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eToro Copy Trading - The Complete Guide

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!

What is Copy Trading?

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. 

Is eToro Copy Trading Worth it?

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: 

  • Are you comfortable trusting someone else's investment decisions? 
  • Do you have the time and energy to research all of the different traders and make a decision about whom to copy? 
  • Can you afford to lose the money that you invest, should things go poorly? 

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.

How Much Does it Cost to Copy Trade?

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.

How to Copy Trade on eToro

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.

  1. Make an account
  2. Find a trader
  3. Examine their profile
  4. Open a position
  5. Monitor your results

Let’s dig a little deeper and make sure you understand exactly what is involved with each step.

Make an account

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. 

Find a trader

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. 

Examine their profile

Clicking on the profile of any trader on eToro will take you to a page where you can view their:

  • Performance (overall profit and percentage gain) 
  • Risk Score (how risky each trade is, out of 10) 
  • Trading History (shows how successful they have been over different periods) 
  • Open Trades (current active trades, with their Stop Loss and Take Profit values set) 

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.

Open a copy position

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.

Monitor your results

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.

Who Should You Copy Trade on eToro?

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:

  • Their past performance: This is probably the most important factor to look at when deciding whether or not to follow someone. Take a look at their track record and see how they've performed in the past. This will give you an idea of what kind of results you can expect from them in the future.
  • Their risk profile: Think about your risk tolerance and find traders who match it. If you're comfortable with taking on more risk, then go for traders with higher volatility. If you want more conservative trades, look for traders who have lower drawdowns and volatility.
  • Their trading style: Do they primarily trade stocks? Or maybe Forex? Find a trader whose trading style matches your interests and investment goals. That way, you'll be more likely to stick with them long-term and benefit from their trading knowledge and experience.
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