eToro CopyTrader ROI Update

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Time for an update on my eToro CopyTrader account to check the ROI. How have the chosen traders performed? Is it still in the green? Well, it would have been if I had kept my eye on the ball…a lesson to be learned.

This article is written in two parts, a ‘before’ and ‘after’ both on the same page, and both being important and related for reasons that will be obvious.

Part 1

The image of my account below shows the balance on the 17th of May. If you add the net profit to the equity, you get exactly what the balance of the account is (including money that is being used by open trades which may, or may not close profitably…). As you can see, the ‘real balance’ (not the ‘account balance’), is at a healthy $10,413 which is an increase of $243 since 2012/02/27. Bearing in mind the equity used in copying in this account is well below $2,000. That is fairly good going.

Etoro CopyTrader Balance May 2012

All good so far, but, the amount of money in the red on open trades (- $679) is quite alarming, as it is a very high percentage of the overall amount allotted to copying (not a % of the overall account).

This is what is called serious ‘drawdown’. Even if all the trades may come out winning, this is a precarious position to be in. One of the traders that I was copying ‘Robepu’, was may have been making some serious errors of judgment, a huge amount of trades open at the same time (at least 50).

Also, another trader had a couple of gold trades open which are always more expensive due to the spread and minimum lot sizes.

Part 2

Never mind, maybe Robepu knows exactly what he is doing, and the trades will ride the dip and profit from a breakout. Lets have a look at the latest balance a week later.

robepu etoro guru

Ouch. A huge crash percentage wise – not a phenomenal amount of cash, but as a proportion (which could be applied to bigger accounts), the relative health of an account that has been constantly climbing the ‘green’ has now fallen into the red by a huge percentage.

So, how did this happen. Why he did this is in such a volatile period is would take bit of work to figure out, (maybe he went a bit ‘nuts’). But, the outcome, and implications for those copying other forex traders are more important anyway.

So, whose fault is this. MINE. I dropped the ball. Quite simply I was not monitoring my account properly, or my traders. IMO it is quite important to monitor their profiles, to see what other people are saying and maybe pick up on warning signals. Robepu had been getting a lot of insults on his profile, and I should have noticed this.

I also should have noticed that his stop losses were very big, and should have closed the trades before they went too far into the red – at least I would have cut my losses. (Once it gets to this stage, it’s probably best to ‘dump’ the trader from your copy list – this was more than just a bit of a ‘blip’, the amount of trades he opened hinted at a seriously questionable money management system).

One way around falling into this trap, is to copy a trader on your demo account for a while and pay close attention to their stop losses and take profits, as well as the number of trades they have open at any given time. By doing this you will get an insight into their risk appetite before adding them to your live account.

BUT, even then, you can never be sure that they aren’t going to screw up despite past good performance. Remember, you are copying humans who can fall prey to emotions, personal events, and other ‘human failings’.

ROI Conclusion

So, what dies this say about ROI, well, this is only one account, so it cannot be seen as representative, however, what it does show is:

  • You cannot see/follow/copy, then sit back and let the money roll in – you need to be vigilant.
  • Traders who have done well previously over a given period of time may ‘lose the plot’, and the only person who can monitor this is YOU.

Regarding ROI on this particular account, proportionately it’s a big hit, but the actual dollar loss is ‘liveable’ (although annoying that it happened over a short period of time. However, given the way the proportions are applied to copytrading, it will take a while to get back in the green (and all because of one bad trader’).

If you do want to figure out exactly what the potential ROI is when trading with eToro CopyTrader, good luck, as to my knowledge there is no formula, and even if someone claims to have it, I would seriously ask myself ‘Why would this person tell me’?

Lesson learned hopefully! And back to choosing a replacement for ‘Robepu’- (the other traders have been providing low but consistent profits). If you think you have what it takes to have a go at copytrading, maybe the best thing to do is open a demo account first, and learn the system before you actually make a deposit. Some traders think that it is better to learn with a live account, using very small amounts, that way if you lose, you lose small amounts while learning (the maximum you can lose per trader is the amount you allocate, so if you allocate £30 to a trader, that is the maximum that you can lose).

Open a demo account | Open a live account

4 thoughts on “eToro CopyTrader ROI Update”

  1. I’m having a huge drawdown with Moksel1972 and Hschinner ,their top traders some weeks ago. I wont trust etoro again , their signal providers are complete amateurs.

    1. Hi JFex, it is never a good thing to put your trust in the rankings that they provide (IMO). I sincerely doubt that there is an algorithm out there on any copytrading platform which can select the best signal providers for everyone’s needs/risk appetite/account size. It’s always good to look at every available piece of data that is provided on each trader, including reading through their profile to gauge what other traders/copiers think of them, and maybe get an insight into their trading strategy. On eToro, the only way to assess potential drawdown (to my knowledge) is to see what losses they have taken in their trading history, although having said that, it is quite difficult, as many of the traders with high potential drawdown rarely lose, so you won’t see many losing trades in the limited history back log that eToro provides. You may want to check out Zulutrade, as they have excellent signal provider stats, including that all important drawdown. You can open a demo account here.

  2. Yeah i’ll probably will get out of etoro as soon as this drawdown is over and will try my luck at zulutrade , etoro wont gain me much profit you win little and then everything is red and all profits plus half of your deposit is gone.

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