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According to research By Charles Schwab UK, younger generations in particular Z and the millennials, unlike generation X and baby boomers Accept online commerce as one of the main public income activities.
This makes many of them traders but lacking in sufficient experience, so that the question of active investment strategies remains open and generally unexploited.
Younger investors also adopt wider investment opportunities, such as trading in copies, which are generally not welcomed as much by their older counterparts.
However, for novice investors, even if they are more advanced, taking advantage of the strategies of master traders and consider it as a means of diversifying the risk of the human factor can be self-lighting.
Sometimes seeing an influencer boast of success and deleting a reference link has a huge number on investor decisions.
So the trading of copies is no longer just trading It is the economy of influence in force.
High yields, hidden volatility
Given the social nature of the trading of copies, there is a real danger in people who trust too much in personalities well known in the industry, in particular masters, whose successful transactions can be easily reproduced.
The biggest risk of trading in copies is not the market It is psychology.
This situation recalls the wave of recommendations for the cryptography of celebrities that tend to surface during each bull market, often leaving experienced traders feeling uncomfortable when these influencers make bizarre promises concerning token projects.
Although having a celebrity on board can certainly give a boost to a project, it does not guarantee that it is legitimate.
However, despite a history of failures, many novice investors are always too influenced by eminent people from industry.
Diversification, although it is a common approach in the investment, can also be very delusional.
The simple fact of spreading your money to 10 different master accounts does not really protect market behavior at the end of the day.
In the world of cryptography, a semblance of credible diversification could only be to mix the very copying trading, making all its warnings, with long -term investments or alternative investment methods such as jalitude.
The main thing is that investors do not cause common risk of trading in copies as much in mass, but by the platforms themselves.
It is their duty to communicate both risks and performance.
When the return or withdrawal measures leave aside the profits and the unrealized losses, investors can easily be induced, leading to unrealistic expectations based on partial information.
Protect the follower at the platform level
When it comes to protecting copying trading ethics, trading platforms usually focus on the key problem Unveil and stop the “stimulation” patterns of the known account.
This happens when someone sets up several accounts Let's say and four And opens positions “buy” in two while placing “sale” positions on the other two.
After closing two “victims” accounts, the others could show impressive yields Let's say, 80%.
The trader can then repeat this cycle, finally with an account with it, let's say, a yield of 230%.
At this stage, even minor gains like one percent can cause growth in disproportionate percentage Due to the composition.
This creates a false feeling of regular profitability when, in reality, it is just an artificial boost from the start.
Investors who see this type of past performance might think that they can expect similar results, but they simply buy in an intelligently designed illusion.
In addition to that, there is not much incitement to the platforms to keep an eye attentive on how traders behave.
After all, it's just a market Some traders can be relaxed and careful, while others should act more aggressively. There is a place for both types.
The only twist here is that instead of pushing a casino style wheel, someone can click on the “follow” button on a hyper-aggressive merchant.
Overall, a trading platform can offer two complete tools to protect investors Risk limits for signal suppliers and risk limits for investors.
Regarding the risk limits for signal suppliers, they must be implemented in a way that prevents users from modifying them instantly. Otherwise, it does not serve his goal.
When the defined limit is exceeded by the user, the platform intervenes in order to counter risked activity. It is the really effective way to protect investors.
In addition, platforms should clearly communicate these limits to investors.
For example A stricter risk limit will be imposed on this master trader If his account loses, for example, 20%, all positions will be closed automatically. »»
This type of application measure would provide more realistic protection.
The same goes for subscribers Platforms should allow them to rely on automated controls such as stopping stop thresholds or risk multipliers.
Let's say that the investor set a loss limit of 500 USDT for the Master Trader. If the loss reaches this amount, all copied positions will be closed and the subscription will be terminated.
Last words
By entering the world of trading of cryptographic copies, investors must understand that it intrinsically involves risks There is always a chance to win or lose.
The key principle is simple and universal Never place more than you are ready to lose.
Once this deposit has been made, there are several ways to effectively manage the risks Diversify by following several signal suppliers, set clear risk limits and use low -risk multipliers.
If these precautions are in place, losing money becomes much more difficult, but at the same time, winning a fortune would not come easily either.
Sergey Ryzhavin is the director of B2copyA silver management platform for brokers developed by B2Broker, a global supplier of fintech solutions for financial institutions. Sergey is a seasoned fintech professional with more than 15 years of experience in copy trade, brokerage solutions and trading technologies.
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Warning: Opinions expressed at Daily Hodl are not investment advice. Investors should make their reasonable diligence before making high-risk investments in bitcoin, cryptocurrency or digital assets. Please note that your transfers and trades are at your own risk, and that any loser that you may incur is your responsibility. The Daily Hodl does not recommend the purchase or sale of cryptocurrencies or digital assets, and the Daily Hodl is an investment advisor. Please note that the Daily Hodl is participating in affiliation marketing.
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