If you start investing $100 at 25 with a 12 per cent annual return, you could retire at 62 with over $1 million. But if you wait 10 years, you’ll only have $300,000 when you turn 62. The point being invest now and thank your future self!
There’s never been a better time to start investing with eToro or any other platform. But if you want to make the most of your eToro investments, you need to avoid common mistakes.
Keep reading to learn about some popular issues and what you should do instead.
1. Fearing Lower Returns
One of the biggest mistakes that new investors make is that they focus too much on potential losses. If you fear losing money when investing with eToro, you may be tempted to pull your investments early.
In some cases, this may be a good decision. However, selling your investments when they’re high isn’t always the right choice.
You should plan for your investments to sit for at least a little while. There’s no single answer for how long to sit on your investments, but the longer you hold it, the more it will have a chance to grow.
At a minimum, you should leave your investments for about two months. If a stock moves quickly, you can then cash in on your investment.
2. Diversifying Too Much or Too Little
When investing with eToro, you should consider how much you diversify your investments. On the one hand, you don’t want to place all of your money into one investment.
If that cryptocurrency has a significant dip, you’ll lose more money. But if you separate your money into a few cryptocurrencies, you will have more security when it comes to dealing with a loss.
For example, if you invest $100 into one currency that loses 10 per cent of its value, you would lose $10. But if you invest $100 evenly between 2 options, you would only lose $5 in the same scenario.
However, you don’t want to invest in too many different cryptocurrencies at first. You should learn a bit about the ones you want to invest in. Consider investing in larger coins, and make sure you research before you invest.
3. Copying the Wrong Investor
One of the most significant benefits of eToro is that you can copy other investors. As a beginner, you probably don’t know where to start when it comes to picking currencies.
Luckily, you can search for popular eToro investors to see how they’re doing. You can also set your account to copy those users.
However, if you aren’t careful, you could wind up copying an unsuccessful investor. When looking to copy someone, consider a few things:
- Have low drawdowns (percentage down at the end of a week)
- Have had losses
- Can help you with investing
You can find investors to copy by looking at popular people. But not all of the popular investors are there for good reasons.
Be sure to research an investor’s history to see if they’re worth copying. Then, you might make a bigger profit than if you copied the most popular person.
4. Trading Too Often
Overtrading is an easy mistake to make when investing with eToro as a beginner. As soon as you make a profit, it can be tempting to cash in on your win.
And if you see another currency that’s relatively cheap, you may want to get in on it before the price goes up.
You also want to avoid trading currencies as soon as you experience a small loss. While the loss may get bigger, it may come back in the next few weeks.
Trading your cryptocurrency too often can make you overthink your investing strategy. Because of this, you should also avoid checking your investments each day.
Check on them each week or so, but try not to worry in the meantime. If you understand how investing with eToro works, you can be confident that your investments will pay off.
5. Focusing on the Short Term
You should also consider when to use eToro and when to let your investments work for you. Whether you trade to often or not, you may want to focus more on the short term.
Doing so can make you narrow in on any profit or loss that your investments experience. While this may be okay for some currencies, it’s not a viable investing method.
Trading for beginners can seem hectic, but it doesn’t have to be. If you know how to manage money and invest it well, you can let it sit for months or years.
When that happens, you give your investments more time to grow. You may end up with a better return on your investment.
6. Investing Too Much
Another mistake that new eToro users make is that they don’t plan for investments, so they end up investing too much. You need to invest some money so that you can watch it grow.
But as a beginner, you don’t want to sink your entire savings into investing with eToro. Consider how much money you have and how much you can afford to lose.
No one wants to lose money from investing, but it can happen. Experienced investors know how much they’re comfortable risking, so they don’t put in more than that.
If you can only afford to lose $100, that’s perfectly fine. Start investing with that amount, then increase your investments as you earn more.
7. Not Using a Stop-Loss Order
Whether you invest a little or a lot, you need to use a stop-loss order when investing with eToro. A stop-loss order is a tool that you can use to prevent significant losses.
If you invest $100 and don’t want to lose more than $10, you would need to place a stop-loss at 10 per cent.
Using such an order can keep you from losing a ton of money, and it can help you make smart financial decisions. That way, you don’t have to take on as much risk.
Investing With eToro Successfully
Whether you’re new to investing or have done so in other ways, investing with eToro can be a great option. You can learn about the right cryptocurrencies to invest in, and you can diversify your investments.
But make sure that you avoid these mistakes so that you can grow your investments.
Want to improve your return on investments? Learn more about the Passive Trading System and how it can help.
Thinking of Investing or Trading? Why not just copy professional traders!
My name is Joseph Moricca, I run Velox Investments and I am an Investor on eToro and have been for a number of years.
Do you want to get involved in trading but don’t know where to start?
Do you want to Diversify your income or simply Make more money?
I have used eToro for a number of years but did not realise the potential to make a solid return consistently until I started copy trading!
If you want to find out how to make money online then read my Beginners Guide to trading on eToro.
To start RIGHT NOW, Sign up to eToro through the link below and take advantage of the free demo account! I mean really what do you have to lose from following my very simple strategy on a demo account! Literally nothing and you might find that you actual find a hidden GEM!
Other Useful Links for learning
- eToro Trading Academy
- Market information: The Motley Fool, The Economist, The Financial Times, Zero Hedge
Disclaimer: eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFD assets.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% 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.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.
This guide is intended for educational purposes only and should not be considered as investment advice. The author and publisher are not liable for any losses or damages you may incur as a result of you following the advice given on this page. The etoro.com layout and content may change since this content was published.