‘copy trade’ feature on eToro is it the ultimate tool?
In this eToro beginners guide we are going to the nitty gritty of how to make money on eToro.
Looking at Wall Street traders rolling in money, it’s easy to be drawn in and wish yourself into their shoes. Luckily for you, I am going to show you a few trade secrets which will take you a step closer to making some money online from the comfort of your own home!
I will be covering a plethora of topics in this guide all of which will help you get the most out of eToro and answer the biggest questions!
After reading this you will know in massive detail one legitimate way to make money on eToro!
Why listen to me?
For those with a more sceptical mind you should be wondering
“why should I listen to you?”
Well I have been using eToro for the past 5 years, I have been a popular investor on eToro manging over $100K and made a regular income from eToro! (which paid for the website and a Michelin star dinner!)
To say the least I have had a very broad experience into every faucet that eToro has to offer!
Check out my About Page to find out more well about me!
My experience gives me a unique perspective into what the platforms really good at.
What is eToro? The History and changes.
This is just a brief catch up on eToro I Provide a ton of detailed break down in my eToro Review: Disgusting Secrets Reveal What Its Really Like.
So lets do a brief summary!
It is ultimately a brokerage company that incorporates social trading and multiple different assets into its offering. eToro has registered offices in The UK, US, Australia, Cyprus and Isreal (which is where it began). eToro is valued at over $800 million!
Originally, In 2007 eToro started as a Forex company trading currency pairs (this is exchanging currencies from one to another) under the name RetailFX. In 2010 eToro introduced the idea of “Copy Trading” which enables new investors to copy the exact trades of more seasoned traders. With eToro you can see every single trade someone else made (as long as there account is set to public).
From 2010 eToro has raised over $150 million in funding to see expansion and to add to the services it offers to traders around the globe!
2013: eToro Introduced CFD trading. (yay!)
2014: eToro added 100’s of new stock options, in the UK and German markets.
2017 eToro focused on adding new crypto currency pairs which has expanded massively in recent years
From 2018 you may have seen eToro sponsorship in the the UK premiership around various football stadiums such as: Tottenham Hotspur, Brighton & Hove Albion, Cardiff City, Crystal Palace, Leicester City, Newcastle United, Southampton, Aston Villa. and Everton. To say the least eToro has been getting around on the sponsorship front showing it is a platform that is 100% here to stay!
Recently eToro is constantly adding new content providing free daily market updates. Which is all good stuff!
Now in my eToro Review: Disgusting Secrets Reveal What Its Really Like. I state that eToro is only really good for two types of visitors:
Beginners and people to looking at Copy Trading.
eToro is not good for people looking to day trade (day trading is making multiple trades a day and closing those trades the same day)
So now you should now what eToro is, lets focus on what it can offer you!
Why did I join eToro?
Recently, I had a very interesting conversation with my father about the accessibility of investing and markets. He told me that if he had the same access in his youth as I do now, he would have enjoyed managing a portfolio and making money in the stock market.
When he was younger, investment involved a lot of time and expertise, and was often limited to those who had studied it intently.
Simply put it was not plausible for the common person to develop their own portfolio.
At the dawn of the internet, many things once inaccessible to the masses developed a mode for mass consumption, and investing was no different.
Now, anyone with a few minutes and a little spare cash can get involved in investing, making money from the comfort of their own homes! It is this discussion with dad that encouraged me to create this eToro beginners guide, so others could learn!
I joined eToro in 2017. Since then, the social aspect of the platform, as well as its ease of use, even for beginners, has been a massive draw for me. Other than the obvious reason to use eToro, which is making money online, one of the main reasons I have stayed with the platform for several years is the social trading aspect.
This means that no matter the topic, people are there to discuss the latest ideas, stocks, trends, and even provide information that can significantly cut research time! On top of this, using eToro also helped me to shape a strategy that has helped me make over 70% profit in 2019.
Of Course Covid Ruined it in 2020 but so is the life of trading and its exactly why I think copy trading is so powerful!
This eToro beginners guide, gives you a clear path on how you can get started!
What is Copy Trading
Copy Trading is a feature that allows you to copy someone’s else’s trades, exactly so when they make a trade you make the exact same trade!
For new traders who are trying to find their feet, eToro is particularly helpful. The copy function allows you to pick a trader (much like when you choose an investment) to back with money.
