Reviewing the Best eToro Social Trade Plan for You
Social trading is becoming the newest evolution of online trading.
It connects traders from all levels of knowledge on a trading website, like eToro web-trader, and allows them to work off each other.
With social trading, you can look at the portfolios of some of the most successful traders and learn from them concerning how they trade and how you can apply it to your own investment strategy.
On eToro, every trader’s account comes with a news feed which is similar to any social network feed you can imagine. On this feed, a trader can share any knowledge, tips, or explain why they are making a particular investment and why others should follow suit. Having a social feed allows any entry-level or intermediate-level trader to gain insight and improve their trading skills.
Why Should You Consider Social Trading?
Social trading is incredibly simple to use and it allows you to connect with other traders who may be able to help you increase your investment earnings. By doing this and being able to see what they are doing and copying it, allows you to learn more about how to succeed in trading and how to improve your skills.
Social trading also allows you to spread out your investments across various markets, assets, and traders. Diversity is the key to successful trading; you want to diversify your investments because markets are so finicky and you don’t want everything to be in one place and find that it crashes.
By using copied trades, from those who are more successful than you, you can conclude that there is about an 80% success rate in comparison to any other type of trading.
Social trading makes it so that you can see how well others are doing in their trading activities: Their risk score, track record, and their portfolio. By allowing other traders to see these items you can decide for yourself whether copying their trades would be beneficial to you.
A Form of Day Trading
Social trading is a form of day trading, just with the social media aspect added into it. Traders still buy and sell securities throughout the day; they will watch the market(s) they are involved in and buy and sell as they see the market rise and fall.
Most day traders just try to earn a profit from the small movements of markets, which is a clever idea if you have the time to keep an eye on a market throughout your investment period.
But with social trading, as mentioned before, the added social media factor allows you to day trade without having to keep a close eye on the market. Now you can just copy a professional trader that is investing in things that you want in your portfolio and allow them to do the hard watching for you.
Even as you are doing this, the moment that you see that the copied professional is doing some trades or sticking with a market even though you have a feeling it won’t work out, you can always intervene and choose not to follow that trade.
Social trading as a day trader allows you to open and close many positions throughout the day and you can also decide to hold a position (or positions) for longer if you so choose to do so. It is very much easier to hold positions for extended periods of time by copying professional traders.
What is eToro?
eToro is a newer global marketplace that is set up to mimic what a social network looks and feels like. eToro’s primary goal is to connect traders so they can work off each other, in the hope that by doing so you not only increase your earnings but that you can learn some amazing skills from each other.
As of right now, there are 4.5 million people worldwide who are using eToro as their trading platform. That is 4.5 million people from 170 different countries. How insane is that?
The eToro trading platform is a great trading site to consider, not only because it allows you to connect with traders of all levels of knowledge, but also because it promotes sustainable trading. They want you to be successful, but they also want you to realize that there are risks associated with trading — so they try to show you how to work with the risks if you fall victim to one and how to avoid them.
You can be a day trader, or you could be looking for a long-term investment portfolio — it doesn’t matter as long as you understand how to work the system and reap the benefits when they are given to you.
Traders can invest in many distinct types of markets on eToro including indices (which are representations of a particular market or market sector), ETFs (exchange traded funds), technology, major currencies, commodities, and so much more.
It doesn’t matter what type of market you are looking to invest into, eToro is sure to have it. All you need to do is search and find the best ones. You can even find cryptocurrencies, which are digital currencies, such as Bitcoin trading, which are not universally offered on trading sites.
eToro webtrader is a free website to join, although you will incur some fees such as brokerage fees and overnight rollover fees. What are these fees?
Brokerage fees are incurred after every trade because they are the cost an investor pays when they are buying and selling trades or to keep their account.
They will be found on the clear majority of investment sites. These fees are charged by an agent or a company to conduct transactions between buyers and sellers; they are charged to you for services such as purchases, sales, and advice on transactions.
Usually, brokerage fees are based on a percentage of the transaction taking place, a flat fee, or a combination of a flat fee and a percentage of the transaction. It all depends on the kind of trade taking place, who the broker is and if they are acting individually or as part of a company.
Overnight rollover fees
Overnight rollover fees are completely different than broker fees. Rollover fees are paid, or debited, to traders who have open positions — investments on trades — that are open overnight.
