Copy trading is a way to copy what other traders do so you can make the same investments. You decide how much money you want to use and then the trades of the other trader will be automatically copied in real time. If you simply don't have the time, then read this Etoro copy trading review and find out if it might be for you!
Etoro's copy trading platform can assist many individual investors whilst they learn the ropes & until they find the time to commit to investing by themselves. It may even be something worth considering for you. But do read the rest of this review before deciding if you are game.
Let's cover the difference between social trading and copy trading before we explore Etoro.
Copy trading explained
Copy trading is like getting advice from a more experienced investor. It allows you to copy what they do with their money so that you can make the same investments as them. Social trading provides more transparency into what someone is investing in.
If you consider yourself an advanced-level investor/trader, you might want to see how Wikipedia defines this topic.
Etoro's copy platform transparency
As an investor, information is key. Transparency oftentimes saves a significant amount of time in any analysis and Etoro understands this. They offer individual instruments & their data in logged-out & logged-in mode for you to browse.
More importantly, they list the amount of Etoro investors that are following the instrument, how many comparatively hold it & if they are bullish or bearish. Quick facts that might help you decide to follow, or go against the market. Below is such an example visualized:
Etoro also provides comments posted by investors in many languages involving their own opinion and key changes/news of the stock.
How to copy a trader/investor on CopyTrader
Social trading alone enhances the platform, but the true value lies in the Etoro copy trading feature. You can decide to copy a trader based on their past performance, overlap in investing approach, and financial/ethical goals.
It made it easy to review anyone's current and past portfolio & performance online. Again, also available without a login. Once you found a compatible trader, you hit copy, set your investing amount & the platform scales your portfolio to that of the trader.
Below are a video explaining Etoro's take on copy trading as well as an image that shows how you can decide if you wish to copy certain trader:
Cost of copy trading – Etoro copy trading review
Etoro offers its copy trading feature for free to all countries it accepts clients from, which is a huge benefit for people who are looking to get started quickly.
The minimum deposit at Etoro
Deposits are free in all countries listed below. However, the minimum deposit ranges from 10 USD in the US to 50 USD in most other countries like UK, AU & UAE. See the below overview for all countries including yours:
Platform functionality deep dive – Etoro copy trading review
It's time to look at the more advanced features and possibilities, for those who wish to tailor their control beyond the one click-of-a-button simplicity. Below stop-loss default, copy timelines, copied traders & traditional investing are covered.
Stop loss default – Safeguard
Any broker and trading platform offer some form of stop-loss functionality. After all, most people prefer to limit their losses & see unlimited gains. However, on the Etoro copy trading platform, the default is set to 40%. Meaning your individual investment positions can drop 40% before they are sold.
Thankfully, using advanced settings can adjust this amount up or down, to fit your personal preference. Investing Guides, however, believe 40% is extremely high when you consider the risk of choosing the wrong trader, at the wrong time.
Copy selectively or historically
Copying someone's portfolio when you just started, but they have been active for years, brings along doubt. Thankfully, you are free to decide if you will start copying their trades from the moment you hit copy, or if you want to mimic their portfolio entirely from the start.
Copying more than one trader/investor
Copying a popular and historically high-performance trader might be relatively safe. But what if you picked a less-known trader due to high performance in the past week? The risk of losing money has now significantly increased, yet you needed to use your own skepticism, to reach that conclusion.
Consider the following scenario: Three traders that each consistently outperform the overall market, have only slightly overlapping portfolios. Will you decide to copy all three? The slight overlap might mean you are risking over-diversification which can result in no returns. Even worse, it might mean you end up losing money.
Traditional trading/investing vs CopyTader
Traditional instruments such as ETFs & Funds have been managed by asset managers for decades. Although the cost involved did not directly get charged to the investor, the fund would usually lose a small % each year on management fees.
Copying a trader is effectively outsourcing your own investment and thus an asset management service. However, the trader managing your assets doesn't necessarily know as the trader is more focused on making returns for himself/herself. This can benefit you as the trader is just as motivated, if not more, as you are. Nevertheless, it can also backfire as humans are prone to error & over time the copied trader might lose interest, change careers or neglect the portfolio.
Common typo's when writing Etoro
Etoro is a name that seems to have created many misspellings over the years. If you come across the below words or have searched for them yourselves, odds are the topic was Etoro:
- etor o
Conclusion on Etoro copy trading review 2023
Etoro copy trading feature enhances the platform and creates significantly higher information transparency than other brokers, especially when paired with the social trading side.
It enables investors short on time and/or knowledge a way to 'participate' in investing and a chance at the same returns made by others. However, when used carelessly and sporadically, the tool can backfire.
Furthermore, it really keeps investors from teaching themselves by choosing the path of least resistance. This is why Investing Guides gives Etoro & its Copytader 4.5 stars for its functionality & application. Best to be used before or during self-education of investing, so you may take control when ready.
Copy trading Frequently asked questions
These questions come up regularly when discussing the topic of copy trading. Hence, Investing Guides hope this will serve as an easy overview of the most sought-after answers:
Copy trading can be good for new investors who have neither the time nor the knowledge to manage their own investments.
Copy trading can be bad for new investors who blindly follow a trader that performs poorly or does not follow the investor's beliefs.
Etoro has become the most known copy trading platform online. However, the following brokers also offer copy trading: AvaTrade, Naga, PrimeXBT, FXTM, BingX, and Pepperstone.
Copy-trading works by choosing one or more traders to copy & deciding the amount you wish to invest. The copy trading platform then executes trades based on the copied trader(s) in real time.
It costs investors nothing to use Etoro's copy trading feature. Other copy trading platforms might charge an additional fee.
Etoro is a good copy trading platform for new investors who are unsure how or where to start.
Social trading involves investors deciding on their next trade based on a group or several individuals' consensus. Whereas copy trading is automatically executed based on following one or more traders.
Etoro is arguably the most known social trading platform out there. Several others include ZuluTrade, NAGA Trader, Darwinex, AvaTrade, FXCM, IC Markets, and Pepperstone.
Copy trading is useless when you have the required knowledge & confidence to make your own investments. As you would not need someone to lead the way at that point.
You can lose at most 40% of your investment with Etoro copy trading. This is the default point the stop-loss kicks in. However, you can adjust this value up or down.