eToro is a well-known company for its social trading platform. One of their main offerings is stock investing in a sophisticated way. Is it worth checking out? How to invest in stocks with eToro?
In 2010, eToro introduced the idea of "copy trading" which allows traders to copy the exact trades of more experienced traders. eToro's copy trading can be used to trade various instruments including stocks. This means beginners can copy the trade from more experienced traders while learning about different trading strategies. On the other hand, professional traders can get their trades copied, which can benefit them in the popular investor program.
The Benefits of Using eToro
- A wide range of stocks, forex, commodities, cryptocurrencies, and ETFs keeps growing and expanding.
- eToro is a Non-Dealing Desk (NDD) broker, which means they deal with many banks and liquidity providers, so they can show you the best prices at any time.
- You will get zero commission stocks if you buy the underlying asset, which is especially good for long-term strategies.
- eToro has one of the best user interfaces in the industry because it is simple to navigate with a clean and beautiful design.
- What matters the most is the copy trade feature, which is profitable for novice traders and professionals. If used properly, you can make significant money flowing to your account by copying other people's trades.
- eToro has 0% commission options which means the cost of trading will be much lower
How to Register an Account in eToro?
Signing up in eToro is a straightforward and quick process. The following are the steps that you must do to register an account in eToro:
1. Sign Up on the Website
First off, go to eToro's official registration page. Make sure to fill in the relevant information requested in the form. In addition, the site also allows you to log in via Facebook or Gmail. After that, you must choose a username and enter a phone number to protect your account's security.
2. Complete Your Profile and Submit
To further ensure your account's safety, the site will ask you to fill in some basic personal information (you don't need to enter your "identification number" if you're unsure) and a few questions regarding your trading experience. It isn't a test or anything so you don't have to worry too much about your answers, but it is important to answer them truthfully and honestly.
3. Deposit Your Funds
The next step is to deposit your money according to the minimum requirement. Click "Continue to Deposit" or "Deposit Funds" at the bottom left. Then it would be best if you did is to choose a payment method. The broker offers various payment methods according to the client's location. After depositing your money, you are good to go and start trading.
However, there is an option to use the demo account (they call it a "virtual account") if you want to try the trading account and its features without risking any money. You can get a complete trading experience with the $100k they give you as a starter in the demo account.
How to Trade in Stocks with eToro Copy Trading
Copy trading is the best feature offered by eToro broker. It allows you to copy someone else's trades and make them your own. This means that the money in your account will be traded in real-time to reflect the trading patterns in the same percentages. The feature is handy for new traders who are still learning to trade.
With the help of expert traders or popular investors on eToro social trading, new investors can try different strategies and gain profit from their positions. This is surely a new and attractive way to invest in the stock market instead of going the conventional route.
Furthermore, you can see detailed information about the popular investor's trade history and ask them how to improve your trades. So clearly, the potential for making serious money is huge here.
For beginners, it is okay if you want to start small. In eToro, the minimum money you should invest in a copy trade is $200 and you can pick up several traders to copy. By choosing a few traders at a time, you can try different strategies and keep your portfolio diverse, especially since eToro's instrument list covers anything from stocks, currencies, indices, commodities, cryptocurrencies, to ETFs. Using different trading instruments and strategies, you can lower your risk of failing and losing money because you have several different probabilities.
eToro broker offers a very interesting feature called Risk Score to measure the risk of your trade. The score ranges from 0 to 10, with 0 being no risk and 10 being incredibly risky. To maximize the use of your money, we suggest you invest in three low-risk investors, one medium-risk investor, and one high-risk investor. You can see the risk scores of each investor in the special column as displayed below:
Essentially, the more money you have, the more diverse your investments could be. But even so, you must be wise with your money management and not invest more than you can afford. The main issue with the 68% of people that lose while trading with eToro is dominated by greed and recklessness. They don't follow the initial strategy that works. Remember that though more money means more potential profit, it can also mean more potential loss.
