Social trading is a specific approach to investment characterized by one following experts with a good history of market deals to repeat their activities.
Contemporary crypto copy trading takes this concept to the next level through the special feature at WunderTrading, one of the best providers of automation solutions in the industry.
People interested in various types of community-driven investing will be more than happy to explore what this automation vendor has to offer.
What is Crypto Copy Trading?
The crypto industry is unbelievably complex with thousands of different financial instruments to work with. Newcomers struggle to grasp a myriad of foreign concepts like decentralized finance, decentralized apps, non-fungible tokens, and more. It is a great lure for tech geeks, but it is still something utterly confusing and overwhelming for newbies.
The entry point into the industry can be quite high due to the necessity to learn so much before attempting to make sound financial decisions. However, you may choose a different path that does not require the same level of dedication and has a much more forgiving learning curve. A copy trading crypto strategy is often the right choice for beginners.
Experts with advanced knowledge and immense experience in the crypto industry often offer valuable advice and may write extensive articles, but people without any prior exposure to blockchain technology and decentralization, in general, may not even understand why certain projects appear promising to analysts. It is much easier to simply follow those who have better expertise in the field.
Repeating their actions is the essence of all copy trading services that aim to automate this process making it more accessible and cheaper. These products are often showcased in catalogs of automation providers such as WunderTrading. Alongside DCA buying, GRID bots, interexchange arbitrage, and other products that allow retail traders to remove the human factor from the equation, one may find a plethora of social trading components.
How to Start Copy Trading?
There are two essential components to any social trading feature:
- You need a list of experts to follow. Note that traders usually work with a specific exchange because of their geographical location, personal preferences, or other factors. You will have to work on the same platform to ensure that you achieve similar results.
- You need an automation platform. WunderTrading offers its customers a wide range of products including social trading. It is already integrated with multiple exchanges like Binance, KuCoin, Kraken, and others meaning that you will have an easier time selecting people to follow.
Go to the WunderTrading website and create a new profile. Upon completion, the platform will immediately ask you to connect an existing account on a CEX service. You can choose from a long list of different types of accounts on available exchanges. Margin accounts for derivatives and standard for P2P.
Next, go to the “MarketPlace” in the dashboard to check out featured retail traders, managers, successful bots, and trading signal generators. You may choose any of them to follow. Note that some of the featured experts charge for their knowledge. Paying up to $70 per month can be a big deal for users with small portfolios.
After clicking “follow” next to chosen traders and bots, you will be able to manage them in the corresponding section of the dashboard. Note that you may tinker with settings to dedicate only certain portions of your portfolio to social trading. Carefully adjusting various parameters based on your personal experience is the best way to manage risks and ensure that you stay profitable in the long run.
How Profitable is Copy Trading?
The money-making potential of any investment instrument depends on a variety of factors. However, copy trading is slightly different in terms of risk assessment with the number of factors reduced to only two:
- The cost of trading on an exchange. Many CEX platforms charge commissions for transactions, certain market operations, leverage, and other services. Make sure to account for these expenses when following someone who uses corresponding instruments frequently.
- The true performance of a manager. When choosing who to follow, you need to look carefully at their investment history. A person achieving a sizeable 700% increase during the last month may have lost 90% of their portfolio in a span of a year. Make sure to take into consideration the whole picture.
WunderTrading is possibly the best crypto copy trading platform because it provides detailed information about traders in its marketplace. You may go through several filters to browse only experts working on a specific platform and using specific instruments. The default investment history period displayed on the marketplace is one month, but you can check out the all-time record.
Do not think that the prior success translates into the future. People who earned millions during the last month may lose millions in the next one. Nonetheless, choosing people who understand the market and perform consistently is a good idea and may bring you significant returns. Expecting the same 700% growth as showcased by experts is not a wise strategy.
Tame your expectations and take into account the current market situation. Smart dealers make money even during bearish trends, but it is much harder for average traders to perform consistently when prices are volatile. Calculating potential profits is close to impossible in short term but can be done in the long run. Each case is individual.
Choose Your Providers Wisely
The biggest factor that defines the long-term success of your investment efforts is the quality of the service provided by the vendors that you choose. A good crypto copy trading app from a reliable source like WunderTrading will work as intended, won’t have any technical issues, and deliver results consistently.
Another crucial component of the equation is choosing the right exchange. Some crypto exchanges are better than others in terms of trading conditions, but you may still consider joining a platform that boasts a better track record, good reviews from users, and a well-performing management team.