The widespread benefits of investing in cryptocurrency make it a compelling investment choice for many investors around the globe. However, since there is a steep learning curve in the field of cryptocurrency investing, you should start your journey with mirror trading. With the help of this trading technique, you will feel much safer as a new investor, and the chances of you losing your money will decrease considerably.
Moreover, you get the chance to learn more about crypto investing and trading without worrying much about losing on most of your first trades. This will help you become a better investor and crypto trader.
Introduction to Mirror Trading
In mirror trading, your strategy is to copy every trade made by a successful crypto trader. This helps you mirror their success as well. Instead of manually tracking an established account and mirror their trades, you can use an automated mirror trading bot to do exactly that for your trading account. Algorithms are used to precisely mirror every trade made by a master trading account.
The first cases of mirror trading date back to the early 2000s, when the latest developments in the field of automated softwares and bots enabled traders around the globe to start mirror trading, and to start earning passive income without being actively involved in the trading process.
Firstly, mirror trading was used in the traditional stock and forex markets. These days, mirror trading is gaining lots of popularity in crypto trading as well.
In its first days, mirror trading was only carried out by large scale investors. As time passes, the demand for mirror trading increased immensely, and mirror trading software became so accessible that most of the traders, both large and small, started to implement it in their trading routine. Currently, mirror trading is being openly used in the stock market, forex market, and in the crypto market as well.
Mirror Trading in the Cryptocurrency Sector
In order to use the mirror trading technique in their field of crypto trading, you first have to find a platform which supports crypto trading automation through mirror trading bots, and find yourself a “Master Trader” whom you want to follow. In order to help you choose the right market trader, the platform will list useful performance data of their account.
This way, you’ll be able to easily make an informed decision when starting your mirror trading journey with master trader. In turn, the master trader gets paid by the platform to show their trading strategy, and they also get to benefit from the earnings of mirror traders who follow them.
After setting up your mirror trading account, you can sit back and relax as your earnings from crypto trading are fully automated. Your software will start replicating the moves of your master trader, and you’ll earn through a fully automated system in exchange of a small fee. The whole market analysis and other prerequisites will be done by the master trader, and their trades would be mirrored by your automated crypto trading software.
In the case of mirror trading in cryptocurrency, there are a few additional factors which you need to keep in mind before starting. Since the crypto market is very fast, the strategy of your master trader might change quickly, and you’ll have to mirror it right away.
If the master trader you’re following doesn’t adapt to the rapid changes in the crypto market, both you and them will suffer from heavy losses.
Although mirror trading is well-established in traditional markets like forex and stocks, it is still relatively a new concept in the crypto market. Therefore, the choice of mirror trading platforms in the crypto market is currently limited to only a few platforms.
Because of low market competition, crypto mirror trading platforms can overcharge you, and they won’t even be liable for your losses. There are also only a few discounts fllimited to large scale crypto investors only.
Crypto Mirror Trading vs. Crypto Copy Trading
At the very basic level, both crypto mirror trading and crypto copy trading look the same. However, both of them differ slightly from one another. Crypto Copy Trading also involves you, the investor/ trader, following a master trader to copy their trading moves and make profit in exchange for a little fee.
The key difference between copy and mirror trading is that, in copy trading, you can customize your trading strategy to some extent. So, copy trading leaves some of the control in the hands of the follower.
On the other hand, mirror trading doesn’t include any type of control and customizability from your end, and fully automates the trade mirroring process.
Copy trading is currently supported on more crypto trading platforms, and is well-established as compared to mirror trading.
Let’s compare both of these types of trading on a very basic level.
Returns
When it comes to the returns associated with the trading process, both mirror and copy trading depend largely on the moves of the master trader you’re following for their returns. Both of these methods rely on copying the trades made by your market trader.
This is the main reason why mirror and copy trading in the field of cryptocurrency doesn’t differ much in terms of the returns they generate for you.
However, since mirror trading is currently being offered by less platforms, those platforms charge very high fees, and this can impact your net returns significantly. On the other hand, copy trading doesn’t require you to pay large fees, as there’s a lot of competition amongst copy trading platforms offering their services, and this causes them to offer considerable discounts.
On platforms like Bybit, copy trading is free to use. This means much higher returns for follower investors/ traders like you.
Automation
Automation is the central part of both mirror and copy trading in cryptocurrency. Mirror trading relies more on the automation part as it is a completely automated strategy. On the other hand, copy trading allows you to do some modifications, and is hence less automated as compared to mirror trading.
Flexibility
As you might’ve realized by now, mirror trading is more automated as compared to copy trading. This is why copy trading is more customizable as well. So, if you’re that type of crypto trader who wants to retain some control of their crypto trading account, you should use copy trading instead of mirror trading.
Copy Trading allows you to not follow some specific moves of your master trader, hence giving you more freedom.
For example, in copy trading, you can instruct your copy trading bot not to mimic a specific trading strategy of your master trader if you consider that move overly risky. On the other hand, this luxury isn’t available in mirror trading, which practically requires you to follow every move of your master trader, even if you disagree with their trading strategy at any particular time.
Aptness
Both mirror and copy trading can be used by beginners, as well as experienced crypto traders. However, mirror trading is suitable even for those traders who have no idea about even the most basic trading concepts. Moreover, if you want to spend little to zero time in managing your trading account, you can opt for mirror trading.
Crypto Mirror Trading: Pros and Cons
Just like any other form of trading, crypto mirror trading also have its pros and cons. Let’s take a brief look on the pros and cons of crypto mirror trading.
