In the world of cryptocurrency trading, the idea of copying the trades of expert traders may sound appealing to beginners.
However, diving into trading without the proper knowledge and experience can be risky.
This is where copy trading comes in!
Copy trading allows traders to learn and adapt to the market by replicating the strategies of experienced traders on a trading platform.
What is Copy Trading?
Copy trading is a simple concept - it involves copying the trades of expert traders on a trading platform.
While there are various ways to execute trades, copy trading is particularly suitable for beginners who are looking to gain a better understanding of how trading works and the factors that influence the market.
Getting started with copy trading is relatively straightforward. It requires signing up for a copy trading platform and depositing the desired investment amount.
However, selecting the best copy trading platform can be challenging. One platform that stands out as beginner-friendly is CapitalXtend.
Copy Trading as a Provider
On CapitalXtend, traders can register as a provider by clicking on the "CopyTrading" tab under MyCapital.
This will redirect them to a user portal where they can click on "Register as a provider" to access the Provider registration page.
Here, traders can enter their trading account ID, password, and nickname, and then click on "Register" to complete the registration process.
Once registered as a provider, traders can update their personal information and general details on their Provider Profile page.
As a copy trading provider, traders can share their trading strategies with others and earn benefits when their trade ideas are used by followers.
Copy Trading as a Follower
On CapitalXtend, traders can also register as a follower by clicking on the "CopyTrading" tab under MyCapital.
Similar to becoming a provider, traders will be redirected to a user portal where they can click on "Register as a follower" to access the subscription registration page.
On the subscription registration page, traders can create a new subscription by entering their trading account ID, and password, and choosing a provider that suits their trading style.
They can also select the type of offer provided by the chosen provider.
After entering the required details, traders can click on "Register" to complete the registration process.
Once registered as a follower, traders can access their My Portfolio page, where they can view the providers they are following.
By clicking on a provider's name, traders can enter the provider's profile page and click "Activate" to start copy trading.
Copy trading allows followers to grow their passive income without the need to put effort into making trading strategies.
How Does Copy Trading Work?
Copy trading works by allowing traders to connect a portion of their investment portfolio with the portfolio of a selected trader.
When a trader chooses to copy another trader, all of the open trades made by the selected trader will automatically be copied to the follower's account.
In addition to copying open trades, all future trades made by the selected trader will also be automatically copied over to the follower's account.
Traders can choose how much money they want to allocate to a specific trader, usually not exceeding twenty per cent of their portfolio.
For example, let's say a trader has a balance of one thousand dollars in their account and decides to copy another trader's trades.
To start, the trader invests one hundred dollars, which is ten per cent of their total funds.
If the selected trader has one open position, that trade will be copied to the follower's account, with the amount invested proportional to the selected trader's portfolio.
The beauty of copy trading is its automation.
Traders don't need to perform any calculations or actively manage trades.
The system handles everything on its own, making it a convenient option for beginners and traders who are pressed for time.
Benefits of Copy Trading
Copy trading offers several benefits, making it an attractive option for both new traders and investors:
1. A Good Option for New Traders
For beginners in the trading market, finding a successful trading method can be challenging.
Copy trading provides a simple way to make money by following the trades of successful traders.
By replicating the trades of expert traders, beginners can start making profits immediately, without needing vast experience or knowledge of the market.
2. Low Risk
One of the biggest risks for new traders is losing money due to placing the wrong trades.
Copy trading reduces this risk by allowing traders to monitor and copy the activities of pro traders. By following successful traders, followers are less likely to lose money.
However, it is always recommended to research and read reviews of copy trading platforms before joining.
3. A Good Option for Investors Who Are Pressed for Time
Creating a profitable trading strategy takes time, research, and energy. Copy trading reduces the daily work involved in trading, allowing investors to make profits without spending too much time on it.
This makes copy trading an attractive option for investors who have limited time to dedicate to trading.
While copy trading offers numerous benefits, there are also some disadvantages to consider:
1. Traders Can't Make Choices on Their Own
Copy trading is based on automated trading, which means traders cannot make decisions on their own.
This lack of discretion can be a disadvantage if the market changes unexpectedly. Traders may not be able to react to market conditions or news in a timely manner.
2. Technology Dependent
Copy trading relies heavily on technology. Traders are completely dependent on the trading platform and the internet connection.
Technical issues such as internet connection cuts, network crashes, or computer/server problems can disrupt copy trading activities.
3. Difference in Pricing of Trades
Due to the delay between the original trade and the copy trade, market conditions can change, which may result in the follower's trade being executed at a different price or not executed at all.
This is more of a risk when trading assets that are hard to sell, such as exotic currency pairs or small-cap stocks.
To mitigate this risk, it is recommended to copy traders in popular markets where there is a high likelihood of finding buyers or sellers for the traded assets.
How to Choose the Best Trader?
When choosing a trader to copy, there are several factors to consider:
1. Observing the Trader's Total Return
Studying the return rate of a trader can help beginners identify traders with a higher probability of success. A trader with a return rate of 75 per cent or higher may be a good choice.
However, it is important to note that there is no guarantee of gaining a profit by copying a trader, as market conditions can change.
2. Checking Return Volatility
Volatility can provide insights into a trader's overall success.
Higher volatility in a trader's portfolio may indicate a riskier security. It is essential to consider volatility as an actual parameter when evaluating a trader's performance.
3. Return Percentage (30 Days)
Return percentage is the ratio of net return on investment to the cost of investment, expressed as a percentage. This metric provides a rough estimate of a trader's probability of success.
Copy Trading with CapitalXtend
CapitalXtend is a copy trading platform that offers a user-friendly interface for both beginners and experienced traders.
The platform provides a diverse range of copy trading options, allowing traders to easily access information about top traders, benefits, and the copy trading system.
Traders at CapitalXtend can benefit from features such as a maximum $300 deposit bonus, high leverage and margins for elevated trading positions, real-time and precise data, and a transparent and empowering trading environment.
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Conclusion
Copy trading is a valuable feature that has gained popularity among investors. It offers a simple way for beginners to get started in trading by replicating the trades of successful traders.
However, it is important to choose the best traders to copy and to understand the risks involved.
CapitalXtend is a reputable copy trading platform that provides a user-friendly experience for both providers and followers.
By joining CapitalXtend, traders can take advantage of the platform's features and start their copy trading journey with confidence.
Disclaimer: Trading cryptocurrencies involves risk, and it is important to conduct thorough research and seek professional advice before engaging in any trading activities.