Finding High-Quality Traders to Copy in eToro
Because you're about to copy someone else's trade, you must ensure the trade is profitable and carried out by a high-quality trader. First off, all traders you copy must be verified and officially a part of the popular investor program. You can gather this information from the colored stars by their profile picture, which shows that their trading style and performance have fulfilled the minimum guidelines set by eToro broker.
Basically, there are 4 levels of investors that you should be aware of:
- Cadet level, indicated by a blue star.
- Champion level, indicated by a red star.
- Elite level, indicated by a green star.
- Elite Pro level, indicated by a black star.
Of course, the higher the level, the more recommended an investor. You can see the star indicator on the platform when you open the menu of "Copy People".
Aside from the abovementioned parameters, there are at least 5 qualities that the trader you copy must have, such as:
- Can really show their trading knowledge and experience on their profile feed.
- Can maintain low weekly and daily drawdowns. In this case, avoid traders with more than 10% drawdowns.
- Don't have incredibly high returns. While this may sound beneficial at first glance, but if someone gains 1000% returns in a very short period, it most likely to be unsustainable luck and not based on the actual strategy.
- Don't have a 100% win rate. Even the most successful traders experience downfalls once in a while. It is perfectly normal to close some trades in the red zones and get losses. It shows discipline and experience that only a proper trader has.
- Open and communicative. A high-quality trader would help you learn and willing to share their trading methods. If they don't reply to your messages, that could be a sign that they don't care or don't have the answer because they don't know what they're doing.
To check quality no. 1-4, you can go to a trader's profile and click the "Stats" menu. Meanwhile, the fifth quality can be checked in the trader's "Feed".
How to Copy a Trader
Once you find the trader you want to copy, open the trader's profile and click the blue "Copy" button. The platform then will ask you to input the amount of money you are willing to invest. You can see some useful information appears on the page as well.
You can also set a stop loss to your trade, which helps protect you against heavy losses. It sets at 40% by default but in eToro broker it is completely customizable. You can set the level to whatever you want based on how much risk you can take. Setting the stop loss at 40% means if the person you copy loses 40% of their trades, your account automatically stops copying them and closes the trade.
Now that you have an open trade going, you can check your performance on the "Portfolio" page. It shows all of your open positions and also access to your trading history. Other than that, all of your copied traders are also listed there. By clicking on the person, you can see their overall return on the investment in a trader and also see what positions they (and you) currently have.
How to Invest in Stocks with eToro Manual Trading
After navigating the platform and having several successful trades with copy trading, you must have the urge to try your own strategy and start trading freely. After doing proper research, you should pick a stock to invest in. For this matter, we suggest that you only invest in stocks you believe are strong enough to survive the market shocks and still have plenty of room to grow.
How to Buy Stocks and Shares
The first step to start trading on eToro is to click on "Trade Markets", choose "Stocks", then "Industry". The platform will show you a list of all stocks tradable on eToro, each with its respective prices at the moment.
You will see two pages with useful information if you click on the stock profile. The first one is "Feed" which consists of news and insights about the stock and discussions on the share price and the company's activity in general. The second page is "Charts" which displays the company's past stock performances over the last year.
If you're sure to invest in that company, click "Trade" in the top right corner. To start trading, you must prepare at least $50. Enter the amount of money you want to invest, set the stop loss, and take profit levels. Finally, the "Leverage" option shows how much leverage you can get from the broker. Remember, the higher the number, the higher the risk. Once you are finished, click "Set Order".
Becoming Popular Investor
Apart from copying someone else's trade, you can also let other traders copy your trade. After you start trading on your own, you can join the popular investor program. As soon as you joined the program and increase your performance quality, you'll notice that people will start copying you! Apart from being exciting, you can also receive a monthly commission as your number of copiers increases. Therefore, it can motivate you to focus more on your trade and perform well.
