How To Choose a Copy Trading Platform— Ten Things To Note
12 min read
One fact that you and I can both agree on is that the tools you use for a job are as important as the strategies you employ. The same thing applies to copy trading. Whether you are a beginner or an expert, knowing how to choose a copy trading platform that suits you and your trading needs is a key part of securing a smooth experience as a copy trader.
Selecting a good copy trading platform isn’t a difficult art, but there are several factors that you must consider. Navigating and understanding what to look for can be confusing, especially if it’s your first time, since the internet is full of options to choose from. And that’s why I wrote this article: to show you precisely what you need to do.
In the next three minutes, I’ll be pointing out ten things you need to pay attention to before using a copy trading platform.
But first, let’s answer an important question that many copy traders have asked in the past.
What Is the Best Platform for Copy Trading?
Questions like “What is the Best Platform for Copy Trading?” allow you to explore the best options among the many online copy trading platforms. But it doesn’t always provide the complete picture of things as they are.
On the internet, many platforms are considered to be among the best options for copy traders. The fact is, it is very easy to get lost in all the opinions about which platform is perfect for you. However, you must keep in mind that the best copy trading platform for you is one that is compatible with your preferences and investment goals, not one that is trendy. But between you and me, an option that ticks all the boxes of giving you a smooth and profitable copy trading experience is Wellat.
How To Choose a Copy Trading Platform— Ten Things To Note
Before choosing a copy trading platform, here are ten things I recommend you consider:
Regulation and Compliance
In learning how to choose a copy trading platform, you should know that a regulated copy trading platform must either be regulated or have a regulated affiliate and must follow the rules set by financial authorities. For instance, Wellat is regulated by the same laws that guide Binance, and each user‘s KYC on Wellat passes through Binance.
The primary benefit of using a regulated copy trading platform is to safeguard your money and rights as a trader. A regulated platform must be transparent about its operations and ensure its users are treated fairly. This way, it is less likely that you’ll get into trouble with compliant platforms after investing your hard-earned cash.
When choosing a copy trading platform, always verify whether a reputable authority regulates it. Such authorities include the Financial Conduct Authority (FCA) or the Securities and Exchange Commission (SEC). Registered and regulated by the Securities and Exchange Commission (SEC), Wellat is a brilliant example of a regulated copy trading platform.
Regulations ensure that copy trading platforms, such as Wellat, operate legally and are accountable for their actions.
For security concerns, always remember that choosing a platform that complies with regulations can make a huge difference in your trading experience and investing endeavors. Do not overlook this aspect as you research.
Track Record and Performance
One key factor to consider when learning how to choose a copy trading platform is the track record and performance of both the platform and its traders.
Investigating a copy trading platform’s track record gives you insight into its past performance. You want to ensure that it has a proven track record of success and that the traders using it have consistently generated profits. As you do so, look at how much money they've made over time, how steady their earnings are, and if they've had any significant losses.
This helps you gauge their reliability and risk level. For new platforms, such as Wellat, seeking strategic partnerships that support the presence of experienced traders and robots is another way to validate a platform's authenticity. For instance, Wellat partners with companies like Binance to ensure that new traders have a quality trading experience while using the platform.
Another factor to consider is the platform's transparency regarding its performance data. A good platform should give you easy access to detailed statistics and performance metrics for each trader you can copy.
Through adept research on a platform's track record and performance, you can make a more informed decision about whether it's the right fit for you. After all, you want to follow traders who know what they're doing and can help you grow your investments!
Transparency in Trading Activity
Transparency means being open and honest about what's happening behind the scenes. When choosing a copy trading platform, ensure that the platform values transparency and openly discloses its trading activities, goals, and any challenges/limitations.
As you prepare to invest in copy trading, it is vital that you can see the trades being made, the strategies being used, and the performance of the traders you're copying. This helps you understand what's happening with your money and whether the platform works in your best interest.
A good copy trading platform will diligently provide clear and detailed information about each trader's past performance, including their win rate, average returns, and risk level. It should also provide you with access to real-time data, allowing you to monitor trades as they occur.
You should prioritize transparency in your search for a copy trading platform, as it enables you to feel confident about your investments and better equips you to make detailed, strategic, and informed decisions. Additionally, since transparency fosters trust, ensuring your investments are safe and secure is beneficial.
Risk Management Features
Investments of any size and type involve varying risks, and copy trading is no exception. When selecting the right copy trading platform, it is crucial to ensure that it offers features that facilitate risk management. This might seem insignificant as a beginner, except that you are familiar with the risks of copy trading. These features are crucial in your search because they serve as safety nets that help protect your investments from significant losses.
This process begins with detailed analytics to minimize risk from the outset. Wellat has one of the most robust analytics systems, even for non-financially inclined users—those with little investing knowledge.
For example, one crucial risk management feature to look out for is setting stop-loss orders. Stop-loss orders allow you to decide how much you will lose on a trade before it automatically closes to prevent further losses.
Diversification is another risk management feature you should consider as you research. Great copy trading platforms enable you to diversify your investment across multiple traders or assets, thereby mitigating the impact of any single loss. Additionally, some platforms offer risk ratings for each trader, helping you understand the risk associated with their trading strategies before you start copying them.
When learning how to choose a copy trading platform, pick one with solid risk management features. This will ensure that you can adequately safeguard your investments and minimize the risk of significant losses.
Fees and Charges
As a copy trader looking for a copy trading platform, one of the best ways to know how to choose a copy trading platform is to compare the trading fees of several platforms.
Trading fees are costs associated with using a copy trading platform. They are usually small and affordable and vary across platforms. However, despite their seeming insignificance, they can have a significant impact on your overall profits over time.
