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Everything you need to know about Copy Trading

Sponsored by eToro
·3-min read
Mixed group of millennial aged friends discuss investing and cryptocurrency trading at a cafe
Source:Getty

If you’re keen to gain a portfolio that performs as though it’s being run by an expert investor, copy trading is your answer. There’s a reason eToro’s CopyTrader feature is its most popular; it allows you to view what real investors are doing in real time, and copy their trading automatically.

What is copy trading?

Copy trading allows you to choose an investor to follow, then automatically copy their trading movements. At eToro, our popular investor platform allows you to copy our most successful investors and share in their knowledge.

Why should I take part in Copy Trading?

Copy Trading allows you to leverage the expertise of others. It’s great for beginners who are learning the basics of the market, or for people who simply don’t have time to watch the markets. eToro’s CopyTrader platform helps you become part a community, so you’re able to ask popular investors about their strategies and learn how they work. At eToro there are no management fees or other costs to join the CopyTrader scheme – just sign up, and get started.

How to choose a trader to copy

It’s important to choose an investor to copy whose investment style is the same as yours. If you prefer to invest conservatively, copy someone who does the same. Before deciding to copy a trader, look at their investment track record, their preferred type of investments, how long they’ve been trading, the typical time they hold investments for, and how many open positions they have. All these factors can show you if your investing values align.

How do I get started?

It can be a good idea to follow the investor you want to copy first before investing capital. Once you’ve followed their trades and are happy with how they choose to invest, you can put your money into investments. Copy trading can be a good way to diversify your portfolio; at eToro you can copy up to 100 traders at once, which gives you the opportunity to copy someone who has short-term strategies as well as someone who works on long-term positions. It also means you could copy several types of investors such as one who trades in forex, one who trades in commodities and one who trades in crypto.

Once you’ve decided to copy someone, decide on the amount you want to invest with each trade, or allocate the same percentage of your portfolio to a specific stock sector as the investor you’re following. At eToro you can invest upwards from $200 in copy trading.

What else do I need to know?

Remember, no investor is perfect. Even if you like an investor’s trading philosophy and strategies, all trades involve some amount of risk, and there are no guarantees when it comes to maximum returns. To help manage these risks, eToro has a Copy Stop-Loss feature, that provides risk management across each copy relationship. This allows you to set controls, so that if your copy value reduces by a certain amount, your copy relationship will stop, and your remaining funds will be returned to your balance.

For more information on eToro’s CopyTrader feature, visit eToro.