To buy and sell cryptocurrency, traders have exchanges that provide user-friendly platforms with easy-to-handle tools. Beginners who are new to crypto trading often have two choices – is it better to use a copy trading platform or a crypto trading bot? A copy trading platform is one where the trader can simply copy the positions of a more experienced trader so that the trades are executed the same way as the person who is being copied from.
However, a crypto trading bot is an automated software that uses sophisticated trading signals and algorithms to trade on behalf of the trader. Most experienced traders often believe that using a trusted and reputed crypto bot such as Bitcoin Era is a much better deal than using a copy trading platform. However, let’s dig a little deeper to understand the similarities and differences between the two types of crypto trading strategies.
How does a Crypto Copy Trading Platform work?
To use a copy trading platform, the trader has to create an account and then select the strategies he wants to copy from an experienced trader he wants to follow. The platform would provide exhaustive details about each trader, like,
- How long he has been trading
- How much money he has made in trading
- The number of signals he uses per day
- What the person’s possible risk is
- And the overall rating of that trader
While using this platform, the user would automatically copy all the actions of the trader he has chosen to follow. Since everybody is trading to increase profits, the moves of experienced traders would be astute, and the copying beginner is unlikely to make mistakes by copying his actions. Nevertheless, he has the freedom to stop copying at any time, to protect his assets. Alternatively, a subscription can be purchased from a third-party trader, not connected to any specific platform. All traders have the freedom to trade on their own or copy another or combine both these options.
Trading Bots
A trading bot is a robot designed for doing automated trading. After buying the bot, the user has to set it up and then transfer a certain amount of currency to it. The bot will then keep on buying and selling assets on the exchange 24 hours a day. There are different types of bots, designed to use different strategies.
- Arbitrage bots: These function by analyzing the prices through the exchange, and trade based on the variation they find. They buy the asset cheap from one exchange and sell it at another exchange, where its value is more. They act quickly, faster than the exchanges which may be slow in updating the prices.
- Some bots rely on historical data of trading to decide how to buy and sell. They speculate the possible increase or decrease of the price, based on the collected historical data.
- Yet other bots are programmed to respond to signals such as the volume of trading or the price of the asset.
Which Is Better – Copy Trading or Bots?
The two are similar in certain aspects, though they differ significantly in some respects.
Similarities: The main similarity is that both strategies free the user to do his other work instead of sitting glued to the computer screen all the time. Both arrangements are especially beneficial for those with no special skills or experience in trading.
Differences: Their differences are more than their likenesses. While a copy trading platform is easy to set up, a bot is not. Adjusting a bot’s setting will need some time, patience, and tech-savviness. Secondly, on the copying platform, some strategies are free while on the bot nothing comes free. Further, a trading platform is secure because no other trader will get access to the user’s funds. But, with a bot, the user is completely entrusting his assets to it. Lastly, a copy trading platform is a learning experience, because, as days pass, the user will learn the strategies of the trader he is following. A bot has practically nothing to teach its user.
How to Choose?
For choosing a trading bot, reviews, and blogs written by those who have used it will help. When choosing a trader for copying, the terms and conditions should be read carefully, and the user can also discuss his ideas with an experienced trader and get his feedback.