How to Invest using eToro Copy Trading

I’ve been using eToro for the last 5+ years for Copy Trading.  What is Copy Trading?  It’s where you automatically copy trades made by more experienced traders.  It’s a great way to learn more about trading as well as tapping into the knowledge and experience of some of the world’s best investors.

Here is my guide on how to get started with eToro copy trading

What is Copy Trading

Copy Trading is where you automatically copy trades made by other traders.  Using eToro, you can browse through the profiles of thousands of traders.  If you find a trader who has stats that you like, you can allocate funds to automatically copy the trades that they make.

Find people on eToro Copy Trading

How to Get Started Copy Trading

Here is how to get started copy trading on eToro:

  1. Open an eToro account – even if you’re not ready to copy trade with real money you can open a free eToro account.  The free account will let you trade and copy trade with virtual funds.  It’s a great way to test out eToro.  You can also follow other traders.
  2. Complete the Questionnaire – When you first join eToro, you’ll be asked to complete a quick questionnaire.
  3. Fund your account – you can fund your account using bank transfer, credit card or PayPal.
  4. Find someone to Copy – look at my guide below on how to find people to copy on eToro…

How to Find the Best People to Copy Trade on eToro

I’ve been copy trading for a few years now.  Over that time I’ve picked up some tips on who to copy.  These are the stats I use to find the best traders on eToro.  All of the following info can be found on a persons “stats” page.

  • Minimum of 12 months history – on eToro you can see every trade someone has made.  You can also see a month by month breakdown of how profitable (or unprofitable) a trader has been.  I make sure I only copy traders who have at least 12 months history on the platform.  I believe that anyone can get lucky for a month or two.  But to invest profitably for a longer period takes skill.
  • Risk Score of 5 of Less – eToro gives each trader a risk score.  The lower the score the better.  The risk score on eToro is based on what assets a trader invests in (some assets like crypto are more risky), what % of capital the trader uses for each trade and how much leverage they use (if any).
  • Weekly Trades – I prefer to copy reasonably active traders.  So I like to check a traders average weekly trades.
  • What they Invest in – I’ve had the most success copying traders who have a clear strategy.  So I don’t like copying traders who invest in a bit of everything.  Instead I like to find traders who are experts in particular assets.  For example I copy someone who only trades EURUSD Forex.
  • Gain – Obviously I only want to copy traders who have been profitable in the past.  While this doesn’t mean they’ll be profitable in the future, I use it as a guide.  Most of the traders I copy have an annual gain of between 10-50%.  I’m cautious of copying anyone with a higher gain.  It might mean they are using a riskier strategy.

Make sure you take advantage of eToro’s advanced search tool.  It can be found on the “Copy People” page. Just click the “Filter” button.  You can then filter people based on the criteria above.

What you Need to Know about eToro Copy Trading

  • Trades are Copied in Proportion – While copying a trader, if they open a position with 1% of their account capital, the same trade will be opened using 1% of the funds you have allocated to copy that trader.  This means you can copy trade with relatively little capital.  The trades your account opens will just be much smaller than the trades opened by the copied trader.  The gains you make will still be the same percentage wise.
  • Profit is calculated on open and closed positions – This is super important.  The profit % that you see next to each trader is calculated based on both open and closed positions.  Some platforms only calculate the profit on closed positions.  So traders would simply leave open losing trades forever so it looks like they are making a profit.  But the % profit on eToro is much more accurate.    If a trader makes a 20% gain over 12 months – your account will make that same gain.
  • You can’t copy high risk traders – basically anyone can be copied on eToro (even you!).  But eToro will not allow you to copy someone who has a high risk score.  They don’t want you to expose your funds to potentially high risk trading.    Here’s a full break down on how the risk score works.

eToro Minimum Investment

The good news is you don’t need a huge amount of money to start investing on eToro.  Here are the minimum investment amounts:

  • Minimum Deposit – $50
  • Minimum amount needed to open a stock trade (manual trading) – $50
  • Minimum amount needed to copy a trader  – $200

So if you’re just looking to buy some stocks you need just $50.  If you are looking to copy trade, then you’ll need $200.  You can copy trade multiple people, but you’ll need at least $200 for each trader you copy.

Manually Trading on eToro

I like to mix both copy trading and manually trading stocks on my own.  One of eToro’s best features is it allows you to buy real stocks with zero commissions.  I’ve used this feature to build a portfolio of stocks such as Apple, Tesla, Nio and Alphabet.  You can also buy partial shares on eToro.  This means you can invest just $50 to buy part of a share.  If you only have a small amount of capital, you can still build a diversified portfolio.

As well as stocks you can also trade forex, cryptocurrency, commodities (like gold, oil etc), ETFs and more.

Stocks on eToro

Is eToro Legit?

Yes!  I’ve been trading on eToro for the past few years and have never had any problems.  Both deposits and withdrawals have been processed quickly and customer support has been quick to respond to any requests.

eToro has over 14 million members all over the world.  Recently they’ve been investing more in The Australian market and now have offices here as well.  eToro is authorised by ASIC to provide financial services in Australia.

Is eToro Worth it?

I think eToro is a really unique way of investing.  It allows you to tap into the knowledge of some of the worlds best traders.  I love how open and transparent everything is.  You can see how profitable a trader has been in the past and see every trade they’ve made.

I think eToro is worth it just for the social features.  So even if you’re not planning on investing, it’s a great platform to follow other traders (it’s a lot like following someone on Facebook).  You get to see the trades they make and many of the traders will post updates explaining market conditions and why they’ve made certain trades.

You can find out more about eToro here

This post is for educational purposes and should not be considered as investment advice. This post is based on individual experience and journalistic research.

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