Before You Copy Trade
Thanks to the latest development in technology, people with little or no knowledge can trade cryptocurrency using copy trading platforms. Copytrading just like the name implies is the act of emulating expert traders and today 8 out of 10 newbies turn to copy trading for help.amd while copytrading might seem profitable to most newbies here are Pros and Cons of the copytrading world you should know about.
On the good side, it is a very convenient way to understand different tactics or positions as a newbie. Some of these tactics are not quite popular and by following expert traders you would probably be exposed to how and when they are used in trading. The experts practically do all the hard work of studying and predicting movements in the market and all you have to do is copy the trades to make profits. This favors most newbies with very busy schedule or those who are probably still skeptical about fully commiting to trading especially in cryptocurrency.
Secondly you would be able to cut down on losses. Unlike a newbie who is trying to learn the ropes alone, copytrading could help you cut down on losses. That way you would be able to maximize profit even as a beginner. Some platforms also offer demo accounts which could help you save money until you are ready to test the waters with real money. You wouldn't be risking any capital and when you do get familiar enough you could start trading.
Another interesting benefit of copytrading is the ability to control losses. Some of these platforms have automated and manual modes that allow you place and decide transactions quickly and easily. This could help you pull out or join in on a trade when you want to. They also have features that allow you analyze a traders performance so you can determine what trader you would like to copy or switch to a different trader if your current one isnt profitable enough.
On the negative side copytrading isn't all that convenient or rosy. Incase you have forgotten, these trading experts are also humans and so they are bound to make mistakes. Should they make mistakes in their trading, you both would suffer losses no matter how much you have invested. While they can easily recover, you might find it more difficult because you might not be as wealthy as they are.
Secondly you have to pay commissions and transaction fees. Copytrading on these platforms attract fees that must be paid to both the trader and the copytrading platform even if you aren't making profit. This means your profit might seem like peanuts after paying all the necessary fees and commissions. Copytrading can also make you totally dependent and unable to make trading decisions by yourself, which means without an expert trader you are no different from the common man.
Bottom line, copy trading is just like a coin and to embrace it is to embrace both it's good and bad sides.