There is a strong relation between copy trading and social trading in cryptocurrency market. However, they are different in the core. In this article we are going to talk about social trading vs. copy trading.
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Social trading is activities, which facilitate or engage interactions among traders in order to strengthen the crypto community.
Copy trading is an element of social trading, which allow users to copy other traders’ trading pattern. For example, mimic other experienced and professional traders’ pattern.
Social trading Vs. copy trading ; advantages and disadvantages
Copy trading is very simple. When a professional trader makes a successful trade, they have the option to share their pattern and experience. If the trader does so, then other traders can copy and use the same pattern.
Copy trading has advantages for both sides. For example, copy traders can get knowledge and learn new techniques, which are useful for their future trades.
On the other hand, who shares their experience will receive commission in return. This commission is a percentage of the earnings each time their trade is copied. As a result, it encourages professional and experienced traders to share their knowledge and patterns for other users to copy them. So, copy trading is a win-win situation.
The advantages of copy trading made it so popular among traders. In fact, it helps new traders to get knowledge about the market and become better traders in the future. Those new traders will become professional soon and start to share their patterns and knowledge with other new traders and earn commission as well. It’s notable that most of copy traders are amateurs, so they may make mistakes in their trades and make their trades unprofitable in long term.
The most common mistake, which new copy traders contribute in, is they copy from traders who has more followers. It’s notable that the number of followers doesn’t matter in this case. Having more followers, doesn’t necessarily mean that the trader in trustworthy. So, it’s recommended doing your own research and choose a trader who has better performance in their trades.