For cryptocurrency traders and money managers, copy trading offers a simple way to leverage the success of seasoned investors or expand your client assets. Platforms like 3Commas allow novice traders to automatically mirror the trades of vetted leaders based on historical performance data. As a leader, you can also attract copiers to duplicate your proven strategies.
However, both traders and leaders should weigh the pros and cons before utilizing copy trading. This comprehensive guide will cover how 3Commas copy trading works, its core features, potential risks of strategy leakage and profit erosion, legal considerations, proper leader vetting, and fee structures. We also compare 3Commas to Finestel as an advanced alternative solution worth considering.
What is 3Commas Copy Trading?
Copy trading allows novice investors to mimic the trading strategies and transactions of experienced traders, referred to as “leaders”. This hands-off approach provides exposure to proven methodologies without needing extensive knowledge or active management.
As mentioned in our 3commas review, it is a top cryptocurrency trading platform that offers copy trading services.. Users can evaluate historical performance data and statistics to choose the most suitable leaders to follow. Once connected, every trade the leaders execute will automatically be duplicated in proportion to the copier’s account.
How Copy Traders Operate on 3Commas
Seasoned cryptocurrency traders can become leaders on 3Commas by making their trading strategies and live transactions public. Their profiles showcase key performance metrics over time, including profitability, risk scores, drawdowns, and more.
Potential copiers browse leader profiles freely and leverage the data to determine which traders best match their risk tolerance and goals. Top-rated leaders often share similar traits like consistent returns, strong risk management, and proven experience across market cycles.
Once a copier subscribes, a proportionate copy of every trade the leader makes will instantly mirror in the copier’s 3Commas account without the manual intervention required. If a leader enters a position with 30% of their capital, a copier allocating 50% to that leader will copy with 15% of their total funds.
Copiers can follow multiple uncorrelated leaders to diversify across strategies. This avoids overexposure to a single trader’s performance. Copy ratios and risk management settings can also be customized per leader.
How Does 3Commas Copy Trading Work?
Connecting Copiers with Leaders: 3Commas facilitates transparent leader profiling and performance tracking to inform copier decisions. Leaders exhibit their strategies, statistics, risk management approaches, number of copiers, fees, and community reviews.
No approval is required for copiers to subscribe to leaders. The 3Commas algorithms automatically handle executing proportional copy trades across any number of connected copiers. This frictionless process allows copiers to follow any high-quality leader on the platform.
Once a copier allocates capital to a leader, all trades are instantly mirrored based on the defined copy ratio. No manual intervention is needed after the initial connection, as trades are duplicated automatically via the platform’s algorithms.
Executing Trades: A major advantage of 3Commas copy trading is real-time mirrored execution with no delays. As soon as a leader enters or exits a position, a proportional copy is opened for every copier at the exact same price point and moment.
This precision allows copiers to benefit from leaders capitalizing on time-sensitive signals or events. Any potential lags could result in entering at less favorable prices. The real-time execution ensures full synchronization.
After a copy trade is opened, copiers have the flexibility to customize take profit, stop loss, and loss reduction settings based on their own risk preferences. These can be adjusted independently of the leader’s trade management approach.
Diversification: The ability to follow numerous leaders simultaneously promotes strategy diversification. This avoids overexposure to any single trader’s performance. Losses from one leader are balanced out by uncorrelated leaders executing different approaches.
Flexible Risk Management: In addition to diversification across many leaders, copiers can customize risk management settings independently. This includes take profit, stop loss, and capital allocation sizes per leader and trade. These tools allow you to tailor copy trading to your risk tolerance.
Leader Vetting: 3Commas provides extensive data profiling each leader. This includes risk metrics, rating, copiers, strategy summaries, trades, performance graphs, comments, and more. Comprehensive leader vetting enables selecting who best aligns with your goals.
Real-Time Mirror Trading: A core feature is that all leader transactions are duplicated in a copier’s account at the exact same moment. Real-time mirror trading is essential for effectively copying fast-moving trades relying on timing and precise entry.
Statistics Tracking: Detailed performance statistics provide insights into each leader’s strategies and risk management approaches over time. Key metrics like profit factor, percent profitable trades, drawdowns, and win/loss ratios inform copier decisions.
