I’ve been trading for a while on eToro, and one of things that I see time and time again are new traders or copytraders, losing money. And sometimes I even see them wipe out their entire accounts. Here are some of the reasons why these people are losing out. If you follow these tips, you should be able to reduce some of the risk and be a smart trader.
They Only Follow/Copytrade 1 Trader
The most basic rule of investing is diversification. If you don’t follow this one rule, you may as well forget about copytrading. Just close your account! You need to follow at least 3 people. I usually recommend to people they should copy 5. This will spread the risk. All traders have bad months.
They Copytrade The Wrong People
Only copy traders who have been trading on etoro for at least 12 months. Have steady growth – not explosive – this is very important. The traders who have 300%+ growth are using high risk trading strategies which are akin to flipping a coin. Sure they might have gotten lucky and pulled off one or two trades with a massive return. But they also risk massive losses. Only copy trade traders who have around 20% growth over the past 12 months.
You also want to ensure they are constantly heading in the right direction. Take a look at their graphs, if there are big dips, don’t copy. They should have a steady growth curve.
They Only Invest in Forex
The great thing about etoro is you can invest in a wide range of markets. Instead of just focusing on currency, try investing in stocks (such as Apple or Google) and commodities such as silver and gold. Stocks can provide the foundations of your investment, and can grow steadily over time.
They Panic and Aren’t Patient
As I mentioned before, all traders will have bad weeks and even bad months. Don’t panic. Sure, if a trader isn’t performing for 2 months in a row, you should definitely stop copying and move on, but don’t jump ship after 1 or 2 days! I see this all the time, and it’s the worst thing you could possibly do. Be patient. Some trades can take days to close out and turn a profit.
If you follow these simple tips, then you will reduce the risk on eToro. This is my strategy and its been working really well for me.