This means that the money in your account is traded in real-time to reflect their trading patterns in the same percentages.
This allows new investors to try out investing money with the help of an expert trader (they are called Popular Investors on eToro) who trades for a living!
Furthermore, you can see exactly what trades the experienced investor is making, and ask them why and how to improve your own trades.
Or if you are clever and aware that you can get their exact results you can just copy them and create a diverse clan of warriors who make money for you!
Clearly, the potential for making serious money is huge! But just in the same way you can make a lot you can also lose a lot if you aren’t careful!
How to Sign up to eToro (Just use the Demo account)
Signing up to eToro is quick and easy. The following steps, from the eToro website, give you all the information you need to sign up:
- Click the Link below.
- On the page, find and click on the button marked “Join Now” or “Trade Now”
- On the following web page, you will see an electronic form where you will be able to enter all the personal data that is required to open a new trading account
- Please fill in all the relevant information requested in this form. Logging in via Facebook or Gmail are additional options
- Upon completing your review of all the terms, please indicate your agreement with them by checking the appropriate box
- Submit your information by clicking the “sign-up” button
I would use the demo account (They call it Virtual Account) to begin with it has all the same features but zero risk to yourself! Plus you can feel like a baller with the $100k they give you to play with!
If you want to start trading right away, click on the “Deposit Funds” button where you can place the amount of funds you wish to deposit!
Then all you need to do is select a payment method. There are plenty of options here: Credit or Debit card, wire transfer, Skrill, NETELLER, and UnionPay, so pretty much whatever you want to use you can!
I have found the deposits to be very quick and easy and as soon as the transaction is processed you should see your equity (bottom right corner) increase!
And you will be able to start trading!
eToro Beginners Guide – A Basic Investment Strategy
Congratulations on making it this far! If you like the idea of managing your own portfolio and making money online, then keep reading. Hopefully, you are signed up and ready to go!
If not, sign up here!
The age-old adage by Benjamin Franklin reads
“By failing to prepare, you are preparing to fail”,
The world of investing is no different. By implementing a basic, but very effective strategy, you can start to make some money whilst still making your own investments. After you have signed up, you need only two things:
After you have signed up you will need only two things to follow this very basic strategy
- $1000 (about £800)
- Time to research copy traders and investments (or just use my top traders here)
If you want to learn more about the Theory behind this strategy check out the Passive Trading System, the complete Guide
Funding your new Passive Trading System
Clearly, not everyone is fortunate enough to have a spare $1000 (£800ish) just laying around to invest.
When I started, I was a university student, so I took full advantage of my 0% interest student overdraft. Obviously, I do not advise this: you should NEVER invest money that you do not have.
However, you still need money to make money!
So I suggest investing over an extended period of time. For example, £200 per month for five months, or whatever figure you think is manageable for your finances.
The more money you start with, the more diverse your portfolio can be.
This means that one bad investment trader wont hurt you as bad.
I like also like $200 (£168 ish) a month because its really not a lot of money, if you break it down its only $50 (£36 ish) a week or just $10 (£7 ish) per weekday!
When you consider this will be money spent making you even more money its an absolute no brainier!
In fact, I invented the Passive Trading System, the complete Guide to show you how with just $200 per month every month for 8 years, you could be earning more than $30,000 per year every year after! Or you can just let the money grow!
The hard part is sticking to the plan!
Which is where I try to help as much as possible! If you have any questions just book in a call on the Contact Page!
Who and what to Invest in
At this stage, you should have the $1000 (£800 ish) deposited and ready to trade. Or be gathering the $200 (£168 ish).
Honestly, I would just invest the full $1000 (£800 ish) into Copy Trading and diversify with 5 different Popular Investors.
As the minimum you can invest in a copy trade is $200 (approx. £168), you can pick up to five traders. By choosing various traders, you also get a flavour for different investing styles who all trade different instruments and patterns that actually lower your risk because you have 5 egg baskets full of different investments (I think this is the right analogy?).
If your investing over several months, then each month that you deposit $200 (£168 ish), you can pick a different trader trader.
If you love pain then do this…
Now let be real, some of you are just going to ignore me and want to follow the Reddit Wallstreetbet boys and all the Crypto hooligans shouting “X” Stock to the moon!
