ELI5: Copy Trading Explained to a 5 Year Old
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Editor's note: This series of articles, "ELI5" refers to the famous acronym "Explain it to me like I'm five." The goal is not to infantilize the reader but simply to give them the keys to understanding concepts encountered in the cryptosphere and the trading world.
If you're in the world of crypto-currencies or the traditional stock market, then you've probably already heard of copy trading. However, that doesn't necessarily mean that you know what it is exactly. But fear not, we're going to explain it all to you.
In this article, we'll go over what copy trading really is. We will explain in detail how it works and analyze whether it is a good way to make money without too much effort or, on the contrary, something to be avoided at all costs.
As the name suggests, the way copy trading works is fairly easy to guess. On some platforms, you have the opportunity to follow the trading operations of other investors. You can see their results and sometimes even chat with them. This is called social trading.
But copy trading takes things a step further. When you like a trader, you have the ability to follow what they are doing automatically. With a few clicks, you can tell the platform that you want to copy all the trades that the person you are following is going to make.
As you can see, there is nothing rocket science about copy trading. It's quite simple, but choosing the right traders to follow automatically is a bit more complex.
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When you invest, whether in the stock market, cryptos or other financial assets, there are always risks. It is not possible to know for sure what
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