy your portfolio. To do this, you must have a good reputation and profitability that allows you to generate greater visibility and in turn get more investors (copiers).
Risks of CopyTrading
As well described in the profitability section of CopyTrading , it can be a double-edged knife. The risk of copying comes from how the positions are opened . Since we are copying the trader’s portfolio, all the positions that are open will become part of our copy, but with the difference that the opening prices of each position will not be the same.
Another important point is time. For example: a trader you follow may not trade daily or do scalping , as it is known in trading slang. This means that he can open a position, and wait up to years to close and make a profit. So, the profitability that you expect in a period of time, may not be on par with the waiting time that the trader you are copying handles.
Best platforms to do CopyTrading
- Type of CopyTrading : Integrated, it has its own trading social network where you can follow and copy other t raders.
- Available countries : Available in much of the world, with exceptions for speaking countries Hispanic, such as Venezuela, Cuba, El Salvador, Honduras and Nicaragua. You can see the full list here.
- Commissions : There is no specific commission for the CopyTrading . There are commissions for withdrawals which are USD 5 for each operation.
- Do you trade cryptocurrencies? : Yes, although it should be noted that it is operated with CFD or contract for price difference. You cannot deposit or withdraw cryptocurrencies on eToro.
- Type of CopyTrading : Integrated. It is not copied directly, as it is deposited to a strategy manager.
- Available countries : In more than 150, with exceptions for some US states
- Demo account : Do not.
- Do you trade cryptocurrencies? : Yes. Investment deposits on the CopyTrading platform are exclusively in BTC.
- Type of CopyTrading : External. It has its own internal trading social network to follow traders, but it connects with brokers where traders trade and copy positions.
- Available countries : In more than 190. There is no type of restriction for Spanish-speaking countries.
- Demo account : Yes.
- Commissions: There are no registration fees, although each trader you follow can set a commission that is deducted from the profits generated.
- Do you operate with cryptocurrencies? : Yes. But it depends on the broker ker to which you connect from the platform.
- CopyTrading Type : External, works only with cryptocurrency exchanges such as Binance, Bitmex, VCCE and KuCoin.
- Available countries : There is no type of restriction for Spanish-speaking countries.
- Demo account : Yes.
- Commissions : None.
- Minimum amounts to deposit and withdraw : For deposits, a minimum amount of 50 USD is established for US residents and $ 200 for the rest of the world. For withdrawals, the minimum amount is 30 USD. There are no maximum amounts to withdraw or deposit.
eToro is perhaps one of the most famous platforms in this field of CopyTrading , since its operation is based on a social trading network, very similar to Facebook. In it, traders have groups and profile walls , in which they share ideas, studies or comments about a specific market.
Unfortunately eToro does not allow deposits and withdrawals in cryptocurrency, with the exception of a couple of regions (UK and Europe), but it is possible to find traders dedicated to trading only in the cryptocurrency market. This means that your portfolio will be clearly with positions in crypto assets.
To learn more about this platform, we invite you to review this review about eToro and all the features it offers.
Sign up for eToro here
- Commissions : Establishes two commissions for the profitability generated in CopyTrading , which depend on the amount deposited in a copy. The commission for the lowest amount is 20% for the platform and the other 20% for the trader.
- Minimum amounts to deposit and withdraw : Only trade with BTC to deposit and withdraw. There is no minimum amount for deposits. For withdrawals, the amount must be greater than the transfer fee of 0.0005 BTC.
The platform that PrimeXBT offers the Convesting module to perform CopyTrading . In this you can see a list of traders to copy. Although the “Copy” here is indirect, is more like a portfolio manager . You give them a subscription, in this case in BTC, and they will return dividends if they generate profits, which are around 60% to 75% of the total value generated.
Within the Convesting module, PrimeXBT CopyTrading is handled under the name of strategy. Each administrator creates a trading strategy and publishes it. Initially, it will operate only with your money, with 0.05 BTC being the minimum amount necessary to start. Once the administrator generates good profitability, he will climb the classification table , this will allow him to gain visibility and in turn investment from other users. All trading operations are within the PrimeXBT trading market.
You can learn more about PrimeXBT in the following review.
Sign up on PrimeXBT here
- Minimum amounts to deposit and withdraw : The platform does not accept deposits, since it only manages the orders copied in the selected broker.
ZuluTrade is a platform from CopyTrading that links to a broker of your choice to allow you to copy a trader’s orders. Within the platform you will have a list of registered traders, where you can see information regarding their profitability statistics and the broker in which they operate. The latter, makes it necessary to register both in ZuluTrade and in the broker to operate.
This platform is not exclusive for cryptocurrencies , but it does allow filtering the list of traders to be copied that are dedicated only to this item. Likewise, the power to operate with cryptocurrencies will not depend on ZuluTrade but on the broker you connect to.
Sign up for ZuluTrade here Zygnaly
- Do you trade with cryptocurrencies? : Yes. It connects only with cryptocurrency exchanges.
- Minimum amounts to deposit and withdraw : The platform does not accept deposits, since it is only responsible for managing the orders copied to the selected exchange.
Zygnaly allows you to manage live direct orders within 4 different exchanges, working exclusively with cryptocurrencies and their derivatives . Within the platform it has a catalog of traders, in which you can find their statistics and individual profitability.
The interesting thing about this type of platform is that, if you already have experience in the world of trading, you can modify the orders that are placed from a copy, since Zygnaly only connects to fix the positions placed by the trader you copy. Each order will be found within the selected exchange, and you manage manually if you want to maintain or close a position.
Sign up for Zignaly here
The post The best platforms to do CopyTrading with Bitcoin and cryptocurrencies (2021) appeared first on World Weekly News.