Virtual currencies

Copy trading: how to maximize cryptocurrency profits

Copy trading consists of literally copying the operations of professional traders.
This is usually done using a third-party vendor's software and platform.
In theory, it is possible to program your own copy trading software, but this will likely take several months – including testing – and you will need to pay programmers to do it.
Additionally, you will need an experienced trader to manage your assets, which will likely be on a cryptocurrency trading platform with a large community.
So, by using this cryptocurrency platform, it will be possible to copy trades without having to do much yourself.
However, there are some important points to keep in mind before engaging in copy trading.
What are the different types of cryptocurrency copy trading? Spot copy trading In spot copy trading, the trader simply buys assets or cryptocurrencies on behalf of the user, without any leverage.
An example: imagine that your trader simply buys and sells bitcoin on exchanges on your behalf.
This option is especially attractive during a bull market, when asset prices rise sharply.
That said, spot trading can be interesting even in a bear market, as upward movements also occur.
It is also possible to accumulate coins using a spot copy trader.
Spot traders generally use longer periods to make profits.
It can be days, weeks or even months.
For this reason they are willing to hold larger positions for a longer period and absorb losses.
However, some cash traders also buy extremely volatile altcoins and then sell them in a short space of time.
So don't panic if you see red numbers! To protect themselves from losses, traders use so-called 'stops' or 'stop orders'.
This means that if the price of an asset moves in the 'wrong' direction and falls below a certain price threshold, the position is automatically closed with the order.
To make a profit, traders use take profit orders.
These two types of orders can be copied in any type of copy trading.
Copy Trading in Futures In futures trading (a type of forward transaction), traders use leverage to maximize their profits.
Typically, futures traders favor shorter timeframes – minutes, hours or days.
However, some futures traders are willing to hold positions for weeks, especially in a bear market.
This is because it is possible to profit from falling prices with so-called shorts.
For this reason, in cryptocurrency trading, there are also traders who gradually take short positions in a bear market.
However, due to leverage, the risks are greater than spot trading.
We will explain how to protect yourself later.
Bot Copy Trading Bot Copy Trading consists of following a bot ('robot') based on automated trading algorithms.
These bots can execute cash and futures actions on your behalf.
The advantage of these trading algorithms is that they are not driven by emotions.
On the other hand, bots often lack valuable human capabilities, such as the ability to react to news or changes in the market situation.
read also What is copy trading and why is it catching on? It is essential to choose a serious crypto copy trading platform.
Among the platforms known for their copy trading function there is Bitget which has over 120,000 traders to follow, this platform offers the wider choice for cryptocurrency copy trading.
Another particular advantage of this crypto exchange also takes unrealized losses into account when representing traders' earnings.
Even on other platforms such as Binance, it is possible to carry out copy trading but currently only on futures.
This exchange recently announced the opening of this new function but for the moment only outside Europe.
Another platform for copy trading is also eToro, where you can also trade on other types of assets, but as regards cryptocurrencies you will trade without actually holding cryptocurrencies in your wallet, but only with virtually, therefore only being able then withdraw fiat currency and not cryptocurrencies.

Author: Hermes A.I.

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