In this review we will see that eToro’s new social trading feature, eToro copy trader, is unequivocally a great tool to leverage if you want to trade under the shadow of successful traders and learn from them. However, it is not as simple as it seems, many people lose money on wrong trades and wrong traders as well. You need to first learn about eToro and its copy trading tool in detail before you can make your mind about whetheryou want to invest your money in it or not.
This in-depth eToro copy trader review will help you learn most of the essential aspects of this tool, how you can find the best eToro traders, the benefits and drawbacks of this tool and more so make sure to stick to the end. And with that said, let’s dive right in:
Please note: 75% of retail investor accounts lose money when trading CFDs with this provider.
Broker Name: eToro
eToro Minimum Deposit:$200
Leverage:It depends on the region and asset. In the EU, the leverage can be up to 1:30 while in other countries, it might be 1:400.
Free eToroDemo Account:Yes
Regulation:FCA & CySEC licenses
Number of Assets:Contains 2000+ market instruments including Forex, cryptocurrencies, commodities, indices, stocks, ETFs and more
What Is eToro?
eToro was started in 2006 as a platform that enables everyone from around the world to trade and invest in global markets in a convenient and simple way. Initially, eToro was based in Tel Aviv but now the brokerage platform has grown in a behemoth with its offices in Cyprus and UK.
eToro is considered as one of the few leading brokers in the world mainly because of its innovative approach of “Social Trading” which is also called as “Copy Trading”. Social trading allows its users to connect with each other, share their trades and copy trades of successful traders to have maximum gains.
The broker is a registered CIF (Cyprus Investment Firm) and is regulated by the FCA (Financial Conduct Authority) of the United Kingdom. eToro now has more than 5 million users from around the globe making this social networking platform full of people to network with each other and benefit.
eToro’s revolutionary copy trading system is fairly easy to understand and implement. You just need to know how it works in simple words to get a quick hang of it. Have a look at the 3 steps that are typically involved when using copy trading system:
1. Finding the Best eToro Traders
Just like social platforms; Facebook or LinkedIn, eToro’s platform is also built with OpenBook approach. It is a news feed style system where you see posts and updates from the people you follow. You just need to find the successful traders to follow (we will discuss its criteria later in this guide), and then follow them.
2.Replicate Their Trades
After following the best eToro traders, you can receive the trade updates from them so you can also copy their trades. You can also receive tips and educative posts from them that can help you learn to trade as well. So just copy their trades manually or turn on automatic copying. Once their trade is finished, you get the profit or loss based on how the trade goes.(You can manually cancel trades as well).
3.Build Your Own Following
When you start trading on your own and become pretty good at it, you can build your own following of people who copy your trades. eToro has a reward system for traders who have people copying their trades. (More on that later in this guide)
Finding Best eToro Traders Using Trader Finder
A few years ago, eToro launched “Trader Finder” which is a tool that helps people find the best eToro traders with the help of different filters. Let’s see what these filters are and how you can find successful traders using them:
It basically tells you where a trader stands in terms of money management and risk–taking. According to Baby Pips: traders should follow the 2% rule which means not risking more than 2% of their total assets in a single trade. However, you can set the filter to up to 5% to find traders with low-risk trading.
Shows the percentage of how frequently a trader used the leverage of 100 or higher. Lower leverage means low risk.
Shows the highest loss a trader has gotten over a period of a week. The lower the better.
Shows the percentage of profitable weeks a trader has over a certain period of time. 20 to 25 profitable weeks means 80% profitability which is good.
Shows the number of profitable trades divided by the number of total trades. Someone with 80 profitable trades out of 100 will have an 80% win ratio.
Minimum No. of Trades
Finds the traders with the minimum number of trades over a period of time. The higher traders a trader has done, the more meaningful data you will have to analyze.
Average Duration of Trade
Based on your preferences, you can set a time period of how long the avg. holding time of a trade should be.
Shows the percentage of the amount a trader invests out of their total assets. IF someone invests 2% of their total capital then you can assume that only 2% can be lost in a certain amount of time. However, you should give priority to fist filter “Average Position” over this filter.
What’s Do Best eToro Traders Get?
So far, what we have discussed shows that eToro copy trader is only best for new users or people who want to copy trades of best eToro traders. If that’s the case, then why do successful traders trade through this platform even when there is no eToro bonus for its users?
Well that is because of the reward system. When the popular traders get copied. Popular traders can make a minimum of $500 if they have a minimum of 10 copiers and as their popularity and following grow, they can earn more.
Furthermore, the Elite Traders of eToro not only earn monthly fixed payment which is $1000, but they also receive monthly reward from eToro which is 2% of the annual funds of copiers”. These rewards make eToro highly attractive for successful traders as they can make extra side income besides their trades.
Is There Any eToro Bonus for Its Clients?