It is interest that is charged to the trader. The amount of the fee can change drastically depending on the type of market invested in and the currency that the market is originally in. If your country’s currency is worth more than the currency of the market, then the rollover fees will be less than if your country’s currency is worth less than the market.
Benefits of eToro
What is so great about eToro online trading is that they want you to succeed and see your investments flourish. To ensure this, they have trading academies, live webinars, trading eCourses, and more to help you learn all about how to trade on their site and see results.
There is even an option where eToro will give you a practice account with $100,000 (all of which is just there as a practice; it’s not real money). It’s great because you don’t have to worry about trying out trading by using (and potentially losing) your own money.
eToro allows you to pretend to have $100,000 and see how you can use that much of an investment and the profits that can be derived. So, if you are new to the trading world, this would be perfect for you. It’s completely free to try out and allows you to see exactly what a real account would look like. eToro even has an option where you can practice using the mobile app.
The amount of aid and information that eToro online trading and the other traders give to new traders is incredible. I have never seen anything quite like it before. There is even a blog where the most successful traders can post articles describing their success and sharing insights with others on how they can follow their lead.
Markets and Platforms
There are also articles about what types of markets, stocks, ETFs, etc. that should be invested in and others that you should probably stay away from.
When you first open an account on the eToro trading platform, you will be given the mobile trader platform which includes two of the older platforms they have including WebTrader and OpenBook.
WebTrader is an all-in-one portfolio management platform and has all the trading tools you could need. With this platform, you can view live rates, use charting software, open positions, and orders, change your trade settings, and much more.
When eToro introduced OpenBook, it created the social trading aspect of the site more than it had before. OpenBook allows you to connect with other investors in the network and learn from them. By opening the door to allow for people to learn from each other, it allows beginning traders to learn valuable skills they can take to other trading areas as well.
The platform that is used now by eToro is the mobile trader platform. The mobile trader platform combines WebTrader and OpenBook into one easy to use application.
It allows users to take their trading with them wherever they via their smartphones, as well as their computers. No longer do you have to be at a computer to track and monitor your investments. You can now receive notifications or check on what is going on in your portfolio just by opening an app.
eToro Social Trading Plans
There are three main types of social trading plans that eToro offers on their website. These social trading plans include CopyTrader™, CopyFunds™, and Popular Investor Program. These three plans build upon themselves, meaning that you start out doing CopyTrader or CopyFunds, and then as you increasingly become more successful, you can then apply to join the Popular Investor Program.
CopyTrader is quick and straightforward. All you have to do is open an account using the eToro OpenBook platform and find some of the top social investors you want to emulate. Once you find one, you just have put some of your funds for copying them and you are all set to go. By copying their trades, your account will automatically begin to copy their positions and the things they are putting their funds into.
The last thing you need to do is monitor and manage your trades. You retain full control over your account, so if at any time you don’t like what the person is trading in, you can take the trade over or stop copying them altogether. It is also super easy to find and copy new traders as you learn more and more about other successful people.
CopyFunds are very similar to CopyTrader; this is because it just copies and applies the strategies that top traders do on their accounts and applies it to your own. There are two different types of CopyFunds in which you can invest; these CopyFunds include Top Trader CopyFunds and Market CopyFunds.
Top Trader CopyFunds are comprised of the most fruitful and sustaining traders that can be found on eToro. By choosing Top Trader, your eToro account will only copy the profiles of the people who are the most successful in trading in the things that you want to invest in as well.
Market CopyFunds are comprised only of financial assets which can consist of stocks, EFTs, indices, commodities, or currencies. With Market CopyFunds, trader portfolios are not included. This exclusion is the biggest difference between these two CopyFunds.
Popular Investor Program
The Popular Investor Program is comprised of the top traders that can be found on eToro’s website. To become a part of this program, you need to apply and be approved for it. This is because eToro wants to make sure that only the best are included here.
The Popular Investor Program allows the best traders to share their wisdom, experience, and success with others so they can continue to learn and see their investments flourish. The traders included in the Popular Investor Program are usually the ones that are being copied in the other two plans.
Which Top Trader Should You Copy?