Save yourself the dollars, pounds or yen and have most of your investment in people who know what they are doing.
I can tell you the main reason that 68% of people lose money on eToro is because they get greedy and don’t follow a basic strategy that works.
But lets face it some of you are masochists like me and love both money and pain you wake up every morning wanting to make the big bananas.
I urge you don’t but if you do, do it responsibly.
Make a rule have 80% of your funds copy trading and then play with 20%.
How should you evaluate the copy traders on eToro?
Now lets getting into the guts of the strategy.
As I mentioned a moment ago, you should be copying numerous people to keep your portfolio diverse.
To make the most of your investment, I recommend investing in Three low/lower-risk investors, one medium-risk investor and one high-risk investor.
To do this easily involves using the eToro platform to refine your search and find traders that match your requirements.
Luckily, I have created a guide for you to get your investments up and running in no time!
If you want to speed up the process have My eToro Top Traders. These are my personal Warriors that I choose. Just make sure you do your research to and match traders to your risk tolerances.
Firstly, click on the “Copy People” tab on the left-hand side and it should show a screen similar to this:
Next, click the large, blue “go” button, without setting any criteria. You will see the following screen:
As you can see, there are 341 search results on a basic default search. Now, remove all of the options next to the button saying “Last 12M”. This can be done by pressing the ‘x’ mark on the right-hand side of the boxes, until you see a screen like this:
As you can see, this leaves 400 000 people to choose from, which is an overwhelming choice.
We ain’t in Kansas any more.
Now we have a fresh slate, It’s now time to create our own criteria to narrow this down.
Finding High Quality Traders
All traders you copy should be verified, and part of the popular investor programme.
You can see this from whether they have a blue, red, green or black badge by their picture. These badges indicate that their trading style operates under the minimum guidelines set by eToro.
This does not necessarily mean that they are good traders, it just means that they operate in a way that is considered more responsible.
To find these traders, you will need to click on the “FILTER” button, and the screen should show up with one similar to the one below. There are various options and restrictions to explore, but for now, you need to click the one that says “STATUS”.
Select both the “Popular Investor” and “Verified” options, and press apply. This should reduce the number to a more manageable one.
After you click apply you will see that the search results have been reduced to a much more manageable number.
If you look at the picture below you will also see that next to the blue Last 12M button your last two restrictions are in place.
We have done a good job and cut out 400k of the newbies and amateurs.
700 people is still way too many to analyse. So we will need to restrict further.
We all like good performance in the last 12 months.
Now we need to be careful here because some people can have a bad year but still be a great trader overall, so you may want to come back to this point and redo without adjusting for performance!
Next, you will click the Performance tab and then click on Return.
After, you have clicked the “Performance” tab, and “Return”.
This will open up, an option box will open with “low”, “medium” and “high”. Below that is a section called “Custom”; here, type “10” in the section that says “Minimum”.
Now again I would suggest looking through each one and sometimes consider not filtering by return as some great traders could have just had a bad year!
But for this guide we will look at setting the minimum value to 10%
Although you may want to look at lower return traders who can help produce consistent returns!
This option will filter anyone who does not have returns of at least 10%.
Now, click Apply.
This will reduce the results quite significantly. In order to get the best results however, you will need to refine a little further.
Down to 172 now, but we were not quite done yet!
You will need to keep refining to find your perfect traders!
There is of course still a little more basic refining we can do.
Next, you will want to click on the tab that says Risk and click on Risk Score.
The Risk Score is eToros way of measuring portfolio risk and is based on several factors all to do with how the portfolio is organised. In general, the Higher the Risk score the higher the return should be!
It should open a screen like the one below. You will want to select Medium risk as this encompasses a nice range of risk from lower risk at 3 to higher risk at 6.
Then click apply.
As you can see below, this has now filtered the results to 148 people.
This is a more manageable amount to do some more in-depth analysis but you can keep messing with filters till you find your perfect blend of trading warriors!
The next step is what I would argue is one of the MOST important factors when selecting a trader.
What to check before copying ANYONE on eToro.
Now, you have the necessary skills to copy people and narrow down the search results. You can even narrow these options further by adding in risk and return factors, depending on your personal goals.
The first thing you should check is the level of Realised Profit that has been generated from closed trades.
