eToro Presents: Top Five Copy Trading Mistakes

1. Choosing traders by win ratio
While you want the traders you copy to have a good win ratio, it is more important to look at the trader’s gain percentage as a measure of his success. Remember that a trader with a 95% win ration may have lost half his money thanks to his 5% of bad trades. But a trader with 95% gains has almost doubled his account, even if his wins ratio hasn’t been as good.

2. Copying traders with similar portfolios
You may think that it doesn’t matter what instruments the trader you copy invests in, as long as he/she make profits, but if you start copying two traders or more with the same portfolios they may end up canceling each other out, and you’ll end up paying for the spreads.

3. Leaving it to the pros
Just because traders have good stats, doesn’t mean that they’re infallible or that they will necessarily perform just as well in the future. Always keep an eye on your copied trades, making sure to step in when a trade is clearly not going as planned, and get rid of traders who underperform. There are always plenty of new gurus for you to copy.

4. Copying copiers who copy
Many traders on eToro's OpenBook achieve great stats by copying other traders, after all, that is the point of CopyTrader. However, wouldn’t you rather copy the original guru rather than his/her copiers who are much more likely to make uninformed decisions? To avoid this scenario, make sure that the trader you’re copying isn’t copying any other guru.

5. Staying in the dark
The only way to really stay on top of your people trading portfolio is to know something about the markets, about trading currencies and about managing risk. With all the time you save by copy trading, why not use eToro’s free educational tools to hone your own trading skills so that when the time comes, you can take over your own trades.