Traders’ population multiplied significantly during 2017’s Bitcoin bull run and is still on the rise. So many thought they could get rich fast day trading cryptocurrencies, but very little could! This paper is about a trading method or an investment skill that helps one do as “those who could” by investing in them; it is about Crypto Copy Trading.
Mankind Has Reached Here, Partially Because We Have Copied Each Other Out often!
Take a look at the image below:
Above is a screenshot from Google Trends. Go ahead and see it for yourself. As you can tell, the copy trading trend started picking up in early 2015 and peaked up once in 2016 and continued. Comparing copy and social-trading web search trend line with Bitcoin/US Dollar price chart would be pretty interesting to you too. Look at 2015 to 2017:
Yeah, we wish we’d bought more too. Anyways!
“Tradency was one of the first to propose an auto-trading system in 2005, which they called mirror trading.”
The demand emerged and later developed countless trading models and strategies for copy trading alone. During the 2017’s cryptocurrency market boom, some big names added crypto copy trading to their platforms as a feature. You deposit fiat or crypto into the exchange and copy one of their traders. Piece of cake, right?
If it’s a cake, then Finestel would be the cream of the crop. Neither an exchange, nor need a trading engine, and crypto copy trading is not our feature. It’s our passion, profession, mission, and vocation; Our Ikigai.
What Is (Passive) Crypto Copy Trading?
Copy-trading is the process of replicating trades of an exchange account (trader) into multiple other exchange accounts (investor or copy trader), resulting in the same outcomes as the trader.
The word “passive” means that traders don’t need to do anything extra than what they’ve normally been doing in terms of trading. They just need to connect their exchange account to Finestel via read-only API access, and then Finestel does the rest by proportionally replicating their trades into investors’ exchange accounts.
Just like traders, investors connect an exchange account to Finestel and copy a trader that matches their copy trading financial goals. If the copied trader makes a profit, their investors receive the same profit proportionally and then compensate the copied trader’s profitability by paying a performance fee.
The image above interprets the word proportional. To clarify, proportional portfolio synchronization or order replication means investors will receive the same trade as the copied trader but relative to their exchange account balance.
Let’s talk a little more about crypto copy trading, compare it with trading, and dig deep into the best crypto copy trading platform afterward.
Why Crypto Copy Trading?
Binance launched with BNB, BTC, ETH, LTC, and NEO, back in 2017. Today it’s the largest crypto exchange by volume and has any market sector one can think of, NFT, DeFi, Metaverse, mining pool, you name it.
Currently, CoinMarketCap has 526 exchanges listed on its website (at the time of writing). Finestel could be the 527th, but would there be any value? It would be re-inventing the wheel, wouldn’t it?
So, the problem is not exchanging assets, fees, liquidity, etc. It’s the trading itself. Trading is not just a bunch of courses and TA (Technical Analysis) books or that guy on Twitter selling moon signals. It’s an attitude, a way of life, and not a side hustle or hobby; also not a get rich quick scheme.
Trading is the art of developing a trading strategy for the market trend without involving emotions. It usually takes a lifetime behind the charts and loosing loads of money to make that happen.
What Is The Trading’s Win/Loss Ratio In General? What Makes a Trader Profitable?
The statistics say 75 to 95 percent of traders lose money depending on the market. Oddly though, the trader’s emotions turn what a trading strategy depicted into a disaster.
The profitable minority doesn’t have a one-of-a-kind killer trading strategy or a TA indicator that others don’t know about. They just stick to their strategy, find its flaws over time and improve it.
Profitable trading means taking profit at the right time and stopping loss in the right place. Trades without “risk management” can wipe your balance, let alone make you money.
So the risk is inseparable from trading. One can use several technics and strategies to manage the risk, but surprisingly, trading’s main risk factor is the trader himself or his emotions to be accurate.
Experienced traders are fully aware that fear, greed, biases, etc., will impact their trading whatsoever. Because of that, they tend to mechanicalize their trading method as much as possible to avoid emotional interference. They use ATS (Automated Trading System), commonly known as trading bots.
What Is a Trading Bot?
Trader bots, trading bots, or automated trading systems are computer software that takes in trading strategies, commands, or rules to perform many different tasks. From market analyses to place/cancel orders to arbitrage trading. They are fast, accurate, diverse, and fully automated if you feed them with instructions.
The Best Fully Automated Crypto Trading Bot to Pick; read here.
Crypto trading bots, mirror trading bots, and exchanges’ built-in bots – like KuCoin trading bots – are just a few examples, and tons of other models exist.
So crypto trading bots are fantastic. Let’s take a look at their pros and cons:
Trading Bots Pros:
You can use them for executing almost any online task.
Once you give them the instructions, they’ll follow them precisely.
Bots keep doing what you want them to until you stop them.
Bots don’t panic-sell or ape-in; humans do!