Realised Profit is gains made from trading that has been turned into money!
If there is a high level of realised profit, then the trader has made good trades in the past, and has closed those trades at a profit.
To check this, click on the trader’s profile, and then on the Portfolio tab. Then, click on the blue drop down labelled “Portfolio”, and switch it to the “History” setting. Your screen should now look like this:
Next, you will click on the blue Portfolio drop-down menu directly below the trader’s name and switch it to History setting, as I have done below.
As you can see In 2019 I had a realised profit of 47% which means I have closed positions into a actual 47% gain into the portfolio.
I want to show you the importance of not just copying the most popular investors, which can be tempting, but of doing your own independent research and asking questions.
Indeed, some of the most popular investors have negative realised profits meaning they closed various trades at a loss.
I am not suggesting that these are bad traders (it might be part of their risk management strategy!) nor that realised profit should be the only measure of success, but it is something to consider when picking who you invest with.
Evaluating a Traders Style
As I said earlier, this strategy is based upon picking four/five good traders to copy, and profiting from their expertise.
The next step in securing your portfolio is making sure that you don’t pick all your traders doing the same thing, or this beats the purpose of diversifying!
Most traders tell you how they trade in their Bio, which you can get to by looking at their Feed.
You may also want to check the Stats tab to see more information about the investor you’re going to copy.
This is my bio (mid 2019):
If the traders don’t tell you how they trade then have a look at how long they hold a trade for and what they invest in.
If they hold a trade for less than a week on average they are an intraday trader, A few months to a year they are more of a Swing Trader, More than a year they are more like an investor.
You wont see many day traders on eToro and that because eToro generally doesn’t encourage day trading, as they see it as higher risk and quite frankly eToro is not a good platform day trading.
To highlight my point:
Great trader, HarashSmith got banned from being copied because he traded too frequently which is against eToros guidelines, so be warned!
Other than length of time you should categorise traders into what they trade.
Do they focus on Forex (currencies), stocks, ETFs, commodities (Oil and Gold) etc..
When you combine the time period with what they trade you should get a brief description of what that trader does
Are they an Intraday Forex trader?
or do they Swings Commodities?
or do they Invest longer term into stocks?
The point being you don’t want 4 traders who only do Intraday Forex trading, or you aren’t really that well diversified!
eToro Risk Score
The eToro risk score is an incredibly useful feature that, without in depth analysis, allows you to gauge both your current risk and other risks at a glance.
The eToro risk score goes from 0-10, with 10 being incredibly risky and 0 being no risk.
etoro places traders into three risk categories.
These are Low, Medium and High. A low Risk score is defined as 0-2, a medium score is 3-6 and high is anything above a 6.
eToro also colours the risks from green for lower risk, yellow for medium risk and Red for high risk and also include black for a risk score of 10.
Please note eToro will not allow you to copy a trader with a risk score of 7 or more, this is mostly to protect new traders from very high risk traders.
But what you will sometimes see is a high risk trader temporarily reducing there risk score to a 6 so people can copy then ramping their risk taking back up. I would not recommended copying anyone above a 6 risk score.
As a rule of thumb a logarithmic approach should be taken when looking at traders risk score to potential return. By this I mean the higher the risk the greater the return needs to be.
I have seen traders with 10 Risk score on eToro get a 2000% Roi in less than a year but I have seen far more traders with a 10 Risk score achieve -100% in less than a few days.
My rule of thumb is as follows
- 0 Risk Score – 0% (they aren’t trading)
- 1 Risk Score – 5%
- 2 Risk Score – 10%
- 3 Risk Score – 15%
- 4 Risk Score – 25%
- 5 Risk Score – 30% (be cautious of larger draw downs)
- 6 Risk Score – 40% (be cautious of larger draw downs)
- 7 Risk Score – 50% (Be very cautious of large draw downs)
- 8 Risk Score – 150% (You will likely lose all your money)
- 9 Risk Score – 400% (You will likely lose all your money)
- 10 Risk Score – 1000% (Your account will likely die very quickly)
Increased risk is not inherently bad!
You have to realise that in investing or trading risk is always present however through a smart strategy and approach we can reduce the risks and keep the profits!
As a rule of thumb You should stick to mostly lower risk traders with a risk score of 1-2 but have a few traders with a medium risk score of 3-6.
