eToro’s CopyTrader is used by thousands of its OpenBook traders, you can see that by looking at the ‘copier’ stats for individual traders listed in the OpenBook rankings. eToro are obviously doing something right, but how ‘right’ are they? What are the Forex Trading system’s strengths and weaknesses?
The system itself is very straightforward, the whole idea of ‘see, follow, copy’ does work very easily, although obviously you have to be careful who you copy, and you should do some serious evaluation of their stats. The trader’s gain ratio may be 1000%, but, if they rarely trade, they may not be worth following, although this depends on your particular approach to copytrading – you may want to just select a few traders, let them ‘run’ and not bother with the account for a while (not that I personally would advise such an approach – to anything, never mind Forex trading).
When selecting a trader to follow, be it commodities or currencies, you need to look at all the stats available for your potential trader. Etoro makes this very easy, with plenty of performance stats available to help you decide. The rankings page on OpenBook has several useful selectors, you can order by best ‘win ratio’, and ‘gain’, and also by how many traders are already following them.
There are several useful filters (see left of shot below), including ‘risk level’, as well as some predefined searches such as ‘Frequent Trader’. When viewing the rankings, you can also select by performance over one, three, six, or twelve months, and it’s worth viewing all of them and see ‘who’ the common denominator i.e. trader is.
Once you have spent a bit of time selecting a trader to follow, (and I do suggest that you take this process very seriously, unless you are using a demo account), the process of adding them to your copy list is very simple. You just decide how much of you account to allocate to the trader (max 20%), then confirm it.
OK, so far so simple (which is their selling point), but, how about a bit of analysis here:
The good news is that eToro’s CopyTrader is completely free. There is practically no competition out there that offers copy trading for free (in fact there is not really much competition free or other wise). Other platforms who offer the service either charge per copied trade, or a ‘white label’ copy solution that charges a percentage of your account on an annual basis.
If you have trading experience, and ‘know’ what you are doing then it may be worthwhile using a paid service, however, if you are not an experienced trader who can easily assess other forex or commodities traders then it may be wise to go with the free option.
Ease Of Use
The Online system is very easy to use, no ‘Mac’ problems, and no downloads, it can all be done via your web browser. Through your browser you log in to the WebTrader interface which is very user friendly and ‘intuitive’ (see below). I have heard the odd gripe about the charts, but have not personally experienced any problems with them.
One small problem is that if you want to ‘drop’ a trader from your copy list, and they have several trades open, you will have to spend a bit of time watching the screen so that you can wait until they are in the green and close them without losing anything (a problem with other platforms). I’m not sure if there is a function to prevent any further trades from being copied from a particular trader while there are still some of their live trades open. A ‘No More Trades Button’ – that would be very handy.
Profit And Loss
Perhaps this is a bit of a silly aspect to add to this review as it is so subjective, but, here goes…
Apparently over 84% of copied trades at eToro result in profit, and I’m not going to quote a source for this, because, having a research background myself, I am aware of the misinterpretation of statistics, and although I’m not saying that this figure is erroneous, I am saying ‘beware of statistics’ full stop.
My own experience has shown more than 10% ROI over ten weeks, and this has been down to my very conservative approach to selecting traders to copy. Over this period I have pretty much ‘sat back’, looked at the account every other day, and not changed my trader selection.
Support tickets are (in my experience) answered promptly and efficiently. The online support is as ‘standard’ across the Forex world, and pretty much every other online industry. In short, if you use the ‘Help Chat’ facility, you will not be talking to a Forex expert, having said that, as mentioned this is nothing unusual with trading chat help facilities on forex platforms.
Support FAQs, and tutorials are a bit simplistic for my liking, lacking in detail and breadth of subject, but again, this is something that is endemic within the support sections of the online currency and commodity trading niche.
- Lack of detail from support/online guidance
- Cannot close individual trades
- $5 charge for withdrawals
- Still in Beta version (but in reality, isn’t everything !)
- Demo Copy Trading Account offered*
- It’s FREE
- Very user friendly platform
- No download required / OS friendly
- Great for beginners
* If you do sign up for the demo trading account, make sure that you also sign up for the ‘Trader’s Challenge’, that way your account will not be compromised by trade closures due to ‘over-weekend’ trades.
eToro would appear to have come up with a great concept that has been executed quite well. It is still a ‘beta version’, so it is not at the time of writing perfect. However, if you do sign up, and take a conservative approach, the most important thing is that you stay in the ‘green’, which is not difficult to achieve. Bigger profits will require a more dedicated approach to copy trading than picking the forex or currency trader with a high win ratio. However, staying out of the red since opening the account, and not having to spend much time at all figuring out how to use the software is a very good sign. A great platform for beginners who don’t have much trading experience, and can benefit from copying the trades of experienced traders. Interested? Sign up here.
This review has been based on several months of using CopyTrader on a demo account, however whilst no ‘real money’ has been deposited, the profit and loss balance is to the best of my knowledge a true reflection of what would have occurred had the money been ‘real’.