Trading Bots Cons:
Creating a profitable crypto trading bot requires trading knowledge or software development skills.
Possible connection interruptions can cause unexpected malfunctions.
Comparing Crypto Trading Bots With Crypto Copy Trading
Among all the advantages ATSs brought to trading, cutting the trader’s emotions off of decision making sits on top. That’s what exactly copy trading does, but with a massive difference. Real copy trading adds an extra feature to ATSs’ emotionless function called “skin in the game.”
Before going any deeper, let me tell you what the word “real” stands for in copy trading.
Many exchanges provide crypto copy trading as a feature of their platform. Instead of trading, you copy what another trader is doing into your account. It works and has been working since many big names provide it. The problem is that traders must use the platform’s terminal only, and copy traders must keep their funds inside that platform and can only copy traders who trade there.
On the other hand, real copy trading copies trades from a trader’s exchange account via read-only API access and replicates those trades into multiple other investors’ exchange accounts (copy traders) using trade-only API access. So, traders trade on the trading terminal of their choice, and investors keep their money inside their exchange accounts.
What Does “Skin In The Game” Mean?
So, to automate your trades, you either need to develop one, buy the strategy from a marketplace, or use open-source trading bots. Among the three, only the first one is trustworthy, and it’s impossible to ensure what you’ve bought or downloaded for free is worth using with your hard-earned capital. Honestly, you’ll never know if the developers you bought the strategy from are using it themselves.
Best copy trading platforms copy what traders are doing with their own money on an exchange and proportionally replicate it into their investor exchange accounts. Thus traders have their skin in the game with investors.
How Does Finestel’s Crypto Copy Trading work?
Finestel is beyond just a real crypto copy trading platform; it’s your financial HQ. Not only does it copy from a connected trader exchange account and proportionally replicate into multiple investor exchange accounts, but it also gives users the ability to manage and monitor all their exchange accounts using one single dashboard.
Learn how to copy Binance traders on Finestel; right here.
You can connect multiple Binance or KuCoin accounts (currently supporting) to your Finestel account and define different functions (trader & investor) for each of them. This is a feature that asset managers who manage multiple portfolios may love the most.
Finestel works with API connections. Read-only for traders and trade-only for investors.
How to Create a Binance Trade-only API for Investor Exchange accounts?
Log in to your Binance account and select the “API Management” option from the profile icon dropdown menu.
To get to the API settings page, you must select a name and verify your Binance credentials (password and 2FA).
The image below is the Binance API restrictions section. Investors must select “Enable Spot & Margin Trading” for Binance spot copy trading among all the options. Investors interested in Binance futures copy trading must checkmark the “Enable Futures” as well.
Below the API restriction is the IP restriction section, which both traders and investors must set as “Unrestricted.”
Trader exchange accounts don’t need to change anything in the API restriction section of their Binance account, as its default is read-only (Enable Reading).
Whether trader or investor, you must ensure not to grant the “Withdrawal” API access to Finestel. Who or whatever has this access can withdraw your funds from your Binance account. Withdrawal API access has its use-cases, but Finestel does not need that.
Additionally, both Binance and KuCoin show your API Secret only once and when it’s created. If you miss the API Secret (the same applies to your KuCoin API passphrase), you’ll need to delete the API and create a new one to get the secret.
How to Connect an Investor Binance Account to Finestel?
After configuring your Binance API, log in to your Finestel account, and find the connect button or the box that reads “Connect a new exchange account.” Hit the button, and on the next page, select Binance among the available crypto exchanges – we’ll list more popular crypto exchanges soon.
The Connect button will lead you to the page you see on the image below. Select “Investor” as the account role and create a username for your exchange account. By the way, the two guides on the right will walk you through the whole process.
Now, copy the API Key and Secret Key from your Binance API restriction section, paste them into their blanks (like the image below) and then hit the “Connect” button again.
Within 30 seconds, Finestel connects to your Binance account, and you’re ready to start your Binance copy trading journey. Now, you can go to the “Explore Traders” menu and copy the best Binance trader for your copy trading conditions.
We’ll get to that right after the next heading.
How to Connect a Trader Binance Account to Finestel?
Everything’s the same as connecting an investor exchange account with only one difference and an extra step.
Start Binance Copy Trading – The Monthly Service Fee & The Trader’s Performance Fee
After selecting the trader, hit the copy button on their profile while selecting the connected Binance investor account you want to copy the trader with.
Once you hit the copy button, a pop-up will show your Finestel balance, the monthly service fee (29 USDT), and the trader’s performance fee (post-paid) – explained further below. The service fee is monthly and per copy. Finestel will subtract it from your Finestel wallet when you hit the “START COPYING” button.
