Copy Trading: An Automated Way to Invest in the Markets
So, you want to invest in the markets, but aren’t sure how to do it. No problem! Copy trading can simplify that venture for you. By copying trades, even inexperienced individuals can benefit from the opportunities in the ever-evolving financial markets.
Being a successful investor requires specialised knowledge and expert skills. Copy trading gives inexperienced investors access to those who possess that knowledge and have mastered the art of investing. It is like getting the best traders to work for you.
What is Copy Trading?
Put simply, eToro’s copy trading is a function that enables people to replicate a trader’s actions on their own account from start to finish. The platform gives investors access to hundreds of different financial assets and allows them to monitor and evaluate many expert traders’ actions.
Investors can copy up to 100 traders and specify what percentage of their funds they wish to allocate to each one. Investors can also view all of the copied trades on their accounts at any time and close some of them or pause copying from a specific trader.
Copy trading is an automated solution. It allows anyone from any background, no matter what their investing skill or knowledge, to invest in the markets and benefit from the expertise of experienced and professional traders. All they have to do is open an account, find a trader to copy, and then decide how much they want to invest with that trader.
eToro is the company behind the development of the first true copy trading platform. Traders and investors are now connected as part of a larger community and actively interact with one another, sharing thoughts, trade ideas, and status updates. eToro works like a social network for investing.
Get the best Traders Working for You
Finding traders to copy and allocating funds to those who are most suitable for you could not be more intuitive. In addition to the featured and top-performing traders, investors can search the entire network with advanced filters to select the traders who most closely match their needs.
The parameters that can be defined in the advanced search include: portfolio allocation, trading performance, risk score, max drawdown, country, social activity, and trading activity.
Finding a trader with a portfolio that is suitable for you is not difficult. And, you can even copy several traders to build your desired portfolio. In fact, allocating your funds to different traders is recommended as a way of reducing risk.
Copy trading allows investors to choose from a diverse set of trading portfolios, ranging from low- to high-risk. Some traders make consistent and stable gains, but others prefer to aim for bigger gains and employ riskier strategies.
For example, the average yearly profit of the 50 most copied traders on the eToro copy trading platform in 2019 was 29.1%. That means you could have made $2,910 on a $10,000 investment just by copying the most popular traders on eToro’s copy trading platform!
How CopyTrader Works
CopyTrader is a user-friendly platform that enables inexperienced investors (copiers) to invest in the markets. At the same time, it gives successful traders (copied traders) a way to boost their earnings by providing their services to others.
At eToro, copied traders can make an additional income by joining the Popular Investor program. In addition to any profits made from their trading, Popular Investors can earn fixed payments and up to 2% of their annual assets under management.
The platform uses several schemes to determine the share that Popular Investors receive for being copied by others. The more people they have copying them, the more money they can make.
eToro provides several asset classes for investing and trading, either as real assets or using CFDs. Long non-leveraged positions on ETFs, cryptocurrencies, and stocks are executed by buying the underlying asset, and, therefore, incur no extra commission or fees. Commodities, indices, and currencies are traded as CFDs and include a commission.
CopyTrader Gives you many Possibilities to Diversify your Investments
As we said earlier, copy trading is like hiring the top expert traders to work for you. However, it is also like investing in people instead of directly in financial assets. Each copied trader can be viewed as an asset, giving you the opportunity to create a unique portfolio comprised of different traders and investment strategies.
Most people prefer to invest with traders who have at least six months of history. You can verify the results of Popular Investors quickly by checking their track record. On the eToro platform, their past results, alongside all currently opened positions, are displayed on their public profile.
Bear in mind that researching traders’ performances is not an exact science. As the disclaimers say, past results are not always a guarantee of future results. That is where diversifying your risk across several top-performing traders comes into the picture. Diversifying across traders who use unrelated strategies is even better because it makes it less likely that they will have a drawdown at the same time.
Finally, make sure to trade only with regulated and professional brokers. eToro is a leading brokerage company registered in several jurisdictions, including the EU, Australia, and the UK.
To learn more about eToro’s copy trading and other services, visit etoro.com.
eToro AUS Capital Pty Ltd, ABN 66 612 791 803 AFSL 491139. CFDs are highly leveraged and risky, and may not be suitable for all investors. You may lose more than your initial investment. Trading CFDs does not result in ownership of the underlying assets. Copy trading facilities cannot be construed as financial advice. Use these facilities at your own risk and we are not liable for losses incurred. This information has been prepared without taking your objectives, financial situation or needs into account. You should obtain advice independently in light of your own objectives, financial situation or needs and refer to our FSG and PDS before deciding whether to trade with us
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 7 5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
CopyTrading is an investment management service provided by eToro Europe Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Trading Cryptoassets with leverage is regulated and comes with a high risk of losing money. Buying Cryptoassets is unregulated in most EU countries and therefore is not supervised by EU regulatory framework and carries no EU protections. Your capital is at risk.