The Cash Diaries

My experiments in passive income, trading and life

2017 Guide to Profitable eToro Trading

etoro 20172016 was a crazy year with all the odd world events happening.  But through all that turmoil I still managed to turn quite a decent profit on the copy trading platform eToro.   As it stands I’ve made around a 22% return on the year.  That’s pretty incredible and has been the most profitable of all my investments.  My “high interest” savings account had a measly 2% return 🙁

A lot has happened on eToro over the past 12 months.   The product has continued to develop and evolve and I wanted to put together a post for 2017 on what I believe is the best and more reliable way to make money with etoro for the year ahead.

A Brief Introduction to eToro

eToro is a social trading platform where people can trade currencies (forex), commodities, stock CFDs and indices online.  Unlike traditional brokers, all trades made on the platform are shared to benefit the entire community.   So not only can people place trades like they do on regular brokers, but inexperienced or newer traders can automatically copy the trades of the most successful traders on eToro.  This is a revolutionary new concept in trading.

eToro has been around for a long time.  They first started operations in 2007 and since then they have grown to millions and millions of users.   They are a fully regulated broker and have earned a reputation as being a trusted and reliable platform.

Follow Along with a Demo Account

Want to explore the etoro webtrader platform?  See how it works and understand what the hell I’m talking about in this post?  Then grab a demo account – it’s free, and you’ll get $10k in pretend money to place trades, copy other traders etc.

Open a Demo Account

A Look at the Main eToro Features

The etoro platform looks a lot different to other brokers.  It’s fairly well designed but here are a couple of things you should be familiar with before diving in.

Webtrader

WebTrader is the name of the  online software that you use to place trades on eToro.  There’s nothing to download and install and it works across different browsers and operating systems.  This means you can get up and running in just seconds.   To see what you can trade look at the “Trade Markets” page.

The page displays some of the popular items you can trade on with the current price.

Note: If you’re a complete newbie to trading, don’t worry about understanding what each of these financial products are.  The good thing about eToro is you can copy trade and let other people do the understanding.

eToro offers a lot of different products to trade on:

  •  Currencies and Indicies – which are quite volatile and move around a lot, but can also be very profitable.
  • Stock CFD’s – these are like regular stocks but you can trade these using leverage and profit when they go up or down.
  • ETF’s (exchange traded funds).  These are funds which are made up of groups of stocks.  They are generally seen as a less risky as they are diversified.
  • Commodities – Think Gold, Silver and Oil.
  • BitCoin – a new and highly volatile digital currency.

Copy People

The copy people page is where I recommend most people should start.  This page displays the Top Investors on the platform, trending investors and the most copied.   You can also see traders based on their risk score, which I explain a little further down.

On this page, when you find a trader that you think looks like a decent investor, you can either:

  • Follow: Following a trader will add them to your watchlist.  This is a great way to save traders to track their performance before copying them.
  • Copy:  When you copy a trader, you allocate a portion of your account balance (say $150) to this trader.  Now whenever that traders makes a trade, a similar trade will be opened in your account using a similar percentage of the funds you’ve allocated.  For example if a trader opens a trade with 10% of their balance, a similar trade will be opened in your account with 10% of the allocated funds ($15 in this case).

Profile Pages

Before you think about copying someone, you should check out their stats or profile page to see how they have performed over the past 12 months

etoro profile stats

The page shows how many months they were profitable and their overall return for each year.  You also get to see their risk score (explained further down) and  how many trades they have made.  You can also see each individual trade and the % of profitable trades.

At the very bottom of the page is some really useful information including the average holding time, and the number of trades per week.

etoro stats

What’s New in 2017

Did you join eToro a while ago?  Well if you log back in to your account today, you’ll find a whole lot has changed.  eToro is almost unrecognizable from a couple of years ago.  Here are some of the most important things that have changed or been added recently:

CopyFunds

CopyFunds allow you to copy a group of traders or a group of stocks in one investment.  It’s a bit like investing in an index fund.  It’s a great way to diversify your investment.  I like that you can invest in things like “Tech Stocks” or “Big Banks”.  And of course you can also invest in the popular etoro traders.  eToro takes care of rebalancing.

WebTrader 2.0

The new web trader is a massive step up over the old one.  For starters, it no longer uses flash, but it’s now all located within the etoro site.  Everything feels connected and the entire experience is much smoother.  In my opinion it is by far the best web based trading platform out there.

