6 Keys to Successful Crypto Copy Trading with Covesting.
Copy trading has been popular for many years. In fact, a lot of forex and stock trading platforms today offer this option. Through this method, new traders have a better chance to gain profit through trading while learning about strategies and their applications in the market. So, what about copy trading for cryptocurrency? Among services that can help you in crypto copy trading, Covesting is one of the most well-known platform.
How Does Copy Trading Work?
As the name suggests, copy trading allows you to directly copy positions taken by other traders and connect a part of your portfolio with theirs . The main idea is to copy their current positions on the market and any action they take in the future (as long as you're still copying them). Keep in mind that it also means you will be doing whatever they're doing. If they open a new position, you will be opening a new position as well. If they close the position, it means you will too. Some traders prefer to follow strategy managers in the hope of gaining profit according to the other trader's skill. But it also opens the risk of loss if your strategy manager loses. However, that doesn't mean you don't have any control over the outcome. Most copy trading platform allows you the ability to close trades, open a new one, or moderate the overall outcome after you establish a connection. But not all platform allows this, so make sure your copy trading platform has this option.
Should You Try Crypto Copy Trading?
There are several reasons why copy trading become popular. The main reason is that it allows new traders to make money in the market despite their lack of experience . A lot of people see the crypto market as an easy way to gain a lot of fortune in a short time. But new traders understand that it's not easy to win the trade, so by following more professional traders, they will have a better chance to get their desired profit. Like any other type of trading, copy trading has some disadvantages to think about. It heavily involves graphs and statistics, and there is a risk of investing in the wrong people. So, it's very important to observe their strategy, how successful their trades are. It's also imperative to learn the risk management they exhibit and more.
See Also: Is Copy Trading Really Worth It? Let's Expose the Facts.
Trading With Covesting.
If that sounds intimidating, don't worry. Nowadays, there are a lot of copy trading tools to help you make money without having to navigate complicated settings and parameters in the provided platform. You can choose from a list of strategies provided by the tools to help you gain profit, such as Covesting. This copy trading module allows you to allocate capital and stop following to withdraw your profits. Covesting's specialty is the cryptocurrency market as it is developed by a team of industry professionals and is integrated into one of the most notable crypto derivatives exchanges, crypto copy trading platforms PrimeXBT.
See Also: The Complete Guide to Crypto Derivatives.
If you have any type of inquiries relating to where and ways to utilize
copy trade crypto, you can contact us at the web-page. These are some tips for successful crypto copy trading with Covesting.
1. Pick Performers Wisely.
Choosing which strategy manager to follow is the basic step of crypto copy trading. Most new traders will only prefer to copy professionals with higher profits. Why should you settle for 10% gain if you can have more than 100% gain, right? On paper, that sounds like a very reasonable strategy. What you don't know is that this method might be the quickest way to book a loss. You are being hasty and choosing the highest number available to you without considering the consequences. Keep in mind that traders, even professionals, lose trades from time to time. If any strategy manages to gain a huge profit in a short time, chances are the traders are taking on a huge amount of risk. Although it may bring you an enormous profit, this strategy might wipe out your capital just as quickly. That is why managing risk is very important in crypto copy trading. The key to sustainable trading is to manage losses properly so that you can protect your capital and keep trading. Covesting allows you to check strategy managers' performance based on various parameters in order to help you choose the most ideal manager. Take a look at this example below. At a glance, A's performance graph seems higher than B. This is probably the reason why A got more followers. But if you look closely, A suffers huge losses at some point, while B steadily increases. This shows that B has the ability to steadily grow a portfolio and avoid massive losses. This is what you want in a trade; not a big profit that comes once in a while, best crypto copy trade platform but steady profit keeps increasing while avoiding the risk .
See Also: What is PrimeXBT Covesting and How to Utilize It?
Besides looking at the charts, you should also check out the number of active days . A higher number of active days shows that the manager could perform consistently over a period of time. Meanwhile, a lower number of days means that strategy is still relatively untested and therefore has a higher risk.
2. High Manager Equity.
You can check your strategy manager's equity on a dedicated page. Through this feature, Covesting allows users to find out how much the manager's personal funds are being put at risk in the strategy. This serves as an indicator of how confident the manager is in their own trading skill. If they are not confident enough to put a significant amount of money into their own strategy, why should you risk your own?
The example above shows A's equity at $272.37, while B's equity is $6,389.20. A manager who has $300 (or below) of their own equity, can easily get themselves liquidated without having to put much risk on their part . Meanwhile, a manager with a capital of over $5,000 is far more likely to take great care in researching and managing their trades. That means B might have a more careful approach in managing their traders compared to A.
3. Check Margin Used.
Covesting lets you check the amount of margin used by each strategy manager going from 0% up to 100%. The graph helps you figure out how much risk the manager is taking with their trades. Lower numbers indicate more margin is being used, so there is a higher risk of liquidation . The higher the number, the less risky it is. For example, check out this picture below. Exhibit A is an example of a high-risk strategy. You can see the available margin dropped close to 0% several times, and it rarely reaches 50%. That means the manager uses their margin amount to its maximum capacity multiple times. Try to avoid this kind of strategy and treat them as high-risk traders. Meanwhile on exhibit B, although there are times where the manager uses margin for a bit, it never goes below 90%. This strategy has a lower risk and generally is a better choice for crypto copy trading.
See Also: Crypto Margin Trading in the US, Is It Possible?
4. Take Profit Regularly.
Another tip to determine your success in crypto copy trading is to take your profit regularly. Remember that as long as your position is still open, it is always at risk. Even when your strategy seems to bring you consistent profit, it doesn't eliminate the risk of massive losses. The reason is that the crypto market volatility is very high, you never know where the market is going. Strategy managers are human, and therefore prone to make mistakes as well. In order to manage that risk, sometimes it's best to stop following strategies for a while and secure profits regularly .
In some copy trading platforms, a withdrawal request may take several business days to process before you can get your money back.
