April 24, 2023

Copy Trading: A Definitive Guide for Beginners

The world of cryptocurrency is known for its innovative and revolutionary technology that has already taken multiple sectors by storm, such as banking, real estate, advertising, and even social media.

In just a few short years, it has even begun to completely transform sectors that the majority never imagined it could, such as the financial sector and more particularly, the trading niche. What was years ago looked at as pure speculation has become a thriving ecosystem that many thousands have utilized to become financially independent and even make entire careers out of.

Cryptocurrency trading is unlike any other market as not only is the driving technology behind it unique, but other features like the fact that is always open, can and is traded by individuals globally at all times of the day, and doesn’t have settlement days, are just a few reasons why traders from all industries have taken interest in it.

However, one common benefit that is largely overlooked about cryptocurrency trading is the versatile tools and easy-to-enter platform it offers to those from various backgrounds in the realm of trading, from the most advanced to those with little or absolutely no trading experience at all.

This article will dive into the world of copy trading and reveal why it could be the very thing you need to take your crypto portfolio-building journey to the next level.

What is copy trading?

Copy trading is the process of mimicking the actions of another trader or bot, usually one who is either a professional or, at the very least, has significant experience and, most importantly, a track record of success in trading.

Unlike the outdated and traditional form of having to study trader’s habits, techniques, and dozens of strategies and then manually trying to implement them, the entire process has been automated in the cryptocurrency industry to where one can now earn while they learn from the same professionals and become copy experts themselves.

Although it relies on the methods and strategies the underlying trader uses, copy trading can still be considered a strategy or alternative form of trading itself. Also, since many copy traders automate their strategy to run 24/7, you could have the opportunity to profit day and night if you select the right people ( to follow.

Imagine being able to trade step by step with the most successful traders or algorithms in the world, the same ones that either trade with big investment firms, or, the same technology those firms use.

There is no one size fits for copy-trading users, and that’s precisely one of the main reasons why it has become so appealing over the years.

How does copy trading work?

Platforms such as Cornix make copy trading possible in various ways, such as providing trading signals to copy via other platforms and through copy trading bots.

For bots that automate the famous Dollar Cost Average method, or DCA, Cornix has a section under “public bots” that publishes automated DCA bots created by other users. This section allows other traders to browse the “catalog” so to speak, of available DCA bots, which also displays their performance.

The traders who publish such bots to be copied are anonymous, however their performance (the most important factor) speaks as their reputation. These bots come in many different pairs and trade on various platforms.

A “signal” can be viewed as a trade call out, or when one trader tells a group of people about a detailed trade on a specific position, including an entry and exit price. 

For the third-party platform signal copy features, Cornix works with other programs such as Telegram. Since it’s common to find many traders using such platforms, Cornix made it possible to copy signals from them. Similarly to the section where one can browse to copy bots from, Cornix also has the same feature for signals to copy from. Cornix displays supported signals that you can either manually choose to use by pressing the follow feature, or automating it by enabling auto trading

At any time the user can pause or even end the automated copy trading experience. As with any financial investment, risk management should be the primary focus which this feature of being able to pause or stop copy trading supports.

The benefits and risks of copy trading

The benefits of copy trading are immense. From offering the opportunity to diversify one’s trading strategy by leveraging the wisdom, knowledge, and experience of other successful traders, to automating their trading and unlocking the potential of making money throughout all hours of the day.

As previously stated, copy trading can be an excellent stepping stone for those with limited, or even no trading experience at all. Everyone has their preference in learning methods, and for those who are more hands-on or at least visual learners, copy trading could be the solution to their trading journey.

If done correctly, one could treat copy trading as a live course, in the sense that they could follow the trades as they are happening and begin to learn the reasoning behind certain executions. Over time, this could lead to a deeper understanding of technical analysis, indicators, trading in different market conditions, and overall, how to become a successful trader.

It is not uncommon to see users copying multiple traders at the chance to further diversify their method of investing.

There are indeed risks involved with copy trading – as there are with any investment means. For one, keep in mind that no trader is perfect regardless of how many winning trades they have, or how long they have been perfecting their craft.

The goal for any successful trader is not to win massive home run trades daily, instead, it is to win small trades consistently, and if a trade does not go in their favor, to lose the very least amount of capital possible.

You also shouldn’t get in the mindset that since the process is automated and can trade for you 24/7 that you don’t need to monitor, even if that means checking on it multiple times a day for a few minutes each time.

Traders may start, stop or even change their strategy mid automation which may perhaps require some input on your end.

Proper housekeeping is a staple to help mitigate risk as much as possible.

What a copy trader should know

Copy trading is a tool, and like every other tool in the world, it can be used to benefit us if used effectively. If used incorrectly, well, efficiency will surely diminish which increases your likelihood of missing out on profits.

Practicing proper risk management is important, but practicing proper capital or bankroll management may be even more important as you can only lose what you expose to the markets.

For instance, a common industry suggestion that has been a standard for quite some time is to not place more than 1% of your entire trading bankroll into any one trade – the same may be a great suggestion when it comes to copy trading, especially if you are newer to the craft.

Instead, you may find more success in copying the trades of multiple traders with a similar, or even a smaller amount of capital allocated to each trader followed. Trading should be viewed as a journey with a long path and no shortcuts – and you should get into the habit of treating it as such even with more risk-averse methods such as copy trading.

Another thing to consider is that every trader is different and has their style and preference for trading. Cornix understands this, and we have created our copy trading section of our platform with this in mind. We offer a diverse range signals to copy steeming from expert copy traders with diverse backgrounds, experience, and trading strategies. By providing such a wide variety of traders and options to choose from, we hope to connect traders with their “perfect” match of experts to copy from. 

Keep in mind that market conditions do change, and sometimes that can happen more frequently depending on the greater markets and economies. It’s also another reason why monitoring your bot, even after you have found the “perfect” trader to follow Is vital to your success.

Best strategies to follow for crypto copy traders

There are no right and wrong strategies, except for those that don’t return profits, which usually comes from a lack of experience, or trying to chase / rush trades.

It can be enticing to start clicking around and copying the traders you first come across, but again, due diligence is necessary to achieve longevity in this sector.

Comparing the performance of traders or bots to copy, historically and in the present time, will increase your chances of obtaining profits, especially as you continue growing in knowledge and experience.

Finding your preference as a trader can help you a lot, which may not be feasible at first, but just know that persistence pays off.

There are many bots you can copy trade-offs of such as DCA (dollar cost average), ones that trade using specific indicators – some single and some multiple.

If you are not aware of the different indicators and methods of trading, you may want to track those bots for a set duration and then once you feel as though you have a firm grasp of them, then move forward to the next steps of funding the trade.

Always have a plan set for each trade before entering it.

The Biggest Takeaways

Copy trading has revolutionized the world of trading and with time, it will only continue to improve both in functionality, and the results it produces for those who are willing to learn how to leverage it as a resource.

It is here to stay, and although Its underlying functionalities are very technical, learning how to utilize the method itself effectively is not.

There will indeed be a learning curve for you to overcome, so do not get discouraged, and while you should always be mindful of how much capital you deploy at any stage of your trading journey, the beginning is perhaps the most important as it will set the tone for the journey ahead.

Try not to just jump into any one trade without taking your time to at least understand the very basics of it, such as if it is long (bullish) or short (bearish) on the market.

Do not be afraid to reach out for help! At Cornix, we not only offer support, but we highly encourage all of our users to leverage it when needed -that’s what we’re here for!