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eToro Copy Trading review: Is it worth doing?

If you’re short on time or you lack confidence when it comes to trading, then the eToro CopyTrader option could be an ideal solution. Let’s take a look at what’s involved and how I got on.

eToro Copy Trading review
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When it comes to investing, your capital is at risk. The value of your investments can go down as well as up.

eToro copy trading review

Over the last 5 years, because of the terrible interest rates banks have offered, I have invested quite heavily in the stock market.

But the fact is, when it comes to trading, I really don’t have much time to constantly check the markets and make trades. So, having someone else make the decisions for me seemed to be ideal.

eToro is one of the biggest investment apps out there, and having been a member for over a year, I decided to try out its CopyTrader function.

What is copy trading?

Copy trading is a simple way that novice investors can follow and copy the trades of more experienced investors, also known as trade managers. Once a subscription is set up, every trade made by that manager is automatically copied by the followers’ account.

A follower does not need to have the same amount of money in their account as a trade manager and it’s all worked out on a ratio basis.

Is eToro copy trading safe?

Your funds are kept secured in established banks, and all of your personal information is guarded under SSL encryption. There is also an option of using Two-Factor Authentication (“2FA”) on your account, making it far more secure.

In the UK, eToro is regulated by the Financial Conduct Authority (FCA). Within the EU, it’s regulated by the Cyprus Securities and Exchange Commission (CySEC) and by FinCEN in the US.

How does CopyTrader work?

To get started, you will need to open the discover section, either on the eToro app or the main website.

Scroll down to find the CopyTrader section. Clicking on the ‘View All’ button will open up another screen which will reveal all the traders you can copy.

Then, it’s a case of choosing which investor would suit you most.

Which trader to choose?

There are filters available that can help you find your perfect trade manager. You can sort by where they are located, the markets they invest in, how much they have made and over what period.

Each trader will have a quick summary including:

  • Their returns as a percentage
  • The period over which this is measured
  • How many copiers follow them
  • How risky their investments are ranked between 1 (low risk) and 10 (high risk)
Traders you can copy
A selection of traders

If the filters don’t really help you, traders are also broken down into five main sections.

If you want the simplest option, you can choose from one of the most copied traders. These are traders on the eToro platform that have the most followers.

Or, you could look at copying one of the trending traders. These are investors that have picked up a lot of followers in recent weeks.

If you’re not so interested in short-term trading, you can look at long-term stock investors. These are investors that look to hold stock for longer periods, sometimes as long as five years.

Long-short investors will look at taking a long position on underpriced stocks hoping they will eventually increase in value, whilst selling short overpriced shares.

Finally, there are multi-strategy investors. They will have a more diverse portfolio and invest in alternative assets such as precious metals.

When choosing the right trader, you need to decide what you’re looking for. Although a trader with a 95% return may look great, is this just a short-term thing? The trader may have been lucky over a few months and his or her luck could soon run out.

You can click on the trader to see their past monthly performance and the markets they invest in.

Below, you can see that the trader saw an increase of 25.32% in March 2022, but a decrease for the following two months.

Performance of copytrader
A trader’s past performance

Take a look at the risk factor too. A high-risk investment can go up quickly, but can also fall just as fast.

Whereas if a trader has made good returns from low-risk investments, there’s less chance of it tumbling.

But remember, decent past performance does not mean good future results.

Start copying

When you have a trader that you like the look of, just click on the green copy button and select the amount you want to invest. If you don’t have enough in your account, you will need to top it up.

And don’t forget to consider setting a Stop/Loss limit. If the value of your investments starts to decrease, you can bail out if they reach uncomfortable levels.

What is the minimum investment?

The minimum amount you can invest for copy trading with eToro is $200.

How many traders can you copy?

Of course, you might not want to stick all of your eggs into one basket. If that’s the case, eToro will allow you to copy up to 100 traders at a time.

Keeping you up to date

Most traders will post on their accounts to let you know their thoughts and latest updates. In some cases, you can ask them questions and they will reply… if they have the time. And the trader I follow even broadcasts webinars as a form of update.

My experience

At the end of 2021, I decided to give CopyTrader a try. After trawling through the list of traders, I chose one that had seen a 40% return over the previous two years.

But, as you know, 2022 hasn’t been so kind. Although the first few months saw steady gains, my investment is currently down 9%. However, that hasn’t stopped me from investing a bit more and following another trader. I expect to see far better returns when the market improves.

Is eToro’s copy trading worth it?

The system is incredibly easy to use and is a great way for a novice to learn more about trading and investing.

Yes, I’m a little disappointed that my account is down so far this year, but then almost all of my investments are. However, the CopyTrader system has given me some really good insights into trading and given me some really useful ideas.

Why not take a look at my post about the best investment apps for beginners?

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