Alex Manea
If you're brand new to investing, or just don't have all day to keep your eye on the markets, there's a new, easy way to tag along with people who are more experienced. Copy trading is simply the act of automatically replicating the trades of another trader. If they make money, you make money. If they lose money, you lose money. On eToro copy trading is incredibly simple. Just find a trader you like and the system will do the rest. You can customize how much of their portfolio you want to copy, and even set automatic stops so that if they start losing too much money, your account is protected.
That sounds easy, right? Well just like with any financial process, there are still some things you should know before you dive right in with your hard-earned money.
In this article, we will break down exactly what copy trading is, discuss whether it is worth it, examine how much money you need to get involved, and then offer a step-by-step guide to getting started with eToro.
Let's get started!
In 2019, a study found that simply by copying the moves of hedge funds, investors received a return of almost four percent above the S&P 500. It is easy to understand how it might work; leveraging the knowledge and resources of a much bigger investment entity to guide your strategy.
In simple terms, that’s the basis of copy trading today, though it has evolved somewhat over the last few years. Instead of just trying to catch up to the moves of the big boys, copy trading is now the act of automatically replicating the trades of another trader on your account.
It aims to reduce the risks involved in trading by following the successful strategies of others. It also allows traders to learn from those more experienced than them, and benefit from their expertise.
If you want a hands-on approach, pouring over the markets and researching every single trade, this kind of automatic investment might not be for you. If you're just a beginner or are interested in copy trading though, Sortter rates eToro's social trading platform as a great way to get started.
There are a few things to consider before deciding if copy trading is for you:
If you can answer yes to all of these questions, copy trading may be a good option for you. It's a great way to get started in the markets without having to do all of the research yourself, and it can be a low-risk way to invest your money.
Just be sure to carefully review the traders that you choose to copy, and always remember that you could lose money if their trades don't go as planned.
The best part about copy trading on eToro is that there are no management or additional charges attached. The expert traders earn through the network’s Popular Investor Program, meaning no hidden fees on your end.
The minimum amount required to copy another trader is $200, and each position must be copied for a minimum of $1. That allows even the newest investors to get started without having to commit a lot of money.
Beyond that, eToro offers a practice account where investors can trade with $100,000 in virtual cash. That's a great way to learn the ropes without risking any real money. Once you feel confident that you understand how copy trading works, you can start following successful traders and earning a return on your investment.
So you’re ready to start copy trading with eToro, but need help getting started? Follow this step-by-step guide to open an account, find a trader you like, and start trading.
Let’s dig a little deeper and make sure you understand exactly what is involved with each step.
The first step to any trading is to open an account. Navigate to the eToro website or download the app, and click the “Join Now” button in the top right corner. This will take you to a form, which will need to be filled out with all of the personal data required for any trading account.
Because this is a financial service with real-money trades, make sure to read the terms and conditions to confirm that you are legally allowed to create an account in your location. Though eToro services millions of people around the world, there are some countries in which it does not operate.
Once you have an account, navigate to your dashboard and click “Copy People” (this will be under the pop-out menu on mobile). This will open several lists of top traders, including the most copied, currently trending, and “Editor’s Choice.”
There is a robust search engine at the top of the page, which can help narrow down your choice by recent returns, risk score, or the number of open positions.
There are thousands of traders to choose from, and you don’t need to make a decision right away. eToro provides plenty of detailed information on their results but there is another way to learn about someone you might have an interest in copying.
Clicking on the profile of any trader on eToro will take you to a page where you can view their:
You can also see what assets they are trading in, as well as read any posts they have made about their current trades. This is a great way to get a feel for their strategies and insights before investing any of your own money.
Once you’ve found a trader you’re interested in, click the “Copy” button to start following along. It will open a window with a few important options.
The first is the amount of money you wish to use on this one individual trader. Traders often give suggestions in their profile on how much to invest.
Second is your stop-loss, which is set to 60 percent of your investment by default. This is the minimum amount it can drop to before the copy position will be automatically closed, with the funds being returned to your account.
Last is a box labeled “Copy Open Trades.” It is checked by default but is extremely important to understand before moving on. If left checked, the system will automatically copy the trader's open positions at the current market rates, not those that were originally used. If unclicked, you will only copy trades that are opened after you start.
Click “Copy” and that’s it! You’re now copy trading.
Like with any trade, it is important to monitor your results with copy trading. On your dashboard, you can easily navigate to each trader and see their impact on your overall portfolio. Regularly check in on your copy trading to make sure that the people you are following are still profitable.
When you're looking to copy trade on eToro, it can be tough to decide who to follow. With over 5,000 traders on the platform, how can you be sure that you're picking the right one?
There are a few things you should consider when choosing a trader to copy:
Copy trading on eToro can be a great way for beginners to get involved in the market, but it isn't for everyone. If you want to trade on your own, make sure you how how to set up Take Profit and Stop Loss on eToro. And, just as important learn when and how to sell on eToro.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