Pros and Cons
Pros for Traders:
- Attract more copiers and assets under management
- Leverage the success of strategies to earn subscription revenue
- Build credibility and reputation with strong performance
Cons for Traders:
- Strategy leakage risks from sharing details openly
- Profit erosion from monthly subscription fees
- Lack of selectivity in copiers allowed to follow
Pros for Investors:
- Access proven strategies of experienced leaders
- Avoid emotion-driven decisions and self-doubt
- Automated trading is simpler than manual management
Cons for Investors:
- Leader risk not aligned with copier’s risk appetite
- Overlapping strategies insufficiently diversified
- Lag in trade execution could impact pricing
In summary, while copy trading can help leaders attract assets, important cons include strategy leakage risks, profit erosion from fees, lack of copier selectivity, and legal/regulatory burdens. Careful consideration of these downsides is warranted.
Overall, copy trading can augment returns if executed prudently. But success ultimately requires proper leader selection, risk management, and portfolio monitoring.
3Commas Copy Trading Fees and Pricing
3Commas charges fees for both leaders and copiers on its copy trading platform. Here is an overview of their pricing model:
- Leaders pay a monthly subscription fee that scales based on the number of copiers and assets under management. Plans range from $41-$150/month.
- There is also a performance fee charged to leaders on profitable months. This ranges from 10-20% of net profits depending on the plan.
- Copiers pay a monthly fee to access copy trading features that also scale with allocation size. Plans range from $21-$90/month.
- An additional commission fee is charged per executed copy trade, which varies based on trading volume. Higher volume copiers get discounted commissions.
- There are also exchange trading fees and potential Ethereum gas fees that may apply per transaction.
The pricing model aims to make fees affordable for smaller copiers and leaders while charging heavier users higher fees. Overall costs for both copiers and leaders can add up over time.
The Best 3Commas Copy Trading Alternative
Finestel is a Canada-based trading technology provider offering a cutting-edge copy trading platform. For profitable traders with a community of followers seeking a reliable copy trading service, Finestel is an ideal solution.
Our platform allows you to manage client investments with advanced copy trading algorithms efficiently. Additional tools like portfolio trackers, billing automation, and in-depth performance analytics are included.
We offer two main copy trading plans:
- Copy Trading Bot – Perfect for traders with limited investors. Our bot flawlessly replicates your trades in follower accounts at lightning speed.
- White Label Software – For larger traders with 10+ clients or significant assets under management. Fully customize the platform with your own branding and interface.
Profitable traders can also showcase their strategies in Finestel’s private marketplace to attract investor capital from our global network. Your real-time track record updates allow you to improve performance continuously.
For investors already working with a successful trader, suggest Finestel as a robust copy trading solution. With our powerful technology, customization, and tools, your trader can easily migrate to our platform. You can then invest worry-free knowing your assets are secure.
3Commas Copy Trading Tutorial
- Presets: 3Commas offers a feature called Presets, which allows you to replicate successful trading strategies used by other traders’ bots. These presets are pre-configured parameters for DCA (Dollar-Cost Averaging) bots. Instead of manually analyzing the market and setting up bots, you can benefit from other traders’ strategies.
- Finding Suitable Presets:
- Go to the “DCA Bot” tab.
- Click on “Presets”.
- Specify your preferred parameters (exchange, traded asset, trading pairs, etc.).
- The page will display available bots with brief information (last month’s profit, number of assets traded, and users who copied the settings).
- Select a suitable bot and click “Copy Bot”
- Following the Strategy:
- After selecting a bot, you’ll have access to its trading statistics and configurations.
- Allocate the desired funds for the bot to trade.
- Press “Start” to begin copying the strategy.
- Changing Bot Configurations:
- If the preset bot doesn’t fully suit your preferences, you can change the parameters during setup or after launching.
- Click “Edit settings” on the statistics page when adding a bot.
- On the “My bots” page, select a bot and click “Edit” in the “Action” column to adjust settings.
In closing, copy trading can undoubtedly help both investors and leaders profit from cryptocurrency markets if used judiciously. However, achieving consistent success requires careful leader vetting, risk management, understanding the platform fee structure, and monitoring performance over time.
While 3Commas presents a popular option, comparing alternatives like Finestel can lead traders to solutions better tailored to their needs. As with any trading approach, prudent strategy selection and execution remain essential with copy trading.