Similar to other social/copy trading platforms, but perhaps done better here than anywhere else, the copy trading offered by eToro is all about placing trades and earning money by using other people and more specifically by using their time, their strategies, their skills and experiences. The beauty of copy trading is that it adds on the reality of online retail trading and it thus means that all barriers to access the trading markets are removed, enabling everyone who is interested in trading to be able to do so without any prior knowledge and earn money from trading at the mere push of a button, thanks to the right choices of the trader they are copying.
The days when trading was an exclusive and restricted activity are a thing of the past and the process is now not only open to all but easy, simple and fast as well. Literally anyone can trade the markets, with a handful of funds and even see profits head their way on the same day!
To achieve such a result though copy trading you simply need to carefully select the traders that will give you profitable returns over the long term, in a consistent and sustainable manner. eToro helps users locate and discern the right traders to follow through a very effective filtering tool that allows the classification of traders against a variety of different criteria, while it also has the most commonly searched listings, such as high return or low risk in its quick settings. And if you are looking for the one single thing to look for when choosing a trader to copy then that would be consistency, so don’t haste to copy someone just because they recorded an impressive percentage profit in the past few weeks. A consistent performance will always beat a lucky streak.
Another thing to bear in mind when selecting traders to copy is that since it is possible to copy traders who themselves are copying other people it is advised to make sure that this doesn’t lead to duplicate trades in your portfolio if you end up copying the same person more than once, though different copiers.
Copy trading is also brilliant because depending on your own personal risk tolerance and reward expectations you can diversify the selection of copy traders you make. Diversification is a very good thing and copy trading allows you to pick the best traders in a variety of markets, assets and investment types.
Copy trading and especially copy trading through eToro works well and could bring some cash your way because in many ways it is like having a managed investment account but without having to dish out the high fees typically associated with such a service. Instead, with copy trading, this is completely free! Thus, copy trading is better than a managed fund account, since it cuts away the middlemen and their fees. What is more, middlemen will make their profit irrespective of how your actual investment actually does, thus there is no full alignment between your interests and theirs.
In contrast, if you decide to conduct your trading through eToro’s copy trading then you gain direct access to the trading markets whenever you decide. You don’t need to pay for any hidden costs and overheads, since except from the spread of eToro (as the broker) all the rest is completely free.
Moreover, since the traders you are copying are also risking their own funds on each trade you can be sure that your interests are fully aligned and your fates are intertwined. However, the good thing is that you can easily drop traders who fail your expectations and only need the click of the mouse to re-allocate the funds in your account. Moreover, you can manually hand pick the best and most successful and profitable traders and those most suited to your needs or style and it is very easy to build a fully custom made portfolio that could be leading to instant profits.