Copy trading strategy
Somebody might think that when one duplicates deals of other traders in an automated mode, you don’t need to work on your own plan. This isn’t completely true. A well-thought-out copy trading strategy increases the general chances to find a trusted trader and clone him effectively.
The Covesting copy trading module has all the functional features to help users succeed in copy trading. However, you will fail if you take decisions without a structured plan. Here is everything you need to know about successful copy trading strategies.
Key Points of Successful Copying
When working on your copy trading strategy, take keep in mind these points to ensure the plan will succeed:
- You need to have a bit of knowledge about what you are going to enter. Even though this is an automatic approach, you need some basic knowledge of how markets and financial assets work. Understanding these aspects will help you to find a good trader.
- Work on reliable software. Covesting is the best copy trading module one could even think of. It displays a lot of active traders and offers to use a very advanced filtering system. Also, you can benefit from staking the COV utility token on the yielding account.
- Before you start copying trades, find out how signals and indicators work. With this specific knowledge, you will be able to explore other means of making money automatically.
- Last but not least, you need to have strong analytical skills. Earnings won’t come to your account if you don’t find a good signal provider to duplicate from. To pick up the best one, you need to analyze all the advantages and disadvantages of his strategy, see the historical performance, and examine other market and non-market aspects. All this requires strong analytical skills and this is what can make your copy trading strategy successful.
How to pick up the right trader?
Beginning buyers and sellers are recommended to follow swing traders. This is because it is considered one of the simplest styles to learn for beginners, even if they are busy at their jobs. If you find a good trader who uses swing trading strategies, you will also learn how to use such tools as daily and weekly charts and how to conduct efficient fundamental and technical analyses.
Which copy-trading strategy is good for beginners?
Except for the background performance and assets, it’s also necessary to learn about some other aspects before you start. Here are some basic recommendations:
- Not all good buyers are successful all the time. We suggest that it’s vital for you to analyze which results a particular participant shows during certain periods. It’s quite possible that even an overly successful trader might come through a harsh time at the moment.
- Never neglect the risks. Being connected to others’ accounts involves a lot of risks, and you need to learn how to deal with them. If you find a good trader to follow, analyze whether his strategy involves using risk management tools. If not, although being successful in general, it might lead to some severe losses your budget cannot afford.
- Don’t look for ultimate perfection. Let’s be straight – every strategy suffers drop-downs from time to time. Search for users whose earnings prevail over losses, and don’t look for 100% success. Trust participants with good reputations and normal earnings.
- Follow traders with more stable plans. You might be allured by the enormous earnings of some traders. However, keep in mind, that, as a rule, huge earnings are followed by impressive drop-downs. Investigate the trading history of active signal providers and choose those who show stable performance in terms of the earnings-to-losses ratio.
- Don’t connect to accounts that have too many open positions. If you see such a trader, this might mean that the plan is generally inefficient and a trader tries to cover this by opening multiple positions at the same time.
Which copy-trading strategy is good for pro?
Professionals need to duplicate other professionals. Scalping is widely regarded as one of the most efficient strategies for advanced buyers. A copy trader doesn’t need to do anything serious but a signal provider needs to be constantly involved in the process and make trades every several minutes or even seconds – once a deal becomes profitable.
Copy-trading vs social trading vs mirror trading
|
Automated |
Copy from algorithms |
Involves sharing research |
Time-consuming |
Can learn from others |
| Copy trading |
Yes |
No |
No |
No |
Yes |
| Social trading |
No |
No |
Yes |
Yes |
Yes |
| Mirror trading |
Yes |
Yes |
No |
No |
No |
Whatever trading style you choose, bear in mind that it won’t help you to succeed if you don’t have a well-structured strategy. Copy trading is no exception. Use our tips for beginners and rely on advanced tools of the Covesting copy trading module to duplicate deals of more professional fellows successfully.
It depends on the trader you decide to follow, his style, tradable assets, and the overall situation in the market. In general, copy trading can be the same money-bringing as regular trading but you need to pay a commission.
As with any other approach, copy trading involves risks. However, you are free to follow any trader you trust. So, you can find a trader with a risk-free strategy to minimize the downsides of the market and potential losses.
Scalping is considered one of the most frequently applied styles. Scalping involves earning from small but multiple trades that are executed within seconds or minutes. This strategy requires strong skills and attention.
If you are a beginner, the easiest strategy you can utilize is following the current trend. This strategy involves fewer investigations than the others.