The copy trading journey starts with a 60-second countdown pop-up. Finestel reads the investor Binance account’s present asset allocation in this one minute to pay the least trading fee possible for syncing it with the copies trader. The video below shows Finestel’s portfolio replication process:
When synchronization completes, the investor’s Binance account will be proportionally the same as the copied trader, meaning, in terms of percentage, not amount.
Finestel will keep the investors’ Binance account synced with the copied trader through the copy trading session via its “proportional order replication” mechanism. Every order the copied trader places on their Binance account Finestel will replicate into the investors’ Binance account.
Binance Futures Copy Trading With Finestel
To copy a Binance futures trader, switch to your Finestel futures dashboard while selecting the Binance account you want to copy the trader with. Find the futures trader you want to copy and hit the copy button.
Unlike spot copy trading, there’s no 60-second syncing process. Finestel will not replicate the copied trader’s open position and orders for pairs that already have an open position. Because those positions could be close to SL or TP, replicating them may harm the investors’ balance. The investor will only receive fresh new orders and open orders that the pair does not have an open position.
Binance Futures Copy Trading Full Tutorial.
As long as an investor copies a trader, Finestel replicates the trader’s Binance futures orders into the investor’s Binance futures account.
The Monthly Service Fee & The Trader’s Performance Fee
The performance fee is the copied trader’s share of their investors’ profit and post-paid; traders set it as a percentage. Thirty days from copy trading, Finestel will realize the investor’s exchange account, calculate the copied trader’s performance fee and then ask the investor to pay via their Finestel balance.
At the end of the next copy trading month, if the investor balance is equal to or more than the 29USDT (monthly service fee)+Copied trader’s performance fee, their copy trading session extends automatically.
In case of a low Finestel balance (less than 29USDT+perfrmance fee), the copy trading session stops, and the investor will lose all their “High-Water Marks.”
Trader’s Minimum Investment
Traders define a “minimum investment” in the pricing section of their Finestel account. The minimum investment is the least balance value of the exchange account an investor must have to copy the trader.
If a trader’s minimum investment is 0.002 BTC, you must have 0.002 BTC worth of exchange balance to copy them.
Some traders’ minimum investment is BTC and some other USDT. No matter what coins or tokens you have in your exchange account, their value must be equal to or more than the trader’s minimum investment.
KuCoin Copy Trading With Finestel
KuCoin copy trading on Finestel is almost the same as Binance, with minor differences in KuCoin API creation and connecting it to Finestel.
KuCoin’s literature differs from Binance’s. In the API Management section, KuCoin uses “General” for read-only API access (the default and for traders), “Trade” for trade-only (for investors), and “Transfer” for the withdrawal access (the one you should avoid). Moreover, KuCoin has an extra layer of security called the API “passphrase” that you generate and is not your KuCoin API key. The video below shows you how to create a KuCoin API for an investor account:
Please remember to write down your API passphrase as it’s not retrievable and is needed for connecting your KuCoin account to Finestel. If you lose it, you’ll need to delete the API and create a new one.
One more thing, please keep in mind that Finestel only replicates the copied trades into the investors’ KuCoin “Trading Account,” not the “Main Account.” So, investors must transfer their copy-trading dedicated assets into their KuCoin’s trading account.
How to Copy KuCoin Traders on Finestel? Read here.
Finestel Wallet Breakdown
The Finestel wallet is a medium for investors to pay the monthly service fee and the trader’s performance fee and for traders to receive their performance fee. It has three sections:
The Free Balance is yours to withdraw any time you want.
The Unrealized PF (Performance Fee) is the performance fee you owe the copied trader. Finestel will pay the copied trader with it at the end of the copy trading month or session (if the copy session stops or the investor cancels it).
The Total is the summary of the two balances.
Finestel Copy Trading Important Considerations
Copying a spot or futures market trader is like the copied trader is trading on your Binance or KuCoin account. Therefore, you cannot copy two spot or two futures traders using the same exchange account. You can copy one spot trader with your connected Binance account and the same or a different futures trader with your Binance futures account.
Similarly, investors must not trade on the exchange account they’re copying a trader with. However, if a Binance investor account is copying a spot trader, the investor can trade on the futures market of that Binance account and vice versa.
Moreover, futures traders and investors must not deposit into or withdraw from their Binance futures account if they have any open orders or positions. The account will pose a liquidation risk and lose money eventually if they do.
Trading Methods Similar to Copy Trading But Different
You might have encountered terms such as “Social Trading,“”Follow Trading,” or “Mirror Trading” during your searches about copy trading. These models are somehow similar, but their differences are not quite clear.
Our research noted that social trading is a broad term that contains all the mentioned models above, or mirror trading refers to a more advanced trading model that follows an Automated Trading System (AKA algorithmic trading systems) and is usually for prominent market players.
Finestel is a fully automated crypto copy trading platform that helps crypto investors profit on their exchange accounts with minimum possible efforts. At the same time, experienced traders can significantly scale up their profit without paying anything.