What is Copy Trading? Complete Guide for Crypto Traders
Copy trading lets you automatically follow successful traders. Learn how it works, the pros and cons, and whether signals might be a better alternative for learning to trade.
- Copy trading automatically replicates another trader's trades in your account—when they buy, you buy.
- It's beginner-friendly but has drawbacks: you can still lose, you may not learn, and slippage affects results.
- Trading signals (like Thrive offers) give you expert insights while you maintain control and actually learn.
What Is Copy Trading?
Copy trading is a form of social trading where your account automatically mirrors the trades of another trader. When they open a position, your account opens the same position. When they close, you close.
The concept is simple: find traders with good track records, connect your account, and let their expertise work for you. You maintain control over your capital and can stop copying at any time.
How Copy Trading Works
- 1. Choose a platform that offers copy trading (Bybit, Bitget, eToro, etc.)
- 2. Browse traders based on performance, risk, and strategy
- 3. Allocate capital to copy specific traders
- 4. Trades execute automatically when the copied trader trades
- 5. Monitor and adjust your allocations as needed
Pros and Cons of Copy Trading
Pros of Copy Trading
- +Learn from experienced traders
- +No deep market knowledge needed initially
- +Passive income potential
- +Diversify by copying multiple traders
- +Save time on market analysis
Cons of Copy Trading
- −You can still lose money
- −Slippage on copied trades
- −No control over individual trades
- −May not learn why trades work
- −Platform and counterparty risk
Copy Trading vs. Trading Signals
There are two main ways to benefit from expert traders: copy trading and trading signals. Here's how they compare:
| Copy Trading | Trading Signals | |
|---|---|---|
| Execution | Automatic | You decide each trade |
| Control | Limited | Full control |
| Learning | Passive, may not learn why | Active, understand reasoning |
| Customization | Fixed to trader's strategy | Adapt signals to your style |
| Risk management | Depends on copied trader | You set your own rules |
| Best for | Passive, hands-off investors | Active learners who want to improve |
Thrive provides AI-interpreted trading signals instead of copy trading. Why? Because signals help you learn. Each signal comes with context—why it's happening, what data supports it, and how to think about it. You become a better trader, not just a passive follower.
How to Choose Traders to Copy
If you decide to try copy trading, here's how to evaluate traders:
1. Look at Long-Term Performance
Anyone can have a good month. Look for consistent performance over 6-12+ months, across different market conditions (bull, bear, sideways). Recent performance matters less than consistency.
2. Check Risk Metrics
- Max drawdown: The largest peak-to-trough decline. Lower is better.
- Win rate: What percentage of trades are profitable?
- Risk/reward ratio: How much do they make on winners vs. lose on losers?
- Sharpe ratio: Risk-adjusted returns. Higher is better.
3. Understand Their Strategy
Make sure you understand how they trade. Day trading? Swing trading? High leverage? Conservative? Copy traders whose style matches your risk tolerance.
4. Watch for Red Flags
- Unrealistic returns (100%+ monthly is likely unsustainable or lucky)
- Very short track record (under 3 months)
- High drawdowns (50%+)
- Inconsistent trading frequency
- Lack of transparency about strategy
Copy Trading Best Practices
Frequently Asked Questions
What is copy trading?
Copy trading is a form of social trading where you automatically replicate the trades of experienced traders. When they buy, you buy. When they sell, you sell. It allows beginners to benefit from expert strategies without needing deep market knowledge, while still maintaining control over their capital.
Is copy trading profitable?
Copy trading can be profitable, but it's not guaranteed. Your results depend on: (1) which traders you copy, (2) their risk management, (3) market conditions, and (4) your own settings (position sizing, stop losses). Past performance doesn't guarantee future results. Always do due diligence on traders before copying.
What is the difference between copy trading and trading signals?
Copy trading automatically executes trades when the copied trader trades. Trading signals are alerts or recommendations that you can choose to act on manually. Signals give you more control—you decide whether to take each trade. Thrive provides AI-interpreted signals that explain the reasoning, so you learn while you trade.
Is copy trading good for beginners?
Copy trading can help beginners by exposing them to professional trading strategies. However, it can also create bad habits if beginners don't understand why trades are being made. A better approach for beginners is using trading signals with explanations, so you learn the reasoning behind each trade.
What are the risks of copy trading?
Key risks include: (1) You can still lose money—copied traders aren't always right, (2) Slippage—you may get worse prices than the copied trader, (3) Over-leverage if you don't manage position sizes, (4) Blindly following without understanding, (5) Platform risk if the copy trading service fails or has issues.
How much money do I need to start copy trading?
Minimums vary by platform, typically $200-$500. However, starting with more capital ($1,000+) allows better position sizing and diversification across multiple traders. Whatever you start with, only use money you can afford to lose—copy trading is still trading, with all its risks.
Can I copy trade crypto?
Yes, many platforms offer crypto copy trading including Bybit, Bitget, OKX, and others. You can also follow crypto trading signals (like those from Thrive) which give you the benefits of expert insights while maintaining full control over your trades.
How do I choose which traders to copy?
Look for: (1) Consistent long-term performance (6+ months), (2) Reasonable risk metrics (max drawdown, win rate), (3) Transparent trading history, (4) Active trading that matches your style, (5) Reasonable follower-to-capital ratios. Avoid traders with unrealistic returns or short track records.