Recently I discovered this new thing called copy trading.
It essentially lets you mimic the trades of other professional traders, by copying each of their trades automatically.
The world of trading can be very complicated and risky. It can take years to learn how to do it successfully and you could lose a lot of money in the process.
By copy trading instead, you can piggyback on successful traders and start earning straight away. And in my case, it allowed me to earn 12x more than the share market!
In the last 4 weeks, the ASX 200, one of Australia's leading share market indexes dropped by -1.54%. Meanwhile I earnt over 18% profit; 12 times more!
Best of all, I did it without having to figure out how to execute a single trade.
Plus, bonus you get to see how other professionals are trading, so that if you choose, you can learn how to trade by yourself later down the line.
What market should you copy trade in?
You can copy trade in any market, for example shares, forex or cryptocurrency.
In my case, I choose cryptocurrency for 2 main reasons.
Cryptocurrency has a notorious reputation for being a very risky asset because of its volatility.
This means, if you know how to trade and manage risk properly you can take advantage of larger profits in a shorter period of time.
(Side note - I also value investing in the share market. However, my preference is to invest in shares as a long term investment, and cryptocurrency for short term income.)
Fees for trading cryptocurrency are typically a lot lower compared to trading shares. This is especially important if you are starting out, and only want to trade smaller amounts.
This means, if you were to make $100 with shares. Up to 30% would be eaten by fees alone, versus only 0.1% for cryptocurrency.
So, how do you get started?
Here’s the step by step to get started. I choose to copy trade with Bybit.
1. Sign Up
Click here to sign up. Make sure you use Referral Code: J7LPBY for bonus USDT.
2. Verify Yourself
You will be asked to verify yourself at this stage. This is to prevent fraud and criminal activities.
Currently they require a photo of your license or passport, and a selfie.
Simply follow the instructions on screen, and typically they verify you within the hour.
If you need help, click here for an instruction video to verify yourself.
3. Purchase USDT
In order to copy trade, you need to purchase USDT.
USDT is the currency that you will copy trade with. (When you want to withdraw your profits, you can simply trade USDT for your home currency and withdraw back to your bank account).
There are a number of ways you can do this.
Option 1 - Bybit
Depending on your home currency, there are a number of options for you to purchase USDT.
You can view these options under the “Buy Crypto“ menu bar.
Where possible, use Bank Transfer as opposed to Credit Cards to avoid fees. Whatever option you pick, I recommend testing by buying small amounts first.
Option 2 - Other Crypto Exchange Platforms e.g. Binance
If you have accounts with other crypto exchange platforms, you can send money from that account to Bybit.
If you haven’t done this before, I always recommend sending a tiny amount to test first. As if you make a mistake, you cannot recover your funds.
4. Select a copy trader
Once you've signed up, go to "Tools" on the menu bar and select "Copy Trading".
Currently on the Bybit platform there are over 1,000 traders you can choose to copy trade.
It can be a bit overwhelming when you first start, so here are the main statistics to pay attention to when browsing Master Traders.
ROI stands for Return On Investment. For e.g. in the image to the left (or above), over the last 30 days, you would have received a 73.30% return on your investment.
Maximum drawdown is the maximum observed loss for that Master Trader. This includes unrealised losses. A low drawdown indicates that unrealised and realised losses are relatively small.
The percentage number of winning trades for that Master Trader. Note, a high win rate doesn’t always indicate a good trader. Sometimes traders will leave losing trades open for months, just to keep this statistic high. It’s more important to look at ROI.
Statistics of Copied Trades
Here you can see the current and previous trades that a Master Trader has made. You can see how much leverage they are using, and the typical profit and loss percentage of each trade.
Putting It All Together
How you pick a Master Trader will depend on your risk profile. High percentage ROIs typically means higher risk and vice versa. I recommend doing your research and starting out with small amounts to get familiar with each trader before jumping in with larger amounts.
5. Input your copy trading settings
Once you select a Master Trader, click “Copy” and a box will pop up. Here you will input your settings.
If you’re new to cryptocurrency, I recommend using “Smart Copy Mode”.
Funds to Copy
This refers to how much you want to invest with this Master Trader.
Copy Stop Loss (CSL)
This is an instruction to protect your investment once losses reach a specific amount with that Master Trader. For example, if you set this amount to $50, once losses reach $50, you will automatically unfollow the Master Trader. After which, your remaining positions will be managed according to your preferred CSL settings: 1) Close all copy positions with the Master Trader at the current market price; or 2) Follow the Master Trader and exit when they close their position.
ByBit Copy Guard
This option allows you to wait to copy an order at an optimal price, instead of only opening a trade at the same time as the Master Trader. I tested this option and found my trades weren't being opened at the same price as the Master Trader. So I prefer to turn this OFF.
Then tick the Agreement box, and click “Copy Now” and you’re all set!
Important, before you start trading!
Remember with any investment strategy, there are always risks involved. It’s impossible to eliminate risk, but you can manage it.
So here are my top 3 principles, to trade safely and maximise potential profits.
1. Start slow
If you’re completely new to trading and/or cryptocurrency, start with small or even micro amounts. On Bybit copy trading, you can start as low as $10 per trade for some Master Traders.
2. Review your profitability
I recommend reviewing your trader's performance at least once every 2 weeks. Each copy trader has a different strategy and risk profile. See if they are trading the way you prefer, and then slowly allocate more funds or leverage as you go.
3. Only trade what you feel comfortable with - don’t get greedy!
Remember past performance is not an indicator of future performance. Just because a copy trader has been successful so far, does not mean they will keep doing well in the future.
Remember principles 1 + 2 again, go slow and only trade with what you are prepared to lose.
Copy trading can be a quick and profitable way to trade without spending years learning how to trade yourself.
Just remember to stick to the key principles, test out the waters slowly and increase your investment as you get more comfortable.
Do you have any questions or recommendations for other copy traders? Leave a comment below!
Note: This is not financial advice, always do your own research! Click here for our full disclaimer.