eToro Social Trading
You will learn about the following concepts
- Tips for trading at eToro
- Reading time tables and graphs
- Risk levels and winning rates
eToro is currently the most popular of the social trading platforms. It provides users with a lot of great features and helps new traders realize their incredible potential. The selling point of the platform is the fact that its interface is simply amazing. The simplicity of the design helps even someone who has never traded before to enter the game. But its not just simple and functional; its also inherently gorgeous. You will never look at the user interface and think, “I couldve done better.” In the following section well discuss some of the tips concerning the platform and how you can do better in utilizing it for your own profit.
In the section where we discussed how to recognize good traders, we told you that you should utilize the whole plethora of indicators you have at your disposal, as well as the advanced filtering systems most platforms offer. We told you that looking at the number of followers and copiers was one of the most important aspect of analyzing a trader. It tells you how many people are currently following a certain user which, taken with a few other factors, might lead you to a conclusion about a traders success rate in the past. Of course, lets not forget that this is still not a guarantee – many the masses have been proven wrong in the past. However, this indicator is still essential.
People can easily “un-copy” a user. The fact that theyre not doing it, in combination with the users portfolio, is a clear enough indicator that they must be doing a good job. The search function allows you to find exactly the kind of trader youre looking for so you can use it however you like. Just dont forget to check the different graphs and see the actual progression. There are traders who currently have a large number of copiers and big gain percentages, but a closer look at their profiles would show that the number of copiers theyve lost in the past few months is actually quite considerable, and the gain is based on older data. eToros interface can show you quite a number of detailed stats on a users profile so you can easily see who has had a steady gain and who is lying on old laurels.
When youre looking at the time tables, examine the maximum youre allowed. Then look at the list youre left with. Every trader should have a graph next to his profile picture and name. This graph shows their overall performance within the given time period. When you take a look at that, you want to further analyze only traders who have had a steady upward graph without too many highs and lows. This means that the traders performance over the time period has been steady and consistent, and also that he probably has a good risk management.
The graphs can also show you the difference between realized equity (green line) and total equity (blue line). The total equity takes into account all of the accounts funds – this means both open trades and remaining funds, while realized equity doesnt include open trades. If the difference between the two is too big, this means that the trader has left many trades opened. This is bad, because it might indicate that there are a lot of losing trades not included in the statistics, yet. Furthermore, this may also mean that when you copy the trader, if you choose to open all of their currently opened trades (something we advise against in most cases), then you will suffer heavy losses.
For the purpose of evaluating the risks a trader takes, you can always look at the drawdown column. Additionally, you can use it for comparison purposes by looking at the numbers – lower risk users will have lower numbers in this column. If you are certain that you want to copy a low risk user, then you can use the search function and select “Low Risk”.
Out of all the platforms you can use, eToro offers you some of the most advanced search and find traders functionality so we advice you to use it wisely.
This is a very important point. Is it a good idea to copy a trader who has a 100% success rate? Most inexperienced traders would say, “Well, duh!” And most inexperienced traders would be wrong. If youve learned anything from our guide, it should be that things are rarely as they seem. If a trader has a 70% win rate and no open trades, he would be much better than a trader who has 100% success rate and 27 open trades, some of which dating back five months and having 298% losses (hey, its quite possible). Winning rate doesnt mean that much taken in its own. You also have to see if there are any open trades.
Experience is essential in trading. eToro allows you to see how long has a user traded and hows done in that time so you can make a better pick. Usually, you want to copy userss who have traded for longer than a year.
eToro is a truly stunning platform and allows you to pick just the right trader for you. All you have to do is utilize that inherent functionality and you will be well on your way to profiting from what is essentially an amazing experience.
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. 81% 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 is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
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.