Social Trading Tips
While social trading gives you access to types of investments and financial opportunities never before available to online traders, it still requires planning, monitoring and strategy. Unlike automated trading, social trading enables you to retain control of your investments, which gives you a huge advantage in managing your portfolio. Because social trading differs from traditional financial trading, you also have to complement your traditional financial strategies with social trading strategies. Here are a few tips to get you started.
There is one basic financial strategy every investor should apply, and that is diversification. Diversification means spreading your risk so in the case of copy trading, that means spreading your risk across several investors instead of putting all you money on just one. Our network consists of over 3 million traders, and you can invest in as many as 20 at a time.
Test before copying
You have at your disposal a demo account with unlimited virtual money, a perfect tool to test drive investors before copying them with real money. This way you can view their strategy and the types of investments they make in real time with real market rates, and you can preview the results their financial strategy achieves.
Get in touch
The advantages of social trading aren’t limited to copying others, you also have the chance to learn more about the financial markets, get in touch with people, discuss financial trading strategies and different types of investments. In short, you have the opportunity to better yourself as a trader and maybe someday become a Popular Investor yourself. So don’t just sit back and copy, get involved with the eToro OpenBook community.
Be on the lookout for new potential
At eToro, we get thousands of new traders joining our investment network every day. That means that new talented investors make their talents available to you all the time. It’s up to you to regularly scour the network using our People Discovery tool, for new potential traders for you to follow and copy.
Use risk management tools
The CopyTrader system includes various tools which you can use to manage your overall copy risk. The chief among them is the Copy Stop Loss, which enables you to limit the amount your willing to lose on any one trader, just like a Stop Loss order for any other type of investment. Make sure to use this tool wisely in order to protect yourself from unnecessary risk.
Get rid of extra baggage
Past results are not always indicative of future performance, and so traders who you thought would make you profits might end up disappointing. In that case, it’s best to cut