This post is a review of eToro copy trader, and tips on how to copy the best traders on eToro. All trading involves risk. Only risk capital you’re prepared to lose. Past performance is not an indication of future results. This content is for educational purposes only and is not investment advice. If you have questions or tips, join the live discussion on the comments section below and interact with like-minded traders.
Ever wanted to dive into stock, indices, commodities, and forex (foreign/currency exchange) trading, however lack the skill and knowledge in executing a successful and very profitable trade?
Yes, we may have that beginner’s luck at executing a few trades. The thing is, how do we maintain a very successful streak by somehow predicting that next sharp rise in the charts?
Certainly that is not that easy to do so without having expert financial “Wall Street” calibre skills. That is my issue as well. I wanted to trade and make a somehow handsome cash while relaxing on a beach. But I’ve already tested the waters of manual trading. Quite honestly, it didn’t work out well for me.
Turns out I was a very emotional trader, quickly responding to chart movements (a notoriously newbie mistake) as I’ve written in a previous blog post.
At the time, I really hoped there would be a game-changing trading platform that allows normal people to just automatically copy expert trades of expert traders. When I say expert, I meant those who are knowledgeable at what they do. Those who are able to deal with their emotions while prices plummet.
It’s actually a good thing there is eToro (your capital is at risk), the world’s largest social trading network with millions of active traders. eToro is a member of the Financial Conduct Authority (FCA) and Cyprus Securities and Exchange Commission (CySEC). The question is, what is my review of eToro? And how do we find and copy the best traders in this trading platform?
eToro Copy Trader Review: What is it & how exactly does copy trading or social trading work?
eToro basically allow you to invest while doing so in a social community (just like Facebook!). Meaning you can follow and chat with fellow traders regarding the markets. You also get updated in their every trading move.
What’s more convenient is that you can easily spot top performers. You can check their profiles to see their trading performance and pick the ones to automatically copy whatever they’re trading.
You also get to choose how much of your money you want to invest per trader that you copy. The registration and service is absolutely free, and in case you choose to put in some investment, the minimum deposit is $200.
If you’re a confident and experienced trader and you wish to rely on your own trading, you can still take advantage of this social network by becoming one of eToro’s popular traders (your capital is at risk) and be copied by other traders. When your trades are copied by other traders, you also earn your own management fee.
How to copy the trades of master traders?
Take a look at this 6-minute video to see what the whole ‘copy trading’ is about and how it works. After the video, I’ll be giving you more tips in selecting who to copy.
Easy, eh? Basically once you log-in you’ll see your Facebook-ish live activity feed where you’ll see what’s going on around your investment network. You’ll see what your ‘friends’ are trading on right now, what hottest investment topics are on. Once you click on the ‘People’ tab, you’ll find top traders whose trades you can easily copy by clicking on the ‘Copy’ button and selecting how much of your money (equity) you want to dedicate in copying your chosen trader.
It is particularly refreshing knowing that eToro doesn’t allow us to invest more than 20% of our money to be copied into one single trader. This leads us more on the safer side. The basic investment rule to diversify assets, and not putting all ‘eggs’ in one ‘basket’.
The platform also makes it easier to find out which trader profiles to copy. This lets us easily identify who has the highest gain, most number of active copiers, most profitable trading weeks, and the least profitable trading week in a given time frame. If you’ll take a look at their profiles, you find out what their risk appetites are. You also see their trading history, whether they are successful or not in their previous trades.
How to find the best traders on eToro?
My advice: Take advantage of the ‘Advanced Filters’ option to make sure you rigorously find out exactly who to look for and copy. Make an informed decision – consider the following when picking who to copy.
- Return – this of course is an important factor and is one of the best indicators of a successful trader. Since it shows how much a trader has made over time, set this to high.
- Weekly drawdown – Try to set this at a low, as this is the maximum losses by a trader over a certain period.
- Average trade size – this is the average amount of money a trader allots on each of his trades compared the amount of money he has available. If, for example, a trader has $200 in his account and invests $150 to a particular trade, he is already considered a ‘high risk’ trader. Why you ask? Because he just put almost all of his money in one single trade.
You don’t want to copy this trader and watch most your money down the drain on a single trade, man. Copy those who are more conservative, diversifies his trades and invests only a small percentage of his equity to allow for other trades.
- Leverage – the higher the leverage, the riskier the trader is. This happens when the trader invests more money than he has available in his account. Copy those who has a lower leverage – again, this is choosing the more conservative traders.
- Active weeks & trades – this shows how many trades the user has made over a given period of time. This is important as this shows consistency and commitment of the trader. You don’t want to copy a trader who does little to no trade per week-your money would be sleeping, right? This also shows consistency on the performance of the trader. For example, if a trader has a high return and has a high number of active traders over time, this just validates the competence of the trader.
- Number of copiers – you can’t take this for granted. Since eToro (your capital is at risk) is a social network, looking into the number of followers and copiers that a trader has just makes sense and makes for a more confident decision on your end. This is because you know that others put their trust on the trader as well. If the metrics are good and this trader has a lot of copiers, then he must be really good at what he’s doing and it might be worth copying this trader.
More of this: Copy systems explained(your capital is at risk)
Some caveat though…
As you noticed in my tips above, conservative is the key word. Diving into copy trading is risky enough. Don’t add to the risk by copying the wrong trader – an unconservative, high risk trader. Trading takes a lot of patience and no one should expect earning a wad of cash on just a single trade. Greed, my friend, destroys a trader.
So if you notice a trader who’s taking on risky moves as described above, do not copy, by all means. I’ve previously written about the pros and cons of copy trading, check it out!
Since online trading is high risk, it may be best not invest all your money in here. Diversify instead by investing on other financial products as well. But I think trying this and learning from your experience won’t hurt. And boy, this may even possibly be a new source of passive income for you.
Test the waters, invest a small account that can’t hurt if lost, and reap the benefits of learning and possible surplus on your account. :)
Have you already experienced the benefits of copy trading? Feel free to comment, share your tips, or ask a question. Please also like me on Facebook and Twitter! Thank you!
*Above is the sole opinion of the author and should not be taken as a formal advice. This will now be based on you, the decision-maker to determine if investing in this type will be in your best interest. All trading involves risk. Only risk capital you’re prepared to lose. Past performance is not an indication of future results. This content is for educational purposes only and is not investment advice. Visit eToro for more information on social/copy trading.