eToro brings to the table something unique. The ability to follow and copy traders with proven verifiable track records. You get instant alerts on the trades they are making. Each trade is logged through eToro and the wins and losses are therefor verifiable. It is an exciting development in the world of trading.
What is refreshingly clear is that you can search for traders that match what you are looking for. You can search for:
- Do they trade Stocks, Commodities, Indices or Currencies
- How active are they (% in weeks)
- How many trades have they made
You can also review:
- What their weekly draw-down is
- What percentage of profitable weeks they have had
- Their overall gain
- How many followers they have
The service is free for the copier, the traders get paid a portion of the profits they earn with your money and if you select for example to copy a trader and lay down $1,000, when they trade through the system your trades are automatically made also. If they make 20% in a year you will also (minus the commission). You can open an account with as little as $100, but you would usually need about $250 to copy a trader. If you have more that $250 to invest you need to diversify by copying more than one trader as the limits dictate no more that 40% of your portfolio on any one trader. Also, what is nice is that you can suggest your own stop losses, for example if a trader you are copying loses you more that 40$ you can choose that the system automatically exits you from the copy relationship and closes all the open positions. While my advice is always take your investing decisions into your own hands, this might be an interesting tool to invest a speculative amount of your main portfolio allocation.
It is a fascinating system with clarity into the track record of the traders you copy. Of course, if they go on a losing streak so do you. With thousands of active users and a vibrant community feel, this is truly an innovative product worth investigating further.
As part of this review I opened an eToro account and deposited $1,000 as a test to see how well it works there are certainly some good traders on the system.
You need to be careful of timing even if you follow a person making the trades. If you choose to invest during a time of macro economic turbulence witch affects the currency you are trading even good traders can be caught off guard and you may lose money even copying the best traders.
There have been various complaints on the internet from people that when they choose to close their account that eToro does not return their money. I found that not to be the case, I deposited and extracted money with absolutely no issues.
Try it out for yourself, it is a fascinating world where you can experiment with a small amount of your portfolio. If it works for you then great.