Copy Trading Strategies Explained: Long-Term vs Short-Term

Copy trading has changed investments in the stock market forever for both new and advanced traders. With the increase in copy trading apps and copy trading software, anyone can copy the trade of experts. However, you must first understand the difference between long-term copy trading vs. short-term copy trading.

1. Understanding Long-Term Copy Trading

Long-term copy trading involves copying trades of investments that can stay open for weeks, months, or years at a time. This establishes a viable strategy if you want reliable returns without monitoring the market constantly.

Reliability: Long-term traders generally produce more consistent performances.
Reduced Stress: Because trades are not frequently opened and closed, there is less stress from market fluctuations.
Good for Beginners: If you are a newer trader, using a reputable copy trading app, you can successfully copy expert traders who have track records of consistent performance.

Many new traders lack patience, which is necessary for long-term strategies. While it may take time to see returns, the good news is that returns will grow over time more consistently, particularly if you are using reputable copy trading software that allows the copy trading to be automatic.

2. Short-Term Copy Trading

In contrast to long-term trading, short-term copy trading is essentially copying trades that last for anywhere from a few minutes to a few days. This may involve day trading and scalping strategies.

Quick profits: Short-term traders are looking to benefit from small movements in the market.
High degree of monitoring: You’ll be watching trades fairly closely, as the market swings can affect your trades quickly.
Higher Risk: While profits can come quicker, they can also be lost more quickly. Using a copy trading app efficiently can help automate some trades but should not be the sole reason to follow a trader. The best traders to copy under any investment strategy, but particularly a short-term strategy, require careful thought and evaluation.

Short-term strategies may be more suited for traders who enjoy active trading and are comfortable with the swings of the market.

3. Market Volatility

Having an understanding of both the long-term and short-term strategies is managing the risk during volatility. Unless you are following a true expert, and reputable expert, allocation and trading through extreme market movement is not advisable. Market movements can affect both long-term and short-term trades, but short-term trades are most likely to be affected. You should have trading software or even a copy trading app that has some level of risk management in order to better protect against and navigate volatility in markets.

4. What Strategy Should You Implement?

For Beginner or Low-Risk Investors: Long-term copy trading is lower risk and easier to manage.
For Experienced, Active Traders: Short-term strategies can yield higher returns but require constant attention.

Using the proper copy trading app or copy trading software is an important factor. Look for options that offer features such as automation of trade copying, price alert notifications while you are away, and performance tracking of the traders you copy.

Conclusion

Choosing between a long-term trading strategy or short-term trading strategy is based on your investing objectives, risk tolerance, and availability. A long-term strategy will allow for stability and low stress, while a short-term strategy will promise quick profits but require you to be acutely active. Fortunately for you, advanced copy trading software and apps made following your preferred strategy easier than ever.