eToro Copy Trading Review
eToro is the world's first and largest social trading network, with over 8 million active investors. Understand how you can make eToro copy trading work for you: follow and copy other investors, or build a following and a second income stream as a successful trader.
However, note that eToro isn't available in Canada, China, Hong Kong, Russia, Saudi Arabia and most African countries. If you're looking for an alternative, give our guide to the best copy trading platforms a look.
In this article:
- How eToro copy trading works
- How to find the best eToro copy traders
- How to copy the best eToro traders
- How to limit your risk
- How to get started
- eToro banned countries
- eToro risk warning
How eToro copy trading works
eToro CopyTrader is built around a simple idea: find traders you want to copy, decide how much you want to invest then let eToro automatically copy their trades for you. It's free to copy other traders, and there are no fees beyond what you would pay if you were trading on your own account.
eToro copy trading features:
- The minimum you can invest in a single trader is $200.
- The maximum you can invest in a single trader is $2,000,000.
- You can copy up to 100 individual traders simultaneously.
- A trade won't be copied if it's worth less than $1, which limits your exposure to penny stocks.
How to find the best eToro copy traders
To get the most from this guide, visit eToro.com to open a demo account online. It's free and will only take a minute. There are no fees or hidden costs because it's a demo account. You can convert your account to a live account at any time, should you wish to.
Click Copy People in the left panel to access eToro's screener. There, you can filter traders by market (such as stocks, crypto or commodities), return, risk profile and other criteria. If you have an interest in crypto, you could screen traders who've invested at least 50% of their portfolio in cryptocurrency and achieved a return between 10% and 50% in the last quarter. You can filter by their follower count or assets under management (AUM) to your results further. We'll cover eToro copy trading strategies in more detail in a separate article.
Once you've found one or more traders of interest, add them to your Watchlist or click through to their profile for more information. The best traders will explain their investment strategy and touch on their approach to risk management. Their profile page opens up onto further sections.
The Stats tab shows their return and risk profile on a monthly basis. While past returns are not indicative of future performance, they can help you form an opinion about a trader's abilities. As a matter of personal preference, I look for consistency over time.
The Portfolio tab shows their current portfolio allocation in detail. See how much they've invested in each instrument, and the return they've generated over time. Interestingly, the report also shows whether they are buying or selling each instrument.
The Chart tab charts their return over time. We suggest comparing a trader's return against a market index, such as the S&P 500 to put their performance in context, as illustrated below. If you enjoy technical analysis, you'll appreciate the ability to overlay moving averages, Bollinger Bands and other indicators.
How to copy the best eToro traders
Once you've found a trader you want to follow, you can choose between copying all of their existing trades or only new trades. Copy all of their trades to match their portfolio as closely as possible.
If you choose to replicate all their trades, you'll open positions in each instrument at the then prevailing market price. Each position will open at a slight loss, which simply reflects the spread between Bid and Ask prices. This is why your percentage return will be a little different from the ones reported by the copied trader. However, your portfolio will match theirs in every other way.
If you choose to only copy new trades, these will open at the same price as that paid by the copied trader and match theirs going forward.
How to limit your risk
Following others isn't without its risks as even the best can experience losses when the markets turn bearish. eToro's platform comes with a wealth of risk management tools that limit your exposure to loss making trades, and protect your profits.
eToro's Copy Stop Loss (CSL) allows you to limit your total exposure to any one trader. By default, that amount is set to 40% of the copied balance. If you were to invest $1,000 in Trader A and the value of your investments fell 40% to $600, eToro.com would end the copied relationship and close your positions, thereby crystallising a $400 loss. In our opinion, 60% is too high, as you would need to a 67% return to breakeven again. We suggest setting the CSL between 90% and 95%, to cap your losses and reviewing the trader's monthly performance history.
It is also a good idea to update the CSL over time, as any change you make after you've started copying a trader will apply to the current value of your investment, rather than the original amount. This will allow you to lock-in your profits over time, in the same way that take profit orders work.
eToro's Copied Trades Stop Loss (CTSL) goes one step further allows you to limit your exposure to individual trades.
Last but not least, you can close any copied position, without ending the copied relationship altogether.
How to get started
If you're ready to get started, visit eToro.com to open an account online. You can choose between a practice account, with $100,000 in virtual money, or a real-money account, including corporate accounts. As the minimum deposit account varies across countries, sometimes significantly, we'd encourage you to visit eToro's website for the latest information.
eToro banned countries
Unfortunately, eToro no longer accepts new clients from a number of countries, listed below. In addition, eToro cannot provide services to US citizens who live outside the USA. If you're looking for an alternative to eToro, check our guide to the best copy trading platforms.
- Aland Islands
- Antigua and Barbuda
- Bosnia and Herzegovina
- Bouvet Island
- Burkina Faso
- Cape Verde
- Central African Republic
- Chagos Islands
- Christmas Island
- Cocos Islands
- Congo Republic
- Cook Islands
- Cote d'Ivoire
- Crimea Region
- Democratic Republic of the Congo
- El Salvador
- Equatorial Guinea
- Faeroe Islands
- Falkland Islands
- Heard Island and McDonald Islands
- Hong Kong
- Marshall Islands
- Netherlands Antilles
- New Caledonia
- New Zealand
- Norfolk Island
- North Korea
- North Macedonia
- Northern Cyprus
- Palestinian Territories
- Papua New Guinea
- Pitcairn Islands
- Saint Barthelemy
- Saint Helena
- Saint Kitts and Nevis
- Saint Lucia
- Saint Martin
- Saint Pierre
- Saint Vincent and the Grenadines
- San Marino
- Sao Tome
- Saudi Arabia
- Sierra Leone
- Sint Maarten (Dutch Part)
- Solomon Islands
- South Africa
- South Georgia and the South Sandwich Islands
- South Sudan
- Sri Lanka
- Svalbard and Jan Mayen
- Trinidad and Tobago
- Turks and Caicos Islands
- Vatican City
- Virgin Islands (British)
- Wallis and Futuna
eToro Risk Warnings
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs (product availability is subject to geographical restrictions).
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.
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