So, how do you know which top trader you should copy? Here are a couple of tips on how to find the best one out there. EToro filters the top traders by five categories, which are: Top investors, trending, most copied, lower risk score, and medium risk score. Of course, you can always do an advanced search to add more categories depending on what you want to look for in a trader to copy.
One of the biggest tips out there is to make sure that any trader you copy has been trading for a minimum of a year. This allows you to feel comfortable knowing that they have learned how to use the system and have learned how to make it work for them.
Look at their feed to see if they share their knowledge with others and if they act when a market starts going badly. It would be beneficial for traders to see that the professional that they are copying is willing to share their knowledge with others so they can learn too. It is also reassuring knowing that if a market starts to turn sour, they are willing to take action before it crashes.
You will also want to check their performance graph for consistency. Ideally, you will want to find a graph that looks rather steady and uniform. If you find that a trader you are interested in has a graph that shows a wide range of swinging green and red, especially if it looks like they have lost all of the money on their account at more than one point, you should steer clear of them and find someone else.
Remember: Anything over 80% profitable trades is suspicious, so if you run into a profile that has a profitable trade percent of 100 — stay away. It might look really promising, but you need to understand that it may mean they are holding on to losing trades and not trading actively.
You will also want to try to find someone with a reasonable percentage return. For example, 10–20% returns. If they have a return percentage that seems astronomical, then you might want to steer clear. Even if they have really high gains, they have an ever higher chance of blowing up their account and losing everything — for you and them.
If you see that they are copying more than 20% of other people, you should stay away. It means that they aren’t really doing much of their own trading and they are instead just copying the movements of other professional traders.
You would be better off searching for someone that this person is copying and see how they have been doing and if it matches your style. There is no point in finding a professional who is only gaining profits by copying other people.
See how many open trades they have going. If you are looking for a day trader, you will want to look for someone who is focused on one particular market at a time for that one person; this usually means that they have one open.
Then as the day progresses the market will close and another one will open. Because they only have one trade open at a time, they will usually specialize in a particular market. You can copy them and find another day trader who specializes in a different market that holds your interest.
If you are looking for a long-term investment, they will have a variety of open positions but, at the same time, stay clear if they have more than five open positions. Five positions usually mean that they are well diversified and, if they are able to keep up with all five open positions, it usually means that they are good at spreading their own personal risk and, therefore, your return or portfolio will be spread out nicely too.
Finally, read their bio and see what they are all about. What’s amazing about social trading plans is that if you find something that concerns you, just drop them a message and see if and how they respond. Some traders will be more willing to respond and respond quicker than most.
My recommendation is to find a trader who is willing to talk to you and share their knowledge and reasoning behind certain trades. Don’t be afraid to reach out to top traders — that is the entire point of social trading plans: To learn from one another.
Pros and Cons of Social Trading Plans
As with any social trading plan, there are plenty of pros and cons that should be considered before making the investment. Some of these are listed and explained below:
Mobile Apps: eToro has made it so that their trading website can be accessed using your smartphone. So, now it is even easier to check on your trades or quickly respond to day-to-day indicators of a worthwhile investment idea. The same goes if you hear or see something that indicates that one of your trades are going downhill.
Minimize Emotions: By trading from an automated social trading system, there isn’t any place for emotions to take over actions. There will be no hesitations or questions in whether a trade would be a good idea or not, which helps those who are afraid to “pull the trigger” and go for that riskier trade option. It will also contribute to preventing traders from over trading — buying and selling at every perceived opportunity — which will allow for greater growth in your investments.
Ability to Look Over Another Traders History: This is also called backtesting. Backtesting allows traders to view historical market data so they can better decide if that market is too risky to invest in or not. It also allows a trader to determine the average amount a trader could expect to win or lose per unit of risk.
Discipline: Because the entire trading system is automated, it maintains discipline in how much you are trading. Discipline in typical trading markets is lost, typically due to emotional factors such as fear of losing money or the desire of trying to grab a little bit more of profit. Because of the automation of trading there is, it removes a lot of the emotion involved in trading and therefore reinforces the discipline.
Order Entry Speed: Computers respond immediately to the changing market conditions, so the moment that your portfolio sees that a market you invest in is changing, it will automatically generate orders for you. If you have ever traded before, or just understand how markets work, you know that they change rather quickly; therefore, automated social trading allows you to take advantage of any and all market shifts that could benefit you.
Diversifying Trade: The biggest tip that all traders have for new people is to diversify your assets. You don’t want all of your money put into one thing because, if that plummets, you are in for a huge loss. Automated trading allows you to trade in multiple accounts or use various strategies at once, which has the potential of spreading the risk over different markets.
Mechanical Failure: Computers and software can fail and that is just the universal truth. So, something that needs to be considered is the idea that at any given moment, something could potentially happen to the system and cause it to crash. Alternatively, it could mean that at a moment when you are about to make a huge investment that could give you a lot of profit, you suddenly lose your Internet connection. It is best to start off small and see how the system works. Once you have a better understanding of the system, you can then begin to move toward bigger trades.
Monitoring: Automated trading systems require monitoring, in part due to mechanical failures. It is best to monitor the system to watch for any connectivity issues, power losses, computer crashes, system quirks, and more. Some issues could make it so that there are erroneous orders placed, orders missed, or duplicated orders — all of them could easily be identified with monitoring and quickly resolved.
High Minimum Deposit: While copying a pro trader seems ideal, it can become quite costly. The thing to look for when doing social trading is how much it will cost you before you invest and also to look at their history and see if their risks are too high for your comfort or not. While copying pro traders can be rather profitable for some, it can also be detrimental to your portfolio and theirs.
Pro Traders Past is Not Indicative of Future Results: Just because a trader has a historically high record of profit winnings, it might not be the whole picture of their trading career. This goes along with everyday performance results: Someone could perform exceptionally well most days of the week, but then one day something happens to them, and they perform lower than normal. This can occur with traders too; they can have good trading days and bad trading days. Just realize that their history in trading does not predict the future.
Trust: You have to instill a lot of trust in the traders you are copying, which can be hard to do if trusting someone you don’t know is difficult. You are putting your money in their hands for them to deal with that takes a lot of trust. While this takes away most of the emotions involved in trading, you do have to have some part of you that stays emotional and tells you when not to trust a trader.
Costs and Fees: To make a profile on eToro is completely free, but the costs that you do incur can be quite significant. The biggest costs that you will see charged to your account are for brokers and overnight rollover fees. It has been found that eToro has higher broker fees than most other sites or brokers that can be found. Of course, because you can just copy the trades of Popular Investors, the benefits can outweigh the costs incurred.
Overall, social trading plans are appealing for a variety of reasons. But before you step forward and start investing in an automated plan do some research and figure out which is best for you and determine the amount of time you have available to invest in your trading. While it might seem like a great thing for your trades to happen automatically when the market is good, it could potentially be ruined by some mechanical or monitoring failure.
If you are still unsure about the advantages of using eToro’s social trading plans, here are a few testimonials found on their website (https://www.etoro.com/en/social-trading/testimonials) that show they have an advantage over traditional trading platforms:
“It’s an excellent platform which I would not be able to trade without. I’m not an experienced trader, but with this OpenBook, I can concentrate on finding the good traders and copy their trades and let them concentrate on the markets.”
“eToro’s OpenBook advanced features allow me to quickly find profiles which match my trading strategy and compare against traders I already have within my portfolio. It’s great to see new features and improvements being rolled out every day.”
“I love eToro! It has a real advantage with the OpenBook, not to mention the CopyTrader function which is perfect for those who are looking for profitable traders. Whether it’s to learn from them or just copy their actions. For me, it’s definitely the best platform.”
“I would like to thank you guys for all the guidance and advice I received. It makes trading on the OpenBook a very unique experience for both copiers and Popular Investors.”
These are quotes from people all over the world thanking eToro’s social plans for being so educational and helpful, no matter what their experience is with social trading plans. As long as you are willing and able to start trading with eToro, no matter your level of expertise in the matter, you will never feel as though you are trapped all by yourself not knowing what to do, there are millions of others out there that you can chat with and copy.
Learning how to trade has never been easier with social trading plans, adding that extra feature of a newsfeed allows people to interact, share their knowledge, and copy more profitable traders with a click of a button. If you are interested in learning how to start day trading or started long-term investments, a social trading plan offered through eToro is your best bet.
Originally published at zamdy.com