On eToro you can automatically copy the investment portfolios of other more experienced traders. If you're looking to start copy trading, then here are some of the things you should be looking out for when deciding who to copy on eToro.
The first thing I look at before copying anyone on eToro is how long they've been trading on the platform. I believe that anyone can get lucky and trade profitably for a month or two. But it takes skill and knowledge to trade successfully over the long term.
I only copy traders who have at least 12 months history on the platform.
eToro assigns a risk score to each trader on the platform. The lower the number, the lower the risk eToro considers a trader's strategy to be. The score is based on a number of factors. These include the % of account capital a trader assigns to each trade, the markets/assets they are trading and the amount of leverage they are using (if any).
I like to copy traders who have a risk score of 4 or less. While a low score doesn't mean there is no risk in investing, it just means there is less of a risk. And remember this score is based on past trading behaviour. This could obviously change in the future.
Obviously I'm only interested in copy traders who have been profitable in the past. eToro shows the profitability as a percentage gain. Anything over 10%, over the course of a year is excellent. Anything too high (100+%) could mean a trader is trading using a high risk strategy and I would avoid copying them.
Trades Per Week
Some traders make 1 or 2 trades a month. Others make many trades every day. It all depends their strategy. I'm less inclined to copy traders who only make a few trades every now and then. I would prefer the funds allocate to be active. That being said, I'm wary of traders who overtrade (unless they are using a specific hedging strategy that requires a lot of little trades).
The holding time stat reflects how long a trader keeps a trade open for. I've found that traders who specialise in stocks usually hold positions open for a long time. Where as forex traders keep positions open for a short period of time.
I would be wary of forex traders who have positions open for many months. Where as I would be ok with copying a trader who was investing in ETFs of Stocks for the longer term.
I make sure I always check to see what a trader is actually trading. I do like to copy traders who specialise in a specific asset or market.
These are just some of the main things I look out for when searching for people to copy on eToro. Let me know in the comments what strategies you use.