Pros
A Profitable Start
There’s a steep learning curve in cryptocurrency trading. This is the main reason why many beginner traders get exhausted after losing some trades, and leave the industry altogether without waiting to master all the good trading techniques first to start earning a good profit.
In mirror trading, all you have to do is to set up your automated mirror trader, and you’ll start earning profit right away. Lots of traders act slowly when it comes to learning how to trade and start earning a profit from it.
Moreover, starting your trading journey requires you to continue learning from good resources available online. Even after they accommodate the necessary knowledge to start trading, they first test the waters with small amounts of money.
All of the learning strategies can definitely benefit you in the long run, but while you are learning, you are missing out on great profiting opportunities available in the market. This is why you should use mirror trading to start earning through automated crypto trading without wasting any opportunities.
It allows you to copy or mirror the trades of your master trader as it is, and you can start making money right away.
Improved Efficiency
Mirror trading is one of the most time efficient methods of cryptocurrency trading available out there right now. All you have to do is select a master trader to mirror, set up your automated mirror trading bot, and you will be all good to go.
After the initial adjustment, you will only need to check and calibrate your account occasionally, and it’ll require minimal amount of maintenance. If your master trader is doing well, you’ll continue making money.
Absence of Emotions
In mirror trading, you do not need to invest a lot of time into trading. Since all of the actions of your master trader will be mirrored precisely, there will be no emotions involved in the whole trading process.
This is why mirror trading is very helpful for cryptocurrency traders who are just starting out. They do not have to stress out about making the right trading decisions, as the mirror trading bot will automatically do that for them.
Boosted Investment Confidence
For any investor, they cryptocurrency market is relatively new. This causes a lot of stress for investors looking to start a profitable cryptocurrency trading side hustle. However, by looking at the profits made by other cryptocurrency investors by using mirror trading, the confidence of a new crypto investor is boosted, and they are intrigued to invest in cryptocurrency right away.
New cryptocurrency investors get the opportunity of benefiting from the experience of seasoned pregnancy investors by choosing them as their master traders. Once you set up your mirror trading account, you can dedicate the free time towards learning the cryptocurrency trading process in depth by manually following your master trader and their strategies as well.
Easy Performance Tracking
Since the cryptocurrency technology is completely transparent, it allows you to easily review the performance of an automated mirror trading platform before investing with them. You can conveniently look at the past performance of a master trader before deciding to follow them. This will provide you with a rough idea of returns on your investment in the long run.
However, you should never take the past performance of a master trader as a guarantee of future returns. That is because the cryptocurrency market is very volatile, and things can change quickly without prior notice.
Cons
Less Data to Analyze
Since the cryptocurrency market is relatively new as compared to the traditional stock market and forex market, there is only a few data to analyze the performance of mirror trading in the case of cryptocurrency.
For example, master traders do not have enough data to compile and show to their follower traders as to how their mirror trading strategies will perform in the long run when the market continues to fluctuate consistently.
So, the lack of performance related data to analyze is one of the biggest drawbacks of joining the mirror trading platforms.
No Guarantee of Returns
In mirror trading, both the profit and loss of your master trader is mirrored to your crypto account as well. So, even before you join a mirror trading platform, you should keep in mind that profit is not always guaranteed, and you will incur a loss as soon as your master trader goes into loss.
Decreased Liquidity
If a large number of cryptocurrency investors start following a single master trader, it can create certain liquidity issues for the cryptocurrency in question. For example, some cryptocurrencies are very limited in their supply, and might not be able to fulfill the needs of a large number of investors placing the same type of trades over and over again.
Zero Control
Unlike copy trading, which allows you to control some factors of the trading process, mirror trading provides you with zero control over your funds, or your trading decisions. Every trading move of your master trader is literally mirrored, and you do not have any say over the trading strategy either.
Therefore, in order to choose a master trader and letting the trading process continue automatically, you have to have a great deal of trust on your master trader.
Is Crypto Mirror Trading Legal?
Mirror trading has no issues related with its legality. It is perfectly legal for both the master traders, and the follower traders as well. On the other hand, mirror trading is actually highly regulated in some parts of the world.
This means the master trader is regulated by the government authorities, and is legally responsible for maintaining a legitimate trading practice without doing anything fishy.
Some new traders might get the impression that mirror trading is illegal. This might come from the scams related to mirror trading in the early days of cryptocurrency, and in the early days of mirror trading related to the forex and stock markets.
You should keep in mind that mirror trading is perfectly legal, and it is the intent of trading or money laundering which might get someone in trouble.
As a cryptocurrency investor, it is your foremost duty to do the due diligence and make sure that you are signing up with a trustworthy mirror trading entity. This way, you will be able to keep your crypto funds secure, and will enjoy the profits generated by automated mirror trading techniques in the long run.
Future of Crypto Mirror Trading
Recently, the cryptocurrency market saw an investment of over 3 trillion dollars, which was termed as a historical moment by traders around the globe. Moreover, cryptocurrencies are becoming so popular that the price of Bitcoin, Ethereum, and other big cryptocurrency coins is increasing rapidly.
So, the rapid expansion of the cryptocurrency market means that lots of new investors are becoming interested in investing and earning passive income through cryptocurrencies. However, since they do not have much experience in the trading field, they have to rely on automated techniques like mirror trading.
Since the future of mirror trading is looking bright, lots of large cryptocurrency exchanges and trading platforms are trying their luck, and even providing their users with free mirror trading to begin with. As the mirror trading technology continues to strengthen, more and more investors are projected to get interested in the industry.
If you are interested in mirror trading as well, we highly suggest that you review some of the biggest mirror trading platforms, and make sure that you sign up with the most trustworthy mirror trading platform out there. You should do this even if it means paying more in terms of fees.
