eToro Social Trading

eToro Social Trading

You will learn about the following concepts

  • Tips for trading at eToro
  • Reading time tables and graphs
  • Risk levels and winning rates

eToro is currently the most popular of the social trading platforms. It provides users with a lot of great features and helps new traders realize their incredible potential. The selling point of the platform is the fact that its interface is simply amazing. The simplicity of the design helps even someone who has never traded before to enter the game. But it’s not just simple and functional; it’s also inherently gorgeous. You will never look at the user interface and think, “I could’ve done better.” In the following section we’ll discuss some of the tips concerning the platform and how you can do better in utilizing it for your own profit.

Advanced Tips

boardIn the section where we discussed how to recognize good traders, we told you that you should utilize the whole plethora of indicators you have at your disposal, as well as the advanced filtering systems most platforms offer. We told you that looking at the number of followers and copiers was one of the most important aspect of analyzing a trader. It tells you how many people are currently following a certain guru which, taken with a few other factors, might lead you to a conclusion about a trader’s success rate in the past. Of course, let’s not forget that this is still not a guarantee – many the masses have been proven wrong in the past. However, this indicator is still essential.

People can easily “un-copy” a guru. The fact that they’re not doing it, in combination with the guru’s portfolio, is a clear enough indicator that they must be doing a good job. The search function allows you to find exactly the kind of trader you’re looking for so you can use it however you like. Just don’t forget to check the different graphs and see the actual progression. There are traders who currently have a large number of copiers and big gain percentages, but a closer look at their profiles would show that the number of copiers they’ve lost in the past few months is actually quite considerable, and the gain is based on older data. eToro’s interface can show you quite a number of detailed stats on a guru’s profile so you can easily see who has had a steady gain and who is lying on old laurels.

Time Tables

clock_moneyWhen you’re looking at the time tables, examine the maximum you’re allowed. Then look at the list you’re left with. Every trader should have a graph next to his profile picture and name. This graph shows their overall performance within the given time period. When you take a look at that, you want to further analyze only traders who have had a steady upward graph without too many highs and lows. This means that the trader’s performance over the time period has been steady and consistent, and also that he probably has a good risk management.

Graphs

etoro_graphicThe graphs can also show you the difference between realized equity (green line) and total equity (blue line). The total equity takes into account all of the account’s funds – this means both open trades and remaining funds, while realized equity doesn’t include open trades. If the difference between the two is too big, this means that the trader has left many trades opened. This is bad, because it might indicate that there are a lot of losing trades not included in the statistics, yet. Furthermore, this may also mean that when you copy the trader, if you choose to open all of their currently opened trades (something we advise against in most cases), then you will suffer heavy losses.

Risk Levels

profit-loss-riskFor the purpose of evaluating the risks a trader takes, you can always look at the drawdown column. Additionally, you can use it for comparison purposes by looking at the numbers – lower risk gurus will have lower numbers in this column. If you are certain that you want to copy a low risk guru, then you can use the search function and select “Low Risk”.

Out of all the platforms you can use, eToro offers you some of the most advanced search and find traders functionality so we advice you to use it wisely.

Winning Rate

This is a very important point. Is it a good idea to copy a trader who has a 100% success rate? Most inexperienced traders would say, “Well, duh!” And most inexperienced traders would be wrong. If you’ve learned anything from our guide, it should be that things are rarely as they seem. If a trader has a 70% win rate and no open trades, he would be much better than a trader who has 100% success rate and 27 open trades, some of which dating back five months and having 298% losses (hey, it’s quite possible). Winning rate doesn’t mean that much taken in its own. You also have to see if there are any open trades.

Experience

Experience is essential in trading. eToro allows you to see how long has a guru traded and how’s done in that time so you can make a better pick. Usually, you want to copy gurus who have traded for longer than a year.

Final Words

eToro is a truly stunning platform and allows you to pick just the right trader for you. All you have to do is utilize that inherent functionality and you will be well on your way to profiting from what is essentially an amazing experience.