The popular CopyTrader feature of eToro enables users to replicate the trades made by experienced traders.
But how exactly does the copying function on eToro work?
Find out how eToro’s copy trading works, how to choose a trader to copy, and other important information by reading this comprehensive guide.
What is Etoro?
eToro is an online platform for social trading that was established in Israel in 2007. At the moment, it operates out of registered offices in the United States of America, the United Kingdom, Cyprus, and Australia.
You can trade a wide variety of assets on the eToro exchange, including forex, stocks, ETFs, cryptocurrencies, and CFDs. It provides rates and features that are comparable to those offered by many of its well-known competitors in the stock and cryptocurrency markets.
The social aspect of eToro is one of the primary differentiating factors, and the CopyTrader feature is just one component of that.
Interacting with other traders is a big part of what it means to engage in social trading on eToro.
Every user profile comes equipped with a public wall that allows for the creation of posts by the user. Users are able to leave comments on each other’s posts to discuss a variety of topics, including the current state of the market and various investment strategies.
What Exactly Is This Etoro Copytrading Thing?
Any investor can automatically mirror the trading activity of other, more experienced traders by using eToro’s CopyTrader system.
This indicates that you are able to make use of their trading expertise at no additional cost and with a minimum amount of effort required. All the while you are building a portfolio that is customised to your long-term investing goals and the amount of risk you are willing to take.
It is possible to use the CopyTrader feature in place of a traditional financial advisor, the cost of which may be prohibitively expensive, or a robo-advisor, which is solely responsible for making decisions based on predetermined criteria.
In general, it is an affordable alternative for traders who are interested in gaining knowledge from more experienced traders or who would rather have someone else take control of their account.
The experienced traders, also known as copyable traders, stand to gain as well because they might be eligible to receive incentives for managing a portfolio that is widely replicated.
How does the Etoro Copytrading works?
On eToro, it is incredibly easy to copy the trades of other traders. You only need to follow a few simple steps to get started with CopyTrading after you have successfully registered for an eToro account and had it verified.
The Discover page of your eToro app or the desktop site is where you will find the copyable traders. You can navigate that area using the widget, or you can click Explore to go to the main CopyTrader page.
You’ll find a list of featured traders there, arranged according to Top Performing and Most Copied. A brief profile window for each trader will show you some basic informations about them and their previous performances.
You can begin copying immediately from the main page, or you can click on a trader’s name to see more information about them. You will have access to their wall through their profile, which is where you will see all of their posts that are visible to the public. These posts will typically be about their trading strategies and market forecasting.
Their Stats page will show you their profits and losses month by month for as long as they have been using the platform, as well as change over time, their trade frequency, frequently traded instruments, and other relevant information.
You are able to look at every trader’s portfolio on eToro, which offers complete transparency. This view includes helpful information such as the percentage of capital invested, the profit and loss for each asset, and even the option to buy directly from the portfolio.
How to CopyTrade
eToro provides you with two different choices whenever you make the decision to copy another trader. You have the option to copy any and all open trades, or you can choose to copy only newly opened positions.
If you select the Copy Open Trades option, all of the trader’s existing positions will be copied into your account. However, it is important to keep in mind that these positions will be opened in your account based on the market conditions that are in effect at the time of your account’s opening, not the conditions that were in effect when the original trade was opened.
You will be able to more closely mirror the results of the copyable trader’s positions if you restrict your copying to only newly executed trades. This will not, however, immediately give you a portfolio that is identical to the trade that you are copying.
If you want to copy the trades of a specific trader, you are required to make a minimum investment of $200 in that trader.
The maximum amount of money that can be put into a single trader is two million dollars.
How to choose which Trader to Copytrade?
On eToro, selecting a trader to copy is largely a matter of personal preference because there are no concrete guidelines or regulations to follow when making this selection. However, there are a few things that everyone should keep in mind when choosing a trader to model their own trading after.
Duration of the Investment
What kind of financial commitment are you hoping to make? How about the medium term, or the short term? You can find a Copyable Trader whose trading style is most similar to your own by looking at their average hold time and comparing it to your own.
Are you risk-averse, or risk-taking, or somewhere in between? You are unable to copy traders who have a risk score of 9 or 10, but for scores lower than that, the decision is yours to make.
A trader with a risk score of 5 or 6 may occasionally engage in risky trading, whereas a higher risk score indicates that the trader engages in riskier trading more frequently. Because risk scores are subject to change over time, it is helpful to look at an average of scores from the past.
In the same way that you would when selecting an individual investment, looking at past performance over the course of the previous year can assist you in locating reliable traders to copy.
The total number of followers
Although this is not a guarantee, a larger number of followers probably indicates that the trader was considered to be worthy of imitation at one point in the past.
Years Spent Trading
Gains that are high are appealing, but you should make sure that the trader you are considering has at least some track record. In the short term, it’s always possible to hit the jackpot, but looking at someone’s history over a longer period of time will give you a clearer picture of whether or not they are skilled.
The CopyTrader feature offered by eToro is uncomplicated and simple to operate. Just keep in mind that you’ll get the best results if you make an effort to choose a quality trader whose trading style aligns with the goals that you want to achieve. Keep this in mind at all times.
If you want to get the most out of your investments, a little bit of research can go a long way toward helping you. In general, the CopyTrader programme is a cost-effective option that should be considered as a possible replacement for expensive financial advisors or rigid robo-advisors. This is because of the flexibility it provides.
Feel free to give Etoro CopyTrading feature a shot if you’re looking for a reliable copy trading platform to use in your trading.