Learn to check if the platform charges a commission or fee for each trade you make. Some platforms have fixed costs, while others may charge a percentage of your profits. Other platforms that are affiliated with regulated platforms use the same fees as the latter. A clear example is Wellat, which uses Binance-standard fees. Also, be aware of additional charges, such as account maintenance or withdrawal fees. These can accumulate and eat into your earnings over time.
Consider whether the platform offers different account types with varying fee structures. Sometimes, paying a higher fee for a premium account may offer benefits like lower trading costs or access to exclusive features.
Understanding the fees associated with a copy trading platform will enable you to choose a platform that aligns with your budget and investment goals. This way, you can maximize profit with lower costs and fewer unnecessary expenses.
Accessibility and User-Friendliness
Accessibility and user-friendliness are crucial when selecting a copy trading platform, as they significantly impact the ease of navigation and use.
Using a platform that provides a simple and intuitive interface makes it much easier to find what you need and place trades without confusion, even if you are using the platform for the first time. Nothing sucks like having to watch YouTube videos or read blog posts to navigate a copy trading platform’s interface.
Look for factors such as the platform's website or app design, the ease of signing up and creating an account, and whether it offers educational resources or tutorials to help you get started.
Accessibility is much more convenient when your chosen platform is available on various devices, such as tablets, smartphones, or desktop computers. It is even better if the platform supports multiple languages. Accessibility features like that will make it easier to trade anytime, anywhere, and keep up with your investments without barriers and limits.
With the right platform, you can enjoy a smoother, stress-free, and more convenient trading experience regardless of your level of expertise.
Range of Available Traders
Having a wide range of traders to copy from allows you to explore various trading styles, strategies, and risk levels. However, you only enjoy this when you use a copy trading platform with multiple traders.
Hence, you want to focus on a platform that provides detailed profiles of each trader, including their past performance, trading history, and risk ratings. This way, you can choose a trader whose approach matches your investment goals and risk tolerance expectations.
Consider factors such as the number of traders available, the variety of assets they trade, and whether the platform offers filters or search tools to help you narrow down your options.
A platform with a wide range of available traders will also make it easier to diversify your portfolio by copying multiple traders simultaneously. This can help spread your risk and improve your chances of success in the long run.
By carefully assessing the range of available traders on a copy trading platform, you can find the right mix of talent to help you achieve your financial objectives while minimizing potential downsides.
Customer Support
An aspect you should not ignore as you learn how to choose a copy trading platform is the availability of customer support. A platform with responsive and reliable customer support services can be super helpful when you are stuck with a challenge and need help. It might seem insignificant until the day you find yourself in trouble.
Check if the platform offers multiple support contact options, such as email, live chat, or phone, and consider their availability and hours. If they have an AI assistant/bot, that would be even better! It's important to know that help will be available, especially during trading hours. The presence of functional customer support services on copy trading platforms like Wellat demonstrates that the platform values the complaints and responses of its users and prioritizes helping them with their issues.
Another way to assess the quality of customer support is by reading reviews or testimonials from other users. Focus on platforms with a reputation for providing helpful and knowledgeable assistance. Consider factors such as response times, the friendliness of the support staff, and the effectiveness of their solutions. You want to feel safe and confident that they will be addressed promptly and professionally, irrespective of the issues or questions.
Choosing a copy trading platform with solid customer support ensures you have a reliable lifeline in case of any technical issues, account inquiries, or other concerns that may arise during your trading journey.
Security Measures
One of the biggest concerns of every trader is security. Everyone wants to ensure that their investment and personal information are safe and protected against fraud and cyberattacks. This indicates that when learning how to choose a copy trading platform, you must prioritize only platforms that value security.
You can begin by researching whether the platform uses encryption technologies as a security measure. Wellat, for example, uses advanced security measures, including encryption protocols, secure connections, and regular security audits, to protect your account information and funds from unauthorized access. If your sensitive information, like passwords and financial details, is encrypted, it will be scrambled and unreadable to anyone trying to intercept it.
You can also enhance your security on Wellat by activating two-factor authentication (2FA) in the security settings to increase the protection layer. With 2FA, you'll need to provide a second form of verification, in the form of a code sent to your device, including your password, to log in.
Additionally, review the platform's history to assess any previous security breaches or incidents and determine if it has a transparent policy for addressing security issues. With robust security measures, you can trade confidently, knowing that your assets and personal information are well-protected against potential threats.
Reviews and Reputation
Reputation precedes an individual or organization, and this principle also applies to copy trading platforms. Considering reviews and reputation when learning how to choose a copy trading platform will provide you with valuable insights into the experiences of other users and the platform's overall reliability.
Take the time to read reviews from real users to understand what to expect. Search for platforms with positive reviews that highlight key aspects such as ease of use, customer support, and overall satisfaction. Conversely, be wary of platforms with negative reviews, which may indicate poor performance, security concerns, or unreliable service.
Please inquire about the platform's reputation within the trading community and whether it's well-regarded and recommended by industry experts or respected publications. Copy trading platforms with solid reputations are more likely to be trustworthy and dependable. Get recommendations from friends, family, or trusted sources with experience in copy trading platforms. Their firsthand insights can guide you in making a more informed decision.
Focusing on reviews from other users, comments from industry experts, and feedback from loved ones increases your chances of finding a platform that will provide a positive and successful experience with copy trading.
Conclusion
Understanding how to choose a copy-trading platform will save you a lot of unnecessary stress and mistakes in your copy-trading experience. With the right platform, you can accelerate your growth and improve your trading skills as you advance.
Reading these tips above is excellent, but applying them is even better. Take the first step of your copy trading journey with Wellat and share your experience in the comment section!