If you're seeking a platform for copy trading, you've likely found that it is possible to implement this strategy on eToro. In this article, CScalp explores what eToro copy trading is, how it works, and the benefits it offers.
What Is eToro?
eToro, an Israeli multinational company, is a platform that offers trading and multi-asset investment services. With a global presence and offices in key financial centers including the U.S., the UK, Israel, Cyprus, and Australia, eToro has positioned itself as one of the world's premier online brokers.
A distinctive feature of eToro is its social investing capability. It allows users to track the activities of other clients and utilize the CopyTrader system to replicate their strategies in real time. When a “master trader” executes an order, the same trade is mirrored on behalf of the user, utilizing their capital. The platform ensures transparency by displaying relevant data for each client, such as winning percentage, risk score, and portfolio composition.
Moreover, eToro has the so-called Popular Investor program, based on the CopyTrader feature. This program offers a platform for successful investors and traders to share their expertise. In return, they receive compensation from eToro for each user who replicates their trades.
If you're interested in exploring other platforms that provide copy trading services, read our article about the 11 best copy trading platforms.
How Does eToro Copy Trading Work?
Let’s explore how eToro copy trading works and look at all the possibilities it offers:
Access the eToro CopyTrader section
To access the CopyTrader benefits, click on the "Discover" option, located on the left side of the platform’s main window. Then, look for the "CopyTrader" row within the options available and click on "View All."
Start Using eToro CopyTrader
Choose a Popular Investor whose strategy aligns with your goals, allocate an amount for copying, and click “Copy.” From that point forward, your portfolio mirrors their positions automatically, in real-time, and proportionate to your invested amount.
Copy Open Trades
When starting with eToro copy trading, you have the option to replicate existing positions or copy only new trades. Copying open trades allows you to duplicate all existing positions of the copied user, aligning your portfolio with theirs. This provides a real-time representation of your funds' potential returns if you were to close the positions.
But what if the copied user makes changes? The proportionate copying ensures your portfolio reflects the modifications in the copied user's strategy.
Setting Stop-Loss during eToro Copy Trading
Risk management is paramount in trading. With CopyTrader, you can set a Stop-Loss level for your copy relationship. Whether in dollar amounts or ratio percentages, this feature adds an extra layer of control. If the copy relationship hits the chosen Stop-Loss value, copying ceases immediately.
Managing Funds: Adding and Removing
eToro empowers you to manage your funds within copy trading. Adding or removing funds to an existing copy is a breeze. Navigate to the portfolio page, adjust your settings, and ensure your copy relationship aligns with your financial goals.
Pause Copy and Stop Copy
If you wish to halt copying without closing existing positions, activate "Pause Copy." This feature ensures no new positions open while existing ones continue to mirror the copied user's actions.
When you're ready to cease copying altogether, choose "Stop copying." Here, you have the option to "Sell All," closing the copy entirely, or "Keep All," transferring copied positions to your portfolio for independent management.
Benefits of Using eToro Copy Trading
Let's delve into the specific benefits that enhance your copy trading experience.
eToro's interface is designed with the user in mind. Navigating through the platform, exploring traders' profiles, and initiating copy relationships are intuitive processes. The platform's user-friendly nature streamlines your trading experience.
Unlike traditional trading platforms, eToro fosters a sense of community. Engage with fellow traders through comments, likes, and real-time tracking. The social trading aspect adds a layer of transparency, allowing you to make informed decisions based on collective insights.
CopyTrader opens doors to a diverse range of trading strategies. Instead of relying solely on your knowledge, leverage the expertise of seasoned traders. Diversification is a key principle in risk management, and eToro provides a platform to achieve it seamlessly.
Real-Time Performance Tracking
Stay in the loop with real-time performance tracking. Monitor the actions of Popular Investors, assess their strategies, and adjust your copy relationships accordingly.
Understanding the platform’s fee structure is crucial for any trader.
eToro Crypto Asset Fees
While stock trading comes with no commission, crypto assets involve a fee of 1 percent. It's essential to factor this into your crypto trading strategy.
eToro's pricing model introduces an unconventional approach. Unlike many exchanges that charge fees per transaction, eToro requires users to pay a 1% fee for both the purchase and eventual sale of a crypto asset upfront, known as the “round trip” fee. This fee is designed to reflect real-time profit/loss changes as the market price fluctuates. If you choose to transfer your coins to an external crypto wallet, you forfeit the ability to move them back to the eToro platform, resulting in the loss of the return spread fee.
eToro Inactivity Fee
eToro introduces an inactivity fee for accounts dormant for over 12 months. You should be aware of this potential charge and the importance of regular account activity.
eToro Copy Trading – Conclusion
eToro copy trading is a straightforward process that can benefit you, whether you're a beginner trader seeking experience from seasoned traders or an expert aiming to optimize your time. However, it's crucial to bear in mind that, like any trading activity, it involves risks. Therefore, emphasizing learning and risk management is essential and should not be overlooked.
Related article: Copy Trading MT4: A Step-by-Step Guide