eToro is the world's leading social investment network where you can either copy other successful traders or make money by selling your trading signals to other investors and followers. In this review you will learn the pro's and con's of using the eToro social trading network.
What is eToro?
eToro once started as a forex broker for "everyone", especially for small investors with little money and has now become the largest social investment network in the world with over 5 million members. Today you can not only trade any currency pair you can imagine but a large variety of CFDs, Stocks ,Cryptocurrencies and Commodities as well. The vision of eToro is to become the first global market place for all people to invest and manage their funds in a simple and transparent way. eToro wants to make investing as simple as possible. eToro is registered and regulated in Cyprus by the CySEC, license number 109/10 and the FCA in Great Britain. They are thus obligated to operate under the MiFID II.
What is Social Trading?
By means of social trading you can profit from the wisdom of the crowds. And you don't even have to have the slightest clue of trading, you can just pick one or or more experienced traders to build your portfolio and have them trade your money. eToro has implemented several tools, such as the CopyTrader or the InvestorFinder in order to facilitate your choice. Basically eToro has two different models for you whether you are a follower or an experienced trader:
Just pick your popular investors and follow their trades. If you like the way they trade you can learn from their strategies and just copy their trades automatically. In the course of time you should track and evaluate the performance of your traders and stay informed on what they are doing. Within the eToro platform you can easily get in touch with other traders and talk about their strategies or the financial markets.
If you are already an experienced trader you can attract followers by your stunning performance and earn money with each new copier. This is the best way to share your signals and performance with others and even make money with it. This video shows you the "heart" of eToro: How to copy other traders?
eToro Premium Programme
If you would like to profit from several special offers, such as faster withdrawals, a personal account manager, a personal payoneer credit card, weekly market analysis videos and free access to the Trading Central Platform you should become a eToro Premium Member. How does the upgrade work? Your total net deposit in the past 11 months must be at least $20.000 and your current equity must be >/= $20.000. Once you have finished your deposit just drop an email at EnglishPremium@eToro.com and your status will be upgraded to Premium.
Various Trading Tools
eToro offer various trading tools for their member in order to find the best investors. In the following we will shortly explain the function of the different tools:
The CopyTrader Tool is basically the "heart" of the social trading network. Here you can copy other investors automatically and monitor and manage your portfolio. Before you start copying another trader you must choose a certain amount of money of your balance, your allocation amount, that you want to have traded. You can decide whether you want to have copied the already open positions of the trader or not. If one day you don't feel comfortable with your choice you can close your positions at any time and dismiss your investor.
The People Discovery section is basically an algorithm that helps you picking the best investors out of over 3.5 million members for your portfolio. How to find the best investor? Please have a look at the best long term performance if you want to see steady results and a steady performance. There are many traders that deliver a stunning performance over several trades by accident and wipe out their account within hours when the markets change. So please make sure to count on traders with a long term experience of over 12 months or even more. Use the following widgt in order to find the best trader for you:
Top Traders' Insight
As you can see there are many tools for you to facilitate your trading routine. The Top Traders Insight Tool collects data from the top 1000 traders on the eToro platform and gives you a deeper insight in their strategies, what, how and when they are investing. It shows you the preferred assets of the eToro Top Traders and visualizes their long and short positions. With help of the top traders insight tool you can see 1:1 how top traders are trading and what they are thinking.
If you don't want to use our economic calendar, you can use the one on the eToro platform. It's all the same the most important fact is that you know when there are important announcements or decisions as you should stay away from the markets during this period of time.
Most novice traders are desperately trying to find the "holy grail", a perfect trading strategy that never produces a loss. As soon as they think to have discovered such a strategy they get their account wiped out by their bad money management. Top traders think different, they know that there's no holy grail out there and the most important issue in trading is keeping your losses small and let your profits run. But in order to calculate your risk per trade you need to know the value of the pips you want to risk. This is where you can use the pips manager.
The former OpenBook platform is now called "discover people". This platform is mainly for followers who are looking for a good trader. You can select traders and other copiers according to certain criteria: Trending Investors, Consistent investors with a low weekly draw down and high weekly profit ratio, stock investors, active investors who copy other traders and diversified investors who invest in stocks and copy other investors. If you click for example on "popular investors", you can choose amongst the best investors and you have more options on offer. Thus you can select your trader according to their country, their trading results in the last year up to 30 days, to their over all performance, to their activity on the platform and many more options. With the help of the mobile platform you can administer your portfolio and/or your trading platform.
Within the eToro Trading Academy you can get a lot of help and support if you want to learn trading from scratch. You can register for live webinars, eCourses and watch trading videos in order to learn how the markets work. Within the Trading Academy you can basically learn everything related to trading: Forex Advantage, Basic Forex Terms, Types of Orders, Effective Strategies, Glossary of Concepts, Trading Psychology, Capital Management, Market Analysis, Basic Technical Analysis and much more.
Leverage and Margin
From August 2018 the highest leverage within EU regulated brokers is 1:30 in order to protect clients from executing overleveraged trades. This is how you can trade even with a small amount of money mini lots, as the broker lends you the required money for your trades. Basically you'd rather trade with a lower leverage and a higher balance in order to protect your money. Bear in mind that the leverage works in either direction and that your account can be wiped off very quickly when choosing a over leverged position size. The margin is the actual amount that is blocked by the broker in order to back up your current trade, kind of security payment for your broker. The new leverage limitations are as follows:
- 30:1 for major currencies
- 20:1 for minos, gold and major indices
- 10:1 for commodities with exeption of gold and non-major equitiy indices
- 5:1 for stock CFDs
- 2:1 for cryptocurrency CFD
The new margin call will come into effect at 50% of the initial margin. If you want to trade with the old leverage, you have the chance to apply for the professional trader status if you meet certain criteria. In this case you can trade within the old leverage rules.
eToro startet once as a forex broker, today the network has become the largest social trading and social investment plaform worldwide. As a trader or/investor/follower you have access to many investment assets, such as:
- Forex Pairs
Within a CopyFund Investors can invest in a whole basket of assets, similar to a normal ETF. The difference is that this CopyFund is managed automatically by an eToro algorithm and rebalanced every month. There are several CopyFunds available on the eToro platform, two of the current most appreciated are the Crypto CopyFund that invest in Cryptocurrencies and the CRISPR Fund that invests in biotechnology and health.
This is eToro
The content that will be discussed is intended for educational purposes only and should not be considered investment advice.
You want to learn daytrading from scratch and you want to know how to set up your Metatrader 4 platform and adapt it to your needs? Subscribe to ourYouTube YouTube Channel and don't miss the latest trading tutorials!