Gaining high numbers of copiers may take a while, but it isn't impossible to achieve as long as you maintain a consistent winning rate and trade regularly. It is also important to be active in the community section by posting regular updates, participating in various forums, and answering other people's questions. Helping other traders to trade well can also bring another advantage as your name will be remembered and probably recommended to other traders.
The Bottom Line
eToro is one of the best trading platforms for copy trading, a perfectly suitable strategy for beginners. By allowing you to copy trade, you can learn about various expert traders' strategies in the stock market while gradually preparing your system.
Once ready, you can start trading independently and join the popular investor program. But remember to be patient and trade realistically by not investing more money than you can afford.
5 Comments
Alex
May 18 2023
Hey, I recently came across eToro as an investment platform and discovered that it operates as a Non-Dealing Desk (NDD) Broker. In light of this, I'm curious to know if there are different types of dealing models employed by various brokers in the industry. Could you please explain the different types of dealing models and provide insights into how I can determine if a broker operates as a Non-Dealing Desk or follows a different approach?
Furthermore, I would appreciate it if you could elaborate on the advantages of utilizing a Non-Dealing Desk broker. How does the Non-Dealing Desk model benefit traders in terms of order execution, transparency, pricing, and potential conflicts of interest? Are there any specific features or benefits that traders should consider when selecting a broker, particularly in relation to the dealing model employed?
Dani Cebalos
May 20 2023
Okay! So, when it comes to brokers, there are different types of dealing models they can use. One of them is called the Dealing Desk (DD), where the broker acts as the middleman and handles your trades internally. On the other hand, you have Non-Dealing Desk (NDD) brokers like eToro. NDD brokers connect you directly with other buyers and sellers in the market, which can provide some advantages.
To know if a broker is a Non-Dealing Desk or follows a different model, you can usually find that information on their website or by reaching out to their customer support. They're usually pretty upfront about it and can explain how they execute trades.
Now, let's talk about the advantages of using a Non-Dealing Desk broker. Here's why it can be a good choice:
Sammy
May 21 2023
DD broker actually not bad at all, bud! I will explain to you the advantage using DD Broker :
Remember, it's important to choose a reputable and regulated DD broker. Do your research, read reviews, and find one that suits your trading style. Happy trading, my friend! Also you can read how to choose DD Broker at here : Are Broker DD Always Bad?
Pioli
May 18 2023
Hey admin, I was reading about stock trading on eToro, and it seems like when you trade stocks with CFDs, you don't get dividends and all, but you can still make profits. It got me curious, dude. What's so interesting about trading stocks with CFDs for some people? I mean, why would they choose this approach instead of traditional stock investing? I'd love to know your take on it, man. What makes trading stocks with CFDs on eToro appealing to you or others in the trading community? Thank you!
Michael
May 19 2023
Hi! Let me answer! Trading stocks with CFDs on eToro has its own appeal for a few reasons. First off, with CFDs, you can profit from both upward and downward price movements. So, whether the stock is going up or down, you can potentially make gains. Plus, CFDs allow you to trade on margin, which means you can control larger positions with a smaller amount of capital. This can amplify your potential returns.
Another advantage is the flexibility. Since CFDs are derivative instruments, you don't actually own the underlying asset. This means you can easily trade stocks from various markets around the world, even if you don't have direct access to them. You have a wide range of stocks to choose from, and you can take advantage of different market conditions and opportunities.
Additionally, trading stocks with CFDs on eToro offers convenience and accessibility. The platform provides user-friendly tools and features, allowing you to easily analyze stocks, set stop-loss orders, and manage your portfolio. You can trade on the go with their mobile app, which is handy for active traders.
Of course, it's important to note that trading CFDs involves risks, including the potential for losses. It requires knowledge, strategy, and risk management. But for those who are comfortable with these factors, trading stocks with CFDs can offer a dynamic and potentially profitable trading experience.