The promises of copy trading with the etoro platform are tempting: high returns on the international financial markets without much learning effort. Just copy other people’s investments and make the same profit. Anyone can make the same profit by copying trades in real time as professional traders.
Do you want to get started in online trading with etoro but you don’t have the knowledge? Do you also not have enough time to pursue strategies and do in-depth analysis? Nevertheless, there is a way to communicate with other traders and copy them. Copy trading with etoro allows you to emulate experienced traders and share their successes.
What is copy trading on eToro?
The term “copycat” is actually revealing: this method of trading on etoro consists of experienced traders, called “signal givers”, sharing their strategies and experiences with a large community. This is done through a social trading platform like Etoro where knowledge and strategies are made public for imitators (“followers”). Other traders have the ability to copy or partially replicate these trades. This increases the success of their own crafts.
It is therefore a strategy where the activities of other experienced traders can be automatically picked up and copied one by one.
Flaggers also benefit from impersonators, as they receive a commission for each follower. Traders have the opportunity to emulate the knowledge of successful traders. Also, they are part of a community, as the respective users can exchange information and give advice through the platform. However, trading eToro copies does not only present opportunities, but it is also exposed to dangers.
Functionality of copy trading on eToro
Traders who have extensive experience trading securities on Etoro offer their trading strategy to other participants. The social service provider acts as an intermediary and ensures that the copiers (“followers”) meet the signal generators. It is comparable to a social network. In addition, users have the opportunity to discuss various topics with other participants, exchange tips and experiences and ask or answer questions.
As a rule, the database provided by the broker etoro works live, so that participants have the possibility to constantly monitor their transactions and intervene if they wish. They also keep an eye on all events.
In this strategy, the etoro trading activities of top traders are simply replicated. Like on Twitter or Facebook, users see all the ongoing activity of their favorite top traders. This allows them to quickly assess whether an investor is successful and adopt the corresponding strategy for their own business. With most providers like etoro, users can leave a comment or share strategy templates within the community.
Of course, followers do not necessarily have to adopt the strategy of a top trader. What is important, however, is finding the right signal generator for themselves. Users can also spread the risk by spreading their capital across multiple traders.
Copy trading with etoro is therefore much less complicated than traditional stock trading. The biggest challenge is finding the right signal generator for you. However, all traders are different individuals and have different security needs. There too, there is the risk of falling into the negative. As a result, equity is at risk and, in the worst case, one suffers a total loss.
Objectives of copy trading
Many people wonder what are the objectives to be achieved by copy trading with etoro. On the one hand, signal givers have a desire to pass on their knowledge to others and receive a commission in this context. On the other hand, investors on etoro naturally pursue the goal of increasing returns with as little effort as possible and therefore maximizing a profit. In addition, there is actually the social idea (“social trading”), which is realized by the exchange of users. Mutual knowledge is transmitted and mutual assistance can be provided.
Under certain circumstances, you can also become a top etoro trader yourself, who in turn makes his own strategy available to others. In this way, synergies between informants and followers can be created.
Copy trading with etoro is therefore suitable for both newcomers and professional traders. Nevertheless, basic knowledge is also needed in this area, which helps to understand and evaluate the decisions of the best traders. Signaling devices can in turn generate good revenue. However, the amount of the commission depends on the conditions of the respective broker. Also, flaggers should take into account that it always takes time for a follower to reach the rank of flaggers.
Etoro users should ask themselves what are their motivations for investing their money. Do investors pursue the goal of making as much profit as possible in a short time or should their holdings grow rather slowly? The knowledge level of the investor also plays a major role.
If one has the impression of finding experienced traders both among the signatories and among the followers, this indicates that the etoro site has many users with a good knowledge of the financial segment. As a user, you should first assess your own knowledge and ask yourself whether it makes sense to invest in the relevant asset. Also, you have to get a sense of the community. The more active the community, the more suitable it is for a newcomer. Likewise, the forms and comments show the competence of the participants and the level of their expertise.
Tips for exchanging copies
It is true that copy trading can only be based on one or a few signal generators. However, it is absolutely necessary to analyze them beforehand. It is always advisable to distribute your own portfolio as widely as possible and the exchange with other users of the community is always interesting. Other etoro participants will certainly have tips and tricks at their disposal, which will make the selection even easier. However, you should not put yourself under pressure, for example to find the right signal generator as quickly as possible. Then there is the danger of suffering a total loss.
Social trading is also not necessarily suitable for making a lot of money very quickly. The essential aspects are patience and perseverance, while impulsive reactions only hinder success.
Newcomers to etoro, especially those who are inexperienced, should start slowly with a demo account. They can thus gain valuable experience without having to take any risks. However, not all providers provide demo accounts. In addition, newcomers can thus familiarize themselves with the etoro trading platform, its instruments and tools. Followers can avoid losses and learn and better understand other traders’ strategies.
Providers like etoro usually offer a discussion forum where traders can exchange information with each other. Here, questions are asked, problems are discussed and debated, which sometimes gives rise to a lively and exciting exchange. Most of the time, a wide range of different topics already exist. But users also have the option to open a new topic and post their queries about copy trading on the net. Basically, the more active a community is, the more that speaks for a social trading provider.