eToro Presents: Secrets of Professional Copy-Traders Reveale

1) Diversify
Even though eToro lets you dedicate as much as 20% of your margin to any one trader, the people with the most successful copy-trading portfolios recommended to dedicate a maximum of 10% to any one trader in order to ensure portfolio diversity. They also advised to look at traders’ portfolios carefully before deciding to follow them in order to ensure that you don’t end up copying ten different traders who all trade the EUR/USD exclusively, thus exposing your own portfolio to too much risk.

2) Gains over win ratio
When looking for traders to copy, it may seem wise to look for traders with the highest win ratio (i.e. the percentage of profitable trades out of the overall number of trades) as the best traders to copy, however our survey showed that all the successful copy-traders prefer to look at gains instead. One trader explained that this is because, while win ratio shows the ability of the trader to analyze the market it doesn’t reflect the magnitude of the profits or losses and thus doesn’t reflect his/her ability to capitalize on the market movement.

3) Test run
The experts agreed that it is always best to start copying a new forex trader with only a small percentage of your margin (around 5%) to see the kind of profits he can potentially bring to your people-based portfolio. Once the trader proves that he/she can consistently deliver, you can increase your investment. They also recommended to always keep some of your margin free in order to scout around for new emerging trading stars who can take the place of underperforming traders in your people-based portfolio.

We hope these tips serve you well as you join the social trading revolution at eToro.