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Copy trading allows you to copy experienced traders portfolios in real-time. After determining your investment amount, the system will automatically copy trades from the favourite traders you follow.

Copy trading can be useful for traders who don’t have the time to follow the markets themselves.

This gives cryptocurrency novices an insight into the expertise of potentially more proven traders without necessarily having to analyse markets or develop their own strategies from scratch. Copy trading has grown in popularity, as it offers a hands-off way for people new to the world of cryptocurrency to benefit from potentially successful trading strategies.

Advantages of copy trading

• Accessibility. Copy trading requires no prior knowledge about trading, making it great for novice traders.
• Access to another trader's expertise. Copy trading allows you to benefit from the expertise and knowledge of someone with more market experience than you.
• Diversification of portfolio. With a wide range of traders providing signals for copy trading, you can gain access to many markets and trading styles. It makes copy trading useful even if you are a seasoned trader, as it allows you to access markets you have less or no knowledge of.
• Copy trading helps you to free up time. As copy trading can be completely automated, you can participate even if you have a day job. Or you can use your free time to learn more about markets. You can also dedicate it to your hobbies or social life.
• It removes emotions from trading. It can be hard to avoid emotions when you are risking your own money, and emotions can lead to irrational and suboptimal trades. Copy trading removes this issue, as automated trading makes it impossible for your emotions to affect results.

Risks and disadvantages

However good copy trading can be, it also carries some disadvantages and risks you should be aware of. To limit risk, you need to diversify your portfolio (do not put all eggs in one basket), limit the amount of funds you allocate to any specific trader, and set up risk parameters on the platform according to your preferences if the copy trading platform allows it. Consider the following points before deciding whether you want to copy other traders:

• Less control. Copy trading (especially automated) removes control over your funds from your hands as you just blindly follow other traders.
• Market risk. Markets are hard to predict, and the trader who was winning yesterday can have a losing streak tomorrow. Remember that past performance does not indicate future performance.
• Liquidity risk. Sometimes, your trade cannot be executed at the same price point as the trade you are copying or at all. That can happen because of the delay between the original transaction and the copying transaction market conditions can change before your trade can be executed.