| Updated: September 15, 2025Social trading performance and ranking
This lesson will cover the following
- How does it work?
- How can numbers lie?
- Final words
Here’s how many people imagine copy trading when they first hear about it – you go to a top-10 list, choose a few traders and they start making money for you. After all, there is no other way, right? This seems like pure genius because those people are currently the best around, so they’re bound to make you money in the long run. You can just sit back and relax. Well, this is not how it works. This is not how it works at all.
How does it work?
Choosing a trader is a long and complicated process. You have to go through hundreds of profiles before you find what you’re looking for. Creating a person-based portfolio takes a lot of time and an equal amount of ongoing management. You need to examine risk-management and money-management strategies, experience, gains, style and more before deciding to add a particular trader to your portfolio. It’s not as simple as visiting the top-10 page and selecting the first five. This guarantees nothing. If you assume these people are listed for a reason and must therefore be good, you’re being lazy and you will be punished for it.
Social and copy trading aren’t for lazy people, and we can prove it. Use your demo account and go to eToro’s ‘People’ section, then choose to copy the top five traders (you can select the period you feel most comfortable with – three months, six months or a year). Make sure you’re using virtual funds and not your real portfolio, because this will be an expensive experiment. Now copy the top five and just wait. Occasionally look at how much they’re making for you. Don’t manage anything – just sit back, relax and see what happens. After all, if you believe this is the way to make money, you might as well test it.
What you’ll find is that you’ll lose a lot (depending on how much you’ve invested). This is simply because the rankings aren’t as reliable as you think. Even eToro states at the top of the ranking that past performance does not guarantee future results. Most of these traders may have been profitable overall during the year, but that doesn’t mean they’re not losing right now. In fact, you’ll notice that you’re at a loss the moment you copy all of their currently open trades (something we’d suggest you never do unless you’ve checked them and believe they’ll be profitable). Furthermore, there are ways to manipulate the numbers.
How can numbers lie?
The rankings consider many factors – followers, copiers, gain, etc. However, this doesn’t necessarily mean anything. A trader with 5,000 followers can lose large sums, while one with three followers can make substantial gains (and vice versa). The number of followers or copiers does not directly indicate that the trader is good; it only shows that the majority of people think he is good. The same majority, in most cases, does not know how to trade, which means it is easy to believe a trader is much better than he actually is.
Furthermore, if a trader is on a winning streak, he may gain many followers and copiers as a result. Don’t get us wrong – we’re not saying that traders with many followers don’t know what they’re doing and have simply been lucky. They definitely know more than the people who follow them. However, those followers cannot always be trusted. The fact that many people think something is good doesn’t necessarily make it so (there was a time when most individuals thought the Earth was flat). All we’re saying is that you should carefully analyse the trader before deciding to follow him just because ‘5,000 people can’t be wrong’.
Take as many statistics into consideration as you can. Also, it’s quite possible that a trader is inflating their gain by not closing losing trades. If you leave a losing trade open, it is not calculated because it is not yet known whether it will end in profit or loss. Numerous open trades may indicate a long-term strategy or simply that the trader is trying to improve his statistics artificially. Be careful. This is another reason it is dangerous to open all the current trades a trader has – you might unwittingly open 20-30 losing trades and incur significant losses just because you clicked the ‘Copy’ button.
Final words
All we’re saying is that you should look at the bigger picture. Don’t think that you will copy a few traders and that will be the end of it. No, it’s just the beginning. Don’t trust charts and rankings blindly. Use the advanced filters and try to determine for yourself whether a trader is good. Examine open trades, the overall portfolio – everything. Even then, you can’t be sure he will make you money, but at least you will have done your best, which will improve your chances.