We have various forms of trading that can be less risky and highly risky as well. Many have conditioned their minds into thinking that all forms of trading is risky but the truth is that not all forms of trading are risky. Even the ones that are risky are more profitable if traded well with good strategies. One of such trade that can be less risky is the copy trading. As the name implies, it means to copy someone's trade but there's more to this other than just copying trades.
Copy trading is a form of trading strategy where traders copy the trades made by those who are much more experienced in the system and are successful traders. This method allows traders that are just new in the crypto space or are novice to trading strategies that may actually be of good profit to them.
It also provides those who lack time to actively manage their investments so as to benefit from expertise. This copy trading is done by linking one's account to that of an expert trader. When they buy or sell crypto assets, the same transactions are done in your own account.
This form of trading is more or less compared to that of following an investor that id skilled. Whatever they do with their money, your money does the same thing making investments in financial markets accessible. It's widely known as a digital skill as the case may be because it's very much profitable.
How does this copy trading work and how is this represented pictorially?.....Any participating in a copy trade must choose a trader to copy his or her trades from.
- **Selecting a trader to copy from:** Before participating in a copy trade, you must select a trader who's an expertise and one you want to copy trade from. Platforms like binance provides you with traders you can copy trades from and the platform also provide details about each trader including their trading style, risk level, rating and past performance. These information will allow you make informed decisions on which trader to copy from.
It's more p2p where you get to select a buyer or seller to transact with. You must select a trader which a good use case, a good completion rate and the likes. After selecting the trader you want to trade with, you link your account with this expertise.
This linkage of connection ensures that any trade the trader you choose makes, it would be executed in your account as well. It's more like a less risky trading game or pattern. After linkage, it's automated and that's the beauty of this copy trading. Unlike futures trading where you'll be watching the market constantly if you're doing scalping, you don't need to monitor the market. The system handles it for you more like a trading bot.
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You have full control over your investment and can decide how much money you want to dedicate for the trade before execution by the expertise. You can choose to use the **Dollars Cost Averaging to spread your income with multiple traders.**
There are two key participants in this copy trading which includes the traders and followers. The traders are expertise who posts their trades in various social media platforms and their information to be copied by their followers which in turn are the ones who copy these trades so that whenever it's executed on their end, the followers will benefit.
They get their own benefits from the performance fees of their followers and also get any gain they generated. In as much as this form of trading is less risky, it can be very risky sometimes depending on certain factors out together.
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One of such factor is in selecting the expertise traders. The success of every trade solely depend on this as they themselves are are dependent on these traders which can be risky because even the most experienced traders sometimes have a bad day of trade.
In summary, copy trading is actually a good form of trade which can be used by traders who lack time to be monitoring the markets for any trades placed. They get to benefit from the trades of these expertise whose trades the copy and use whatever amount of money in setting it up.
> **Disclaimer** :Any financial and crypto market information provided in this post was written for informational purposes only and does not constitute 100% investment advice. It's just basic knowledge every crypto trader or investor should have
**_All screenshots from my binance account_**
