Crypto investing can be overwhelming for beginners. As more decentralized projects deliver new and unique assets, the market evolves continuously, and crypto regulations change frequently, making it challenging to keep up. However, early investments are beneficial for the future, as they help develop healthy financial habits, can beat inflation, and lower the risks over a longer period.
That’s why more people are learning how to invest in digital assets, especially cryptocurrency, as building a portfolio could ensure more financial security than current government-based systems. Investing requires significant time and effort spent researching, as there are numerous strategies people can adopt based on their risk tolerance and financial goals.
For example, beginners and intermediate investors use copy trading to replicate the portfolios of successful traders who manage top cryptocurrency. This method ensures accessibility and diversification, allowing people to become accustomed to market cycles. Other novice traders prefer mirror trading as it provides access to expertise.
But which system is best? Let’s find out.
What does copy trading involve?
Copy trading is quite simple— you set up a trading account and start following leading investors and traders to copy their asset portfolios. This is possible because professionals link their accounts to trading platforms, making their investments publicly available. Most platforms enable beginners to automatically replicate these trades in their accounts.
Copy trading has several benefits, such as the following:
- Supporting access to knowledge and experience;
- Creating a learning opportunity;
- Ensuring time-efficient investments;
- Offering asset diversification;
- Developing the potential to profit;
However, beginners should practice due diligence when approaching copy trading, considering its disadvantages:
- The lack of control over one’s trading decisions;
- The limited learning over a long period;
- The dependency on others’ investments;
- The risk of copying high-risk or poor traders;
- The additional costs for copy trading that are charged by some platforms;
Copy trading is more effectively leveraged when beginners join a social network where professionals share tips and tricks. At the same time, novice traders should become familiar with the market leaders’ investments by checking their social media, which can offer a broad perspective on their decision-making process. That’s because some traders have less FOMO than others, so their motivation is backed by research.
What is mirror trading?
While mirror trading is similar to copy trades, it’s a more automated strategy. The system is based on algorithms that monitor trading activities, ensuring effectiveness through their evaluation models. Therefore, users can benefit from the best data on their preferred assets or markets from successful traders.
Mirror trading offers the following advantages:
- It allows beginners to invest in complex markets;
- It ensures time efficiency due to automation;
- It gains access to proven trading strategies;
- It delivers a potential for passive income;
On the other hand, as efficient as it is, mirror trading comes with risks:
- It exposes users to volatility, which impacts even the best traders;
- It depends on the platform’s reliability and security, which are not always top-notch;
- It lacks features of adjustments, so there’s no customization available;
- It comes with a fee structure that can reduce net returns;
Beginners must choose their trading platform wisely when approaching mirror trading. They should look for features of a user-friendly interface that allow them to easily access performance and trader data. At the same time, the platform must adhere to the highest standards of security while being transparent about its fee structures.
So, researching and comparing more platforms is essential. It’s also helpful to check the team behind the project and analyze the opinions of employees and management over their industry and business efforts. For instance, Rachel Conlan, CMO at Binance.com, stated that “Every move we make at Binance is designed to scale awareness, build trust, and transform curiosity into lasting confidence. That’s how we grow not just our platform, but the entire crypto ecosystem.”
But why should beginners approach crypto?
Cryptocurrency is one of the most innovative financial models, offering a promising outlook for the future. These digital assets operate on decentralized blockchains, where leadership is transparent and fair, and participants have the right to vote on changes and improvements.
In addition, cryptocurrency is at the forefront of technology, which is surely a promising asset for the years to come. As the Web3 world slowly lays the groundwork for advancement, investing is an opportunity with such potential that it can help you gain wealth over time.
The Web3 ecosystem is what follows the Web2 era. It includes features such as artificial intelligence, interoperability, and cryptocurrency, all of which are gradually improving people’s lives. AI can revolutionize healthcare, interoperability drives innovation, and crypto offers financial opportunities to the unbanked.
That’s why many crypto enthusiasts recommend starting to invest as soon as possible, considering that the value of these digital assets increases as their scarcity intensifies.
Which cryptocurrencies will become more valuable in the future?
Some of the most promising crypto assets are currently those leading the market. Let’s take the example of Bitcoin. The project released a limited number of 21 million coins, but approximately 95% of them have already been mined since 2009. This supported a growing value in Bitcoin, which will continue to reach increasingly impressive heights as it approaches its end. Experts have calculated that the last Bitcoin will be mined around 2140, so the rate at which miners will mine the coin will slow down, but its value is expected to boom.
Ethereum is another innovative cryptocurrency, but its value comes from its technology development. Users stake it instead of mining it, and there is no official limit on the number of coins that will ever be issued. While this keeps Ethereum’s costs at a relatively balanced level, the projects’ focus on smart contracts, decentralized finance, and NFTs is what drives investors and traders to introduce it to their portfolios.
Final considerations
Trading and investing as a beginner can be challenging, especially now that the market has evolved significantly. There’s a wealth of information and even more cryptocurrencies with potential, so researching and making the right decisions can be challenging. However, new users can approach copy trading or mirror trading to replicate the investments of successful and high-profile investors, allowing them to become accustomed to the market’s ups and downs, as well as start building their portfolio value.