BYBIT Copy Trading Review

BYBIT is widely recognized as one of the top cryptocurrency exchanges worldwide. Its platform offers various advanced features, including copy trading, which has garnered significant attention among traders. For those new to crypto trading, copy trading presents an accessible and easy option for trading cryptocurrencies. In this article, we’ll examine what BYBIT’s copy trading feature entails and how it operates. Let’s dive in.

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BYBIT Cryptocurrency Exchange

BYBIT, headquartered in Dubai, is a cryptocurrency and derivatives trading platform offering a range of services such as lending, affiliate programs, trading bots, and the P2P market. The focus of this article is copy trading. One of the main highlights of the exchange is that it provides leverage of up to 100x on select assets, which is considered a high-risk strategy. To manage this risk, the platform employs safeguards, including an insurance fund, auto deleveraging, and both cross and isolated margin accounts. These measures aim to minimize potential trade losses for users.

BYBIT offers a diverse selection of over 610 cryptocurrencies and has a massive user base exceeding 20 million individuals across 160 countries worldwide. Despite its relatively recent establishment, BYBIT has rapidly gained popularity, challenging industry giants like Binance and Coinbase.

Check out: Bybit Restricted Countries Guide

What Is Copy Trading?

Copy trading, also known as social trading or mirror trading, is an investment method where individuals replicate the trades of other traders. In the context of cryptocurrency, this involves mimicking the trading actions of experienced crypto traders. The concept behind copy trading is to allow less experienced traders to benefit from the expertise of more knowledgeable counterparts by replicating their trading strategies.

Nowadays, numerous exchanges offer copy trading with various features. These platforms typically provide an easy way to filter through the trading results of experienced traders, enabling users to find those that align with their trading style and risk tolerance. When a trader you follow executes a trade, the copy trading platform automatically replicates the same trade in your account. You have the flexibility to determine how much of your capital you want to allocate to a trader, as well as the level of risk per trade.

For instance, if a trader opens a short position on Bitcoin with 6% of their trading account size, the same trade would be executed in your trading account. You can set limits on the risk per trade based on your risk appetite, even if it differs from the trader you follow.

Copy Trading on BYBIT

Copy trading is a popular feature on BYBIT that is designed to help novice traders manage their portfolios by mimicking the actions of skilled crypto traders.

Categories of Copy Traders

BYBIT divides copy traders into two groups. The first group consists of Followers who replicate the trading strategies of experienced investors. Followers rely on the expertise and track record of seasoned traders for their trading decisions. The second group comprises Master Traders, who are experienced investors demonstrating proficiency in trading and attracting followers interested in replicating their strategies.

Master traders can showcase their trading strategies to attract new followers. They have the opportunity to earn a percentage of the profits generated by each follower who copies their trades. The amount they receive is determined by their level as a master trader on the platform. This system enables master traders to leverage their expertise to build a following and potentially earn additional income based on the success of their followers.

Copy Trading Options

Followers on BYBIT can choose between USDT perpetual trades or trading bots for copy trading, with a minimum investment amount of 50 USDT. However, master traders have the flexibility to set their own minimum investment requirements, which will be clearly displayed on their profiles.

Categories of Master Traders

Master traders are divided into four different levels, and each trader at each level has a different profit-sharing ratio.

How to Start Copy Trading on BYBIT

To begin copy trading on BYBIT, all you have to do is follow these simple steps:

Step 1: Go to the Copy Trading section on the app’s home page.

Step 2: Browse through the top Master Traders and select the ones you wish to follow.

Step 3: Tap “Copy” to initiate the copy trading process. You can follow up to 10 master traders simultaneously.

Step 4: Set the investment amount and choose between copying USDT perpetual trades or trading bots.

Step 5: Optionally, access additional parameters for your copy trades by selecting “More Settings,” such as stop-loss ratio and take-profit ratio per order.

Step 6: Once the settings are confirmed, acknowledge the copy trading agreement and tap “Copy Now” to proceed.

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Benefits of Copy Trading

Copy trading has a lot of value and offers the following benefits:

Real-Time Insights

Copy trading offers the opportunity to gain real-time insights into the investment decisions of skilled traders. Instead of relying solely on theoretical knowledge or delayed market analysis, traders can witness how master traders react to live market events and adjust their strategies accordingly. This real-time observation allows for a deeper understanding of market behavior and helps traders adapt to changing conditions more effectively.

Access to Expertise

Copy trading provides an invaluable opportunity for traders, especially inexperienced ones, to access the knowledge and expertise of more experienced investors. By observing and replicating the trades of master traders, new investors can learn about market dynamics, trading techniques, risk management strategies, and decision-making processes. Copy trading is a learning experience that allows followers to become self-reliant traders over time. As followers gain experience and confidence, they can gradually transition from passive followers to active participants in the trading process, incorporating lessons learned from master traders into their own trading approach.

Professional Risk Management

Seasoned traders are adept at managing risk effectively, employing techniques such as position sizing, stop-loss orders, and portfolio diversification to protect their capital and minimize losses. By copying the trades of master traders, new investors can benefit from the same level of professional risk management, reducing the likelihood of significant drawdowns and preserving their trading capital over the long term.

Emotion-Free Trading

Cryptocurrencies are a volatile asset class that can be unpredictable. With copy trading, investors can trust their trades to experienced hands, removing the emotional guesswork from the equation. By automating trades based on proven strategies and data-driven analysis, copy trading guides investors through market volatility with calm and clarity, helping them avoid impulsive decisions driven by fear, greed, or FOMO.

Diversification

Diversification spreads risk across different assets and strategies to limit any downside. Copy trading enables traders to diversify their portfolios by following multiple master traders with distinct trading styles and approaches. Each master trader brings their unique perspective and expertise to the table, offering traders a broad range of investment opportunities. This diversification not only spreads risk but also enhances the potential for returns, as different trading strategies may perform better in different market conditions.

Drawbacks of Copy Trading

While copy trading appears to be an attractive option for novice traders, it is not without its drawbacks. If you are opting for copy trading, you must keep these things in mind:

Dependency on Master Traders

One drawback of copy trading is the risk of becoming too reliant on master traders, leading to a loss of autonomy in trading decisions. Traders may grow accustomed to following master traders without conducting their own analysis or research, hindering their critical thinking and decision-making skills. This dependency can create a false sense of security and complacency, as traders may assume that master traders will always make profitable decisions without recognizing the inherent risks of the crypto markets.

Limited Control

Copy trading offers limited control over trading strategies, as traders must adhere to the predefined strategies and trading styles of master traders. This lack of customization may not always align with individual objectives or risk tolerance. Additionally, relying on master traders to execute trades can result in delays in responding to rapidly changing market conditions, potentially leading to missed opportunities or increased exposure to market volatility.

Overexposure and Herd Mentality

Popular master traders may attract a large number of followers, resulting in overexposure to their trading strategies and increased risk. This overcrowding of trades can diminish the effectiveness of their strategies and lead to herd mentality, where traders blindly follow the crowd without fully understanding the rationale behind their trades. Overreliance on specific master traders can also expose traders to the risks associated with their fluctuations, potentially hindering personal development and growth as investors.

BYBIT Copy Trading Fee

When participating in BYBIT’s copy trading feature, you will incur the same trading and funding fees as traders on BYBIT’s derivatives platform. These fees include maker/taker fees of 0.02%/0.055%. The funding fee, however, is more complex. BYBIT uses funding to ensure that its last traded price remains aligned with the global spot price, similar to the interest cost of holding a position in spot margin trading.

For detailed information on BYBIT’s perpetual and futures contract fees, visit the fees page on its official website. Additionally, you can learn more about the funding fee by visiting this link.

Final Takeaway

In conclusion, BYBIT’s copy trading feature allows crypto newbies to tap into the knowledge and strategies of experienced investors, providing insights into market dynamics and trading techniques. Despite its numerous benefits, copy trading does pose certain challenges, including the risk of overreliance on master traders and limited control over trading decisions. Traders must carefully assess their investment goals, risk tolerance, and preferences before engaging with copy trading.

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