Passive Income with Covesting – what is it and how does it work
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Covesting is a social trading platform on PrimeXBT. Social trading has been around for many years and is often referred to as copy trading or mirror trading. There are many alternatives to Covesting, and they all come with their unique aspects. Covesting mainly stands out by allowing social trading on cryptocurrencies and by the connected COV token. More on this later.
The covesting platform is, in my opinion, a perfect way to generate passive income from crypto trading. As a strategy follower, you can make passive income from other traders’ active day trading. As a strategy manager, you can make more money from the trading you already do. Read on to see exactly how this works, or simply go over and sign up right now at PrimeXBT.
Social trading – Mirror trading – Copy trading
While there are differences between all the social trading platforms on the market, the key point with this type of trading is;
- You, as a trader, do not execute any trades.
- You follow a trader, and all the trade he/she executes will automatically be replicated on to your account.
This is also true for Covesting. As an example;
- I follow trader A
- Trader A executes a Buy on BTCUSD
- A buy on BTCUSD is automatically executed on my account
In this post, I will solely focus on Covesting, but if you are interested in Social trading, you may want to look at some of the alternatives as well.Etoro, Naga, WikiFolio, MyFxBook, ZuluTrade, Ayondo, Tradeo, Tradency, Darwinex, FXStat, and Collective2.
Covesting
As mentioned above, Covesting is different in that they offer social trading on cryptocurrencies. PrimeXBT is my favorite broker for day trading on cryptocurrencies, and because of this, I quickly fell in love with Covesting. Covesting allows me to follow other profitable traders, and it will enable me to create my own strategy for other traders to follow.
Following other traders
To follow other traders in Covesting is very easy and intuitive. Click on the Covesting section in the top menu. From here, you will see a list of all the different strategies you can follow. They are sorted neatly by Total profit, Today’s profit, active days, the number of followers, performance, followers equity, and rating. Once you find a strategy you want to follow, simply click the “Follow” button.
This will bring up a window where you have to choose the amount you want to allocate towards following this strategy. Once this is done, you are all set. You can get started with social trading within minutes.
If you want to know more about a strategy before you start to follow it, simply click it to read more and see more details about the strategy’s historical performance. Two things to note here;
- If you want to follow a strategy you need to allocate a min amount of ₿0.001
- When strategies get popular, they may reach the maximum allowable allotted amount of BTC.
Once you start to follow a strategy, you will be able to see the stats in the portfolio section from the left sidebar.
Portfolio
In the portfolio section, you will “Current holdings” which is a list of all strategies you currently have allocated funds to. Below the current holdings list, you will see “Following history” which is a list of strategies you have followed in the past but don’t follow anymore. Details are broken down into total profit in BTC or USD, total profit in %, stop loss, Today’s profit in BTC or USD, Today’s profit in %, initial equity in BTC or USD, current equity in BTC or USD, and finally, Status.
I would like to see details on open trades and closed trades, but unfortunately, we cannot see this. Traders preferably do not want these details shared as it may partially disclose their strategy and allow others to copy the trades.
Overall it is straightforward and easy to start following other trades.
Creating your strategy
Creating your own strategy and allowing other traders to follow is just as easy and may be a lucrative way to make additional income from your trading.
- There are no prerequisites to do this besides a deposit of ₿0.1.
To get started, simply click the “Create Strategy” section in the left sidebar. From here, give your strategy a name, a description, and choose your starting capital. Once done, click the “create strategy” button and start trading from the “Trade” section in the left sidebar.
Now you can view the details of your strategy in the “Manage strategy” section in the left sidebar. Here you will be able to get a complete view of your historical performance for the strategy and your followers’ profit distribution. It will take a bit of time to gain followers, but they will come if your performance is good.
As soon as your strategy is in profit, it will be listed on the rating list on the Covesting strategy list, allowing other traders to follow you.
COV Token – Optimize your results
You can easily buy COV token via PrimeXBT. Doing this allows you to
- Get a trading fee discount as a strategy manager
- Increase the % of your profit distribution as a strategy follower
- Get an entry fee discount as a strategy follower
If you are serious about the Covesting section, this is an absolute no-brainer. The savings you can get from holding the COV token is far more significant than the cost of the token itself.
I will take a deep dive into the COV token in a separate post in the nearest future.
Cons of using Covesting
In my opinion, there is only one single downside to keep in mind before using the Covesting platform as a strategy manager, and that is the psychological aspect of trading. This is without a doubt the single most challenging aspect to control when it comes to trading. When you share your performance, this will probably become even more difficult. You will need to disregard the performance of the other strategy managers completely. It may be even more challenging to realize a loss due to fear of losing followers. This can easily lead to overtrading and FOMO, or maybe “undertrading”, in fear of taking a bad trade.
The cons as a follower of existing strategies, the downside is quite apparent; the potential loss as a result of the strategy manager executing loss generating trades. While there is no way to safeguard yourself 100% from losses, I think a bit of commonsense will do wonders. Do not follow strategies that have made 500% in a single day and lost 300% the next. Chose strategies carefully based on slow and steady profits, with low drawdowns. Go for a mix of strategies instead of just a single one. Finally, chose a strategy that has been active for a while, which will give you a better indication of what to expect going forward.
The covesting platform is, in my opinion, a perfect way to generate passive income from crypto trading. As a strategy follower, you can make passive income from other traders’ active day trading. As a strategy manager, you can make more money from the trading you already do. Read on to see exactly how this works, or simply go over and sign up right now at PrimeXBT.
Conclusion
If you want to get started with social trading with a focus on bitcoin and other cryptocurrencies, Covesting on PrimeXBT is the perfect place to start. It is easy and straightforward, and you can get started in minutes.
I currently have an existing strategy running, where I try my very best to copy the signals shared by Chris from MMCrypto. You can read more about that here. If you want to follow the strategy, you can do so right now via Covesting.
I have also started to follow two existing strategies. I will create a log later today, where you can read about the results.