Well sadly, there is no eToro bonus for people using the platform because of the MiFID regulations. But, eToro makes up for it in other ways.
Besides providing a revolutionary copy trading platform, eToro also offers monthly payment to its popular traders. If you have a good following of people who copy your trades, you can get monthly payments.
Furthermore, you can open an eToro demo account to try it out and recognize successful traders by copying their trades with virtual money. You can get up to $100,000 virtual money in eToro demo account.
Let’s Review the Advantages ofeToro Copy Trader
Risk Management Tools
eToro has set some boundaries and tools to help its copy traders manage their risk and not lose all of their money on trades that go wrong. Firstly, you cannot invest more than 20% of the total equity of your account on a single trader.
Secondly, the Copy Stop Loss feature allows you to set a percentage of the amount that you can lose with a trader and after that, the copy relationship will be terminated with that trader. There is also an option to set stop loss for individual copied trades which means an individual trade will be closed at your set percent of loss.
The best thing about copy trading is that you can follow the trades of multiple traders and not just rely on anyone. This means that even if you get a loss with one trade, your other profitable trades can make up for it or even give you profit.
You can try out traders with different characteristics such as percentage of risk they take, win ratio, weekly loss ratio, the leverage they use and more. You can also combine traders with different medium and long term trading operations and get profits accordingly.
Invest With Little Knowledge
When you enter into the world of trading, you might not have a lot of knowledge and the less you know, the more you can lose. However, with copy trading, newbies can now not only earn but also learn while earning by copying successful traders.
All you need to do is to use the Trader Finder to find best and successful traders, follow them, read their posts and analysis, learn from them, copy their traders, earn from them and then with time become a more skilled trader with equity in hand to make your own trades.
Drawbacks ofeToro Copy Trader
High eToroMinimum Deposit
The most discouraging thing for beginners can be the eToro minimum deposit limit which is $200. Not everyone might be willing to invest this much money at the start.
This limit of $200 is higher than what most brokers in the industry have set. However, the benefits of copy trading make it seem like a small drawback.
Not So Straightforward
This is true and especially those who are vaguely familiar with the concept of trading as a whole might have to spend a lot of time learning how eToro works and how to copy trading is done.
They will have to practice a lot and work with a lot of popular traders to find the right people. But the ability to open an eToro demo account with fake money helps a lot in finding and trying out successful traders.
So Can You Make Profit with eToro Copy Trading?
In simple terms, YES! But, it is not going to be a straight road to success that can make you a millionaire overnight. You need to understand that trading comes with a lot of risks and in fact, according to The Balance;96% of people lose money in Forex Trading alone. It’s a competitive business like sports or any other performance-based endeavors. However, eToro is luckily one of the better brokers to team up with. Here, the percentage of losing traders is a mere 75%, which is one the low end among online brokers. This is probably due to their social trading programs, like CopyTrader and CopyPortfolios.
However, we are not discouraging you because with the revolutionary copy trading system, your chances of losing money definitely go down. But you need to understand that you will have to give a lot of time to the platform to find out the successful traders who actually have profitable trades.
Once you start learning to trade on your own, analyze charts and make decent predictions, you will find it much easier to copy trades of more successful traders as you can personally analyze their trades to see if they will be profitable or not. And that is when you will be making real money.
Pros and Cons of eToro Copy Trading
The interface is fairly simple
Free demo account
Money and risk management tools
Trades are copied proportionally
Historical performance is conveniently displayed
Most currency pairs and major commodities like gold, oil and silver can be copied along with ETFs and shares
The social network is very active
A lot of resources to learn
The most popular investors that you can copy have their verified full name, photo and other information visible for credibility
Cannot easily find the history of all previous trades by popular investors
You cannot see the actual account balance of successful traders
Besides the good performing traders, there are poor performing ones as well that can trade in loss
Trader Finder needs more improvement
Has higher spreads and rollover fees
Customer support has a reputation of not being quick and much helpful
Please note: 75% of retail investor accounts lose money when trading CFDs with this provider.
Well that concludes our eToro Copy Trader review, and in the end, we would just say that no doubt copy trading is a great tool to assist you in making the right trades, but you cannot solely rely on it. You need to continuously increase your knowledge and learn to analyze data and traders on your own.
Furthermore, you need to work with more and more successful traders to find out which ones are performing the best. We suggest that you use the demo account for this purpose.
Lastly, just make sure to increase your knowledge and learn to trade yourself in the long run because then you can become a successful trader as well, people will follow you and you will make more money.
TradingGator is a trading review website where you can read about everything from CFD signals to the best European forex brokers. Find the top trading platforms and courses to become lazer sharp in your execution. We even cover the best forex affiliate programs and show you step-by-step how to get started. TradingGator - For Traders, By Traders!