How to Trade on eToro Social Trading Platform?

Last Updated : Saturday 29th April 2017

Written By Tim Baudin
Forex Trading Instructor

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Our ultimate, 100% FREE guide tells you about how to connect with other traders & automatically copy their trading portfolio performance. Beat the market with wisdom of the crowd!

Want to trade Forex for living or just for some additional support income?

Maybe you are a busy person and with personal commitments, business deals and regular work hours cramping your schedule, you find a little time to give to trading Forex. 

But this does not mean that you cannot earn and get profitable margins!

First, let’s understand basics of social trading.

What is a Social Trading Platform?

social trading network

The idea behind creating social trading platform was

what if you could bring the advantage of the wisdom of many traders in a collective format to make fundamental investment decisions?"

This is what social trading is all about – Connecting on a global network with traders and investors around the world, following their ideas and experiences and using them to make your own investing decisions.

The Need of a Social Trading Platform

How to get started with the social trading platform?

Getting Started with eToro : Step by Step

1. ​Join eToro - Social Trading Network

It’s very simple & free. You can use either your Facebook account , Google account or with your details like username, password, email & phone number.​

2. Deposit​

Now you don’t require to make deposit straight away if you don’t want. But you can only copy someone if you have min a $100 in your account. It’s better to start with $200 or $300 which allows you to copy 2 or 3 traders to diversify your portfolio.

You can deposit either through any major credit cards or any choice of alternate payment systems like such as Skrill, PayPal, Neteller, and WebMoney.

You can deposit using following currencies at present : USD, EUR, GBP, JPY, AUD, CAD

eToro also runs various promotional offers time to time. 

You must first verify your account to claim this bonus. It's a simple process. You need one Government issued ID (front and back scanned colored copies are required). It's also mandatory to verify your phone number.

Once this verification process completed, you'll get an email with your Promotion code!

3. Get Understanding in using eToro Platform

Newsfeed

Similar to Facebook, you get to know all activities for traders you are following.​

Portfolio

This is the place to view all your open trades and monitor your performance.​

Watchlist

Here you can add people or markets you are interested in knowing more. You can have multiple lists.​

People

This section allows you to filter people to whom you would like to copy based on various criteria. 

Markets

Place to trade or research various markets like Forex, Stocks, Indices, Commodities and EFTs


Now that you are part of this social trading network, there are mainly 3 ways to earn money.

1. Copying The Best Traders with CopyTrader

This is the best way to start for a beginner. When you copy a trader, their trades are automatically copied to your account. 

2. Trading with eToro Yourself without Copying Other Traders

Once you are familiar with the eToro trading platform, you can also trade yourself directly for Stocks, Indices, Forex, Commodities, and ETFs.

3. Become a Popular Investor

Anyone and everyone can become a Popular Investor on eToro – This do acts as an incentive for responsible trading and being an active part of the community. Even having just one copier starts getting your additional commission everything (25% of revenue).

There are total 4 levels of this program. As a number of traders copying your portfolio increases, so does your commission…and there is no upper limit to your final commission! This is on top of profit you are making with your trades.

It can take a while to get a number of followers but it’s not hard if you are making consistent solid profitable traders. By being active on the network, taking part in discussions, answering other people’s questions etc. can get your name out inside community quickly.

How to Select the Best Forex Traders to Copy on eToro 

Avoid the mistakes of blindly following and copy the ‘most copied’ trader.

Selecting the right forex traders on eToro is a crucial step because this is how you avoid losses and get a profitable share of trade on this platform. There are dozens of traders to select and follow, and you can always view their profile to get a detailed analysis of their regular performance over the months.

If you are willing to learn from the best and follow the top traders on the block, here are some tips and guidelines you should have in mind:

  • Look for traders who have been trading for a while now (at least 6 months) and are active in the feed, blogs, and discussions. It ensures that amazing gain was not just out of luck.

  • If you are not willing to bank upon risky traders, look out for red flags in their trading history. This indicates that they lost their equity at some point and this shows that it may be risky to embark upon them.

    Also, look for weekly and daily drawdowns. Anything more than 10% is sure sign of red flag.

  • The gain ratio percentage can often be misleading. If the winning ratio of a trades is 100% or even greater than 90%, this does not usually mean a good thing.

    This is an indicator of the fact that they left the position open until it became profitable, which will make you lose your capital as they widen their stop levels.

  • Follow gurus who don’t leave their trade positions open for a long period of time. Short term eToro traders are the ones that get you the best profit.

    Instead, look out for gurus who are prone to cut down their losses when the trade is not likely to work. Understand that trading is not always profitable. There will always be bad days.

  • When looking at the performance graph, keep an eye out for a slow yet steady growth and not sudden drops and rises over a period of time.

    A consistent upward graph is more reliable than gurus with graphs that have sudden peaks and drops, even if they have been profitable for the present year.

  • Understand the guru’s strategy and check if you can relate to them and can look up to them. This is the whole point of trading on eToro –copying someone who you think is worth following!

    Check how much communicative they are. If they are not replying to your message than either they don’t want to share their knowledge or may be worse don’t do what they doing !

Evaluate Traders Performance and Trading Behavior

To create people based portfolio according to trading style that suits you, the users stats page is one the most important page for you to decide if you should copy or not.

The stats page is built out of 5 cards:

  1. Performance

  2. Risk

  3. Copiers

  4. Trading

  5. Additional info

Checking Trader's Past Performance

Here you can see full history based on months, years etc for that particular trader. This will give you idea about the consistency of profit and loss for any trader you are interested in. 

There are two other important things to look. 'Risk score​'  shows risk the trader is taking and it's on scale 1 to 10. 1 means very low risk. 10 means very high risk. 'Max Drawdown' shows the greatest loss for this account equity during selected period (daily, weekly, all-time)

How to start copying?

One you have found any trader whom you like to copy , just open their profile page and click “Copy” button just below their profile.

Enter amount with which you want to copy. You can also set a “stop loss”, which protect you against heavy loss. It’s 40% by default. So, if trader you copying loses 40% of your total investments than you automatically stop copying them.

Monitoring your total Portfolio Performance

Inside your “Portfolio” page, you can view your all open trades.

You can close an individual trade without stop copying a trader here.

CopyFunds

Managing Forex Trading Risks with eToro

Risk and money management while trading on eToro is an important consideration to take. Though copying other traders gives you an absolute edge and share on their profits, it also entitles you to a portion of the losses they incur.

Therefore, it is extremely important to select right traders to copy and monitor their performance to keep an eye on your assets. Following are some handy tips that can help you evade major losses and ensure a safe and profitable Forex trading experience.

  • For a rough calculation of the amount of risk that you face when copying an investor, here’s a simple formula. If for example you are allocating 10% of your funds to a trader and they risk 5% on a trade on their account, then a 0.5% of your total balance is automatically risked.

    Therefore, it is important that you take a look at your trader's trading history and then decide on the amount that you allocate on their funds to face minimum risks on your account.
  • For most gurus, the profile shows a “Risk Breakdown” analysis, which shows how many of their previous trades were either “low”, “medium” or “high” risk.
  • In case the analysis is not shown, a manual method to calculate their risk factor is to start copying them through virtual money in a demo account.

    Look at their “open trades” and “history” tabs and the “amount” and “units” will indicate how much they risked on their trades. Here the pip risk indicates how much the trader won or lost when the market moved up or down 1 pip in general.

    Traders who trade on a daily basis stop 100 pips away while long term traders may use 500 pips. Copying such long term traders is generally not advised because they lock in your funds and may cause you losses.
  • There is an option of copying the open trades of a guru once you start following them. One should understand that open trades that comprise a few weeks or even months are generally going into a loss and it is not a smart move to copy them.

    Therefore, one should always uncheck the option of copying the previously open trades of a trader.

Withdrawal

There is withdrawal fee with eToro based on amount you want to withdraw

Withdrawal Amount

Fee

$20-$200

$5

$200.01-$500

$10

$500.01+

$25

To reduce cost, it’s better to wait till you have above $500 to withdraw and withdraw in one lump sum. This way it’ll cost you only $25.

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