With copy trading, traders are allowed to automatically copy different traders’ positions whenever they are opened or closed. These positions are usually advertised using social media networks where their different followers can copy different methods.
With copy trading, traders can occupy positions in different markets such as forex and stocks. Your followers decide how much they can invest and how much or less they will give, depending on how successful the trader is.
Every business venture has its risks. Therefore, it is advisable for traders to thoroughly understand how copy trading works before they commit to anything on eToro Copy Trading
When you decide to use platforms like eToro, you choose to imitate the kind of investments another trader makes. It means you fully have confidence in this trader for you to copy their trades manually or automatically.
Requirements to be an eToro Copy Trader
- There is the least amount that one can invest, which is two hundred dollars.
- The highest number of traders you can copy is limited to one hundred.
- Trades that have a value of below one dollar are inaccessible.
- The highest amount a person can invest in one trader is half a million dollars.
Copy trading on eToro
There are several reasons why copy trading is beneficial for traders on eToro.
1. New Investors
A new investor has no experience in the financial market. Even though experience is a very crucial tool in the business world. New investors who are willing to copy trade using eTorind it easier to trade even though they do not have experience.
2. Time Saving
Learning and becoming well acquainted with the financial market takes time no matter how good a trader one is. There is always that learning process that a trader needs to grasp different concepts and techniques in the financial market.
In the eToro platform, the statistics of traders4traders displayed new traders with copy trader. They get to research with the traders they want to copy. It saves the new investors’ time instead of individually conducting research.
3. Approaches to Different Markets
In as much you may want to, you can’t learn and understand all markets’ operations. However, with copy trading as your means of trading, you can intensify your knowledge and diversify different markets’ experience.
On bitreviews.com it is possible because you get to copy trade with traders who have vast experience in the financial market. It becomes easier for you because you get the chance to invest in new and different markets.
4. Experienced Traders
Some of the best and successful traders are found on eToro. New investors on eToro can closely monitor these professionals’ performance and success, giving them a chance to copy their techniques and study their moves.
Traders on eToro discuss and explain their techniques and rationale, creating a learning opportunity for the new investors.
Factors to Consider Before You can Copy a Trader
Before you can decide to venture into copy trading, you need to look at some of the factors then make a good decision. Some of the factors are as follows:
1. Amount of Time Spent on the Business by Traders
Choose a trader who has used the platform for a long time because they have more experience in this business field. However, it is not guaranteed that the longer someone has stayed on the eToro platform, the more successful they are.
2. Current Conditions of the Market
Be keen to look and evaluate the patterns in which a trader’s portfolio is fairing. There are times when the business is down; therefore, the traders’ affairs fluctuate. It should not discourage you but rather encourage you to look at it from a different perspective.
Try and see if there is room for growth and improvement in the coming months. That will guide you on the right time for you to invest and copy trade on eToro.
3. The Performance Over the Last Few Months
Look at the success of the traders and you will be able to determine if they are consistent or just got lucky for a few months. Using this strategy, you can weigh and know the type of trader to copy from.
4. State of the Results
Are the results constant or their Performance does not have a pattern? Since they joined the platform, how have they been performing? Knowing the growth rate of traders on eToro will help you decide on where to put your investments.
Risks Involved in Copy trading by eToro
You will encounter risks when you trade and make investments in the financial markets. When you become aware of pending risks, you become ready and you can formulate ways of reducing them most, especially when copy trading on eToro.
1. Diversify your Portfolio
The moment you diversify your portfolio, the more you will spread your risks. Read and analyze the portfolios of traders you wish to copy trade from. You will be able to know the risk scores of the individual traders you wish to invest in.
2. Analyze the Risk Score
The risk score is set to range from 1-10. Ten being the high risk, while one being low risk. You are advised to pick a trader with a risk of four and below because you will be exposing yourself to low risk.
Carefully Monitor the Copied Traders
You may have already invested in a trader. But do not forget to check out their profiles even though they have experience constantly. You will be able to know whether you agree with their strategies or not.
Once you consider these factors, it will be easier for you to copy trade on eToro. You will have known the current market situation, the Performance of traders and the amount of time the traders have spent on the platform. Every business has its challenges; it is up to you to decide after evaluation whether to venture into the business or not.
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