Please note although eToro considers 3 a medium risk score I see it as still lower risk.
I suggest following the 80/20 rule, (Which I talk about more in my Passive Trading System, the complete Guide)
Which is essentially sticking 80% of your funds in lower risk traders and 20% in higher risk so that the lower risk traders can balance the potential risks of the higher risk traders!
The thing is, riskier traders can generate much higher returns but they can have greater draw downs (periods of money going down) so you have to have a stronger stomach.
Unfortunately, the research shows that people would rather not lose 10% than gain 10%. Which is why people can feel very panicky when an investment falls!
What do the different colour stars mean on eToro?
Another questions I often get asked is what do the different coloured stars mean on eToro?
Well simply the Stars are a grading system used on the eToro Popular Investor Programme. The stars colours are based on the number of copiers a trader has, the minimum amount invested and the total Assets under Management.
A Blue Star is Cadet level.
You must have have at least 1 verified copier $1,000 USD of your own money invested and $500 in Assets Under Management.
Free eToro marketing, which is nice!
The blue star is the first step on the ladder.
A Red Star is Champion level
You must have have at least 10 verified copier $5,000 USD of your own money invested and $50,000 in Assets Under Management.
You get Paid $400 a month, if your AUM grows by at least 1%, you get $800 USD
This could work out at $4,800 a year up to $9,600 a year if you keep the account growing each month.
I was a Rising Star for a bit but they scrapped that level and now just have Champions! I had $100,000 USD following in my prime but COVID-19 ruined it for me!
A Green Star is Elite Level
You must have have at least 10 verified copier $25,000 USD of your own money invested and $500,000 in Assets Under Management.
You Get paid 1.5% of AUM, if your AUM grows by at least 1% over the month, you get 2% of AUM.
This could work out at $7,500 a year up to $200,000 a year if you keep the account growing each month and reach the maximum amount for this tier.
A Black Star is Elite Pro Level
You must have have at least 10 verified copier $50,000 USD of your own money invested and $10,000,000 in Assets Under Management.
You Get paid 2% of AUM, if your AUM grows by at least 1% over the month, you get 2.5% of AUM.
This could work out at $200,000 a year up to $2.5 million a year if you keep the account growing each month and max out at the current level of $100,000,000 USD.
The maximum AUM on eToro is currently achieved by Jaynemisis who has $100 million AUM and he will be making between $2 to $2.5 million a year from eToro (not bad)
Remember this is all on TOP of what you earn personally for the year, so if you made 10% on 100k you get all the eToro payments as a big fat bonus!
My favourite traders are here!
So that’s an easy Strategy
So that’s pretty much the basic strategy to get you off to a really good start on eToro.
This was just an eToro beginners guide and trust me there is a lot more to learn!
The next steps would be to add more funds over time and to diversify your portfolio.
eToro is a fantastic platform for both the social aspect and a great way to make money online.
I would also recommend joining my Passive Trading System, the complete Guide or download the eBook I made (either to the side or right at the bottom) so that you can get access to my free eToro email course!
From eToro trading and investing I have paid for a Michelin star restaurant and used the money to help build a deposit on a house and using the funds to now build my online empire!
Not to bad for a side hustle!
Final Words of Advice
- Traders, just like the market, can experience rough patches, and this does not make them a bad trader
- eToro should be part of the plan, not the WHOLE plan
- Do your research! Investors that were once unprofitable may change their strategy and become massively lucrative
- Don’t rush into independent trading – take your time learning from the experts
- Be patient! Many traders leave after a month at a loss, which is a waste of money; give the strategy time to work
- Making money online has its ups and downs!
FREE 30 MINUTE STRATEGY ANALYSIS CALL (Normally Valued at over 1,000!)
Want to learn the secrets to eToro?
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You will get:
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Also, I’ll give you a traders cheat sheet and free access to my eToro Passive Trading System email course!
I am not selling, just pure value!
Why? (good question)
Normally, I would charge 100s for this, but I want to prove myself to you, so that one day you will come to me again asking for advice!
You see, I don’t just want one off clients. I want to build a platform and a business of repeat clients that I enjoy working with!
It might be stupid, but I believe if you help people they will help you back!
So what are you waiting for? Support a young UK business and help yourself makes some money! (seems like a no brainer to me!)