Lots and Lots of new Stocks

Over the past year, etoro has slowly been adding more and more CFD’s that you can invest in.  There is now a huge selection and word is they are going to add more and more over the coming year.  This is really exciting and provides a massive array of investment opportunities.

A Smarter eToro Investing Strategy for 2017

So you have an eToro account and you are ready to start copy trading people.  But what should you look for when searching for traders?  Well below I’ve put together the exact strategy I use to find traders to invest in.

Experience

The first thing I want to see in an eToro trader before I copy, is history on the platform.  In 2017 i’m only copy trading people who have spent at least 12 months on the platform.  This way I know that they haven’t just been lucky with a couple of trades.  12 months is longer than I have recommended in the past, but I think it’s the way to go to reduce risk.

Active Trading

I want to copy traders who are actively using the platform.  One of my pet peeves are the traders who start by making lots of trades and then only make 1 trade every month or two after that.  Only copy traders who make > 1 trade per week.  This will ensure your money doesn’t get locked up in a non-active trader.  You can find how many trades they make per week at the bottom of the profile page.

Drawdown

The drawdown is the maximum negative swing of your investment.  On etoro you can filter traders by drawdown which will help you eliminate many of the risky traders.   You want to make sure the weekly drawdown is as close to 10% as possible.  Below that figure is obviously great, but the number of traders who perform that well is limited.

etoro drawdown

Risk Scores

You should be looking to invest in traders with a low to medium risk score.  You definitely want to avoid investing in all high risk traders.  Their returns may look impressive in a graph, but experience has shown me that they more often than not crash and burn.   They’ll make a couple of highly profitable trades (using lots of leverage) and than try and replicate only to realise that it was luck not skill.

A Diversified Portfolio

Don’t just copy one traders.  All traders have good and bad months, so it’s important to not just rely on one.  I think 2-3 works well.  If you’re looking to copy more than that, than I would suggest looking into a copyfund, which will aggregate lots of traders on etoro and will save you some work having to pick through all the millions of people on the platform.

CopyFunds

If you can afford it, then I think CopyFunds are a good option as an investment.  The minimum to get started is much higher than copytrading people individually so this is really only suitable for those who can afford to put a few thousand into etoro.

Discover: Follow my copy trading newsletter to get my picks on who to follow on etoro.

How to Get Started on eToro

Start with a Demo Account

If you’ve never done any investing then I highly recommend you start with an eToro Demo Account.  You’ll be given some virtual funds that you can use just like regular money and invest in anything on the platform.

I like using my Demo account to trial copy trading people before I make the jump and invest real money in them.

Switching to a real account

Once you’ve got familiar with eToro and are comfortable investing you can make your first deposit.  Make sure when you do, you take advantage of the bonus credits.  Depending on the size of your deposit you can get up to $1000 extra cash to invest.

Start By CopyTrading

One of the biggest mistakes new investors make is trying to make trades on their own.  I strongly advice new investors from making random trades.  Instead leave it to the gurus and the top traders on etoro and let them make the trades for you.

Investing in a copytrader requires at least $100.  I usually invest around $200 per trader.  It really depends on the trader.  Some traders will offer advice on their bio as to the amount to invest, however $100-$200 is usually a good bet.

Learn More about Forex and CFD Trading

If you want to start making trades on your own, and eventually becoming a pro trader than it’s going to require learning about forex and the other markets.    That’s obviously beyond the scope of this post, so I recommend heading over to the resource I use Investoo – they provide some great guides on investing in forex.

Read More: What’s the minimum investment on eToro

eToro for Pro Traders

Although eToro is great for new traders, it’s also the best forex platform for experienced traders as well.  Not only can you make trades like you currently do with other brokers, but now you can get paid for your trading as well.

Read More: Become a Pro Trader on eToro

eToro pays you if you have people copying you.  The amount you get depends on the number of copiers, but in some cases you’ll earn more than a full-time income for doing what you currently do. This is a great way at creating an extra income stream

You can join eToro for Free Here

2 Comments

  1. Thank you for this refreshing post. I’m allready on Etoro but I was hesitating to put in a bigger deposit due to all the negative reviews online. Did you ever have any problems with withdrawals?
    Are you a trader to copy or do you just copy others yourself?

    • Matty

      September 6, 2017 at 4:32 am

      I’ve never experienced any problems with Withdrawals. I usually do one withdrawal per month, and have never had an issue.

      I used to exclusively copy trade, but as i’ve learnt more about trading, I’ve started trading myself (with mixed results) as well.

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