How does Covesting Copy Trading function work is a very common question. Luckily there’s a good and simplified explanation of it.
This is how copy trading will work:
Let’s assume an investor has $100K to invest. He decides to follow a trader named John because of the awesome Technical Analysis and stats he provides over the time.
Let’s now assume that Covesting token is $10.
So, $100K becomes 10,000 COV > mirror John’s portfolio of mixed crypto
This process is executed by the LA in a matter of seconds. COV is only a medium to translate the $100K to copy John’s portfolio
John trades based on his charts. Investor’s portfolio will automatically mirror every trade executed by John.
Note: Especially relevant is that the John does not have control of investors funds. He trades and risks his own money. Funds for copy trade are kept in a segregated account.
If John makes 50% ROI, the investor’s portfolio grows to $150K in value.
If the investor is happy to take the profit, he “unfollows” John. The platform will execute this instruction and sell off the
$150K portfolio and convert it into COV for the investor.
Now let’s imagine the possible scenarios upon unfollowing:
If COV = $15ea > investor receives 10,000 tokens.
Which in general is much better than holding because it actually assures your investment will grow.
If COV = $1.5ea > investor receives 100,000 tokens
IF COV = $150ea > investor receives 1,000 tokens
In all 3 scenarios, the investor receives $150K in value before sharing a success commission with the trader and the platform.
In reality, John earns $9K (18% of $50K) and Covesting earns $5K (10%). This leaves the investor with a net position of $136K.
Mind that success fee is only taken into account when the trade is profitable. Nobody would charge you commission if the trade outcome is a loss.
If COV accumulation is your end goal you can also wait for the market to change accordingly before unfollowing a trader. On the other hand, if fiat is the end game then it doesn’t really matter one way or the other how COV is performing. Copy trading gives a higher assurance that you will walk away with profit over holding as the COV token can change with market conditions whereas the trader you follow will have stats implying that he is good at what he does and can judge said market conditions to some degree.
Let me take you back to the fees in the scenario above:
18% Trader’s success commission – Think that it’s too high? I consider it normal for being able to follow up to 20 traders and sleep well without sweating over your crypto during the night. If the trader is well paid, he will be striving to perform better and better.
10% Covesting fee in the scenario above – 50% of that goes towards token burn. Token burning is not limited to a certain amount of tokens burned. It doesn’t happen quarterly or monthly – it’s continuous and also includes exchange fees and algo trading fees.