Etoro has been around for a while now, and it has gained traction over the past few years. One of the best features of eToro is its copy trader function. Copy trading was what made eToro stand out from other brokers. It enabled novice traders to copy other successful traders on its platform. There is a huge opportunity for novice investors to make money just by copying other investors on eToro.
Etoro has a huge pool of talented investors to choose from, and with a little diligence, you can automate your investment and make a lot of money from copy trading.
How Does Etoro Copy Trading Works
Copy trading allows you to copy other eToro investors' trade as long as their account is public. Once you copy an investor on eToro, the portion dedicated to copy that investor will mimic each transaction the investor makes in his portfolio. Although there might be instances that your portfolio may not copy trades due to the trade being below the minimum amount, eToro will copy the rest of the trades that reach the minimum.
How Much is the Minimum Copy Amount
eToro just recently increased the minimum copy amount from $200 to $500 due to increased volume on their platform. The increase in their minimum copy amount will reduce the number of small trades on their platform and ease their network congestion. $500 might seem like a huge amount to some, but when you look closer into how to copy trading will spread this amount, the increase is beneficial to the copy traders. Considering most Popular Investors have more than ten positions open on their portfolio, the increased minimum amount will allow copy traders to sync their portfolio to the popular investor.
Are There Fees on Copy Trading
Etoro does not charge you any fee when you use their copy trading feature unless you copy an investor who has leveraged trades open. In this case, eToro will only charge leverage fees on your account.
Is Copy Trading in Etoro Safe?
When I started investing in eToro back in 2012, eToro did not regulate the copy trade feature. Novice investors were copying a lot of very risky traders back then. Most popular traders that used high leverage to entice other users to copy their account. If you were a beginner like me back then, you would probably fall for that scheme and copy one of those risky traders.
eToro's copy trade feature had improved since those times when high-risk traders populated most of the search results. eToro has devised some clever metrics to protect its users from traders who could potentially wipe out your investment. They also regulated copy trading features by implementing limitations on users who want to become a popular investor. The restrictions and detailed information of popular investors made copy trading a lot safer for cautious investors.
Is Copy Trading in eToro Profitable?
Ever since I started on eToro, I've managed to gain respectable returns from copy trading. I've already copied several popular investors, and most of these investors have made me some profits. If you are cautious about choosing who to copy, the returns you can make on copy trading are usually higher than most mutual funds available.
Some popular investors doubled their accounts in two years, and others doubled their accounts in two months. Returns hugely vary among popular investors, but the ones that last longer are the ones who have good risk management.
In order to successfully make money by copy trading in eToro, you need to understand and do some research on the popular investors' stats. It is not enough that you search which popular investors have the highest returns. Etoro provides details on each of their popular investor under their stat page. Examining this page will increase your chances of making a lot of money in eToro while minimizing your risk.
Tips and Strategies on Choosing Who to Copy on Etoro
Etoro's Copy trading has made investing accessible and a lot easier for novice investors. Despite the simplicity, it is important to recognize the risk-return tradeoff on investing still applies to copy trading. The higher the return you expect from a popular investor, the higher the risk involved in copying that investor.
One way you can manage risk is to examine the popular investor's stat page. Performance is the first section of this page, and it is good to check the past performance of a popular investor to get a glimpse of what to expect from that investor.
Even though eToro constantly reminds its users that past performance does not guarantee future results, you should consider consistency as one of your criteria for choosing an investor. Average consistent returns are better than huge spikes in an investor's return. A popular investor who consistently gets gain, be it small, is the key to profiting in copy trading.
Another aspect you should look into an investor's past performance is the gain-loss ratio. You might want to research an investor who made one huge profit but had several succeeding losses before that. Although losses are part of investing, keeping it a minimum will greatly affect your portfolio down the road.
The next section you need to examine is the risk score of a trader. Try to look for a trader that has an average risk score between 3 - 5. It will reduce the risk of choosing a popular investor that can blow up your investment. There may be times when a trader exceeds this risk score due to market volatility. What is important is that the risk scores of most months are between these ranges.
Once you find the right popular investor to copy, try and stick to your copy trades. One of the mistakes most new copy traders make is to jump from one copy trade to another. Patience is important when it comes to copy trading. What most new investors don't understand is the concept of spread. Spread is the difference between the bid and ask price. Each time you start a copy trade, all the positions in your copy trade begin at a loss. Although the loss is minimal, these losses will accumulate every time you close a copy trade and open a new one. Keeping your copy trade for months or years at a time allows your investment to earn and grow.
If you follow what eToro has been marketing for years, you can make money just by copy trading others. Trusting the experts and letting them do their thing will result in better performance on your portfolio. Don't expect to become rich within a few months if you only invest small amounts in copy trading. Etoro Copy Trading is not a get-rich plan, and you should set realistic expectations from your investments. Getting a safe return of 30%-80% in a year is certainly possible but don't expect to get this return every year. Whichever market you choose to invest there will always be market fluctuations.
I hope you find these pieces of information useful. If you have any questions, please don't hesitate to ask me in the comment section.
If you don't have an account on eToro, please use the referral link https://etoro.tw/3qMNrcV in registering your account on eToro. I hope you'll make money copy trading on eToro.
I am not affiliated with eToro, and the topics discussed in this article are based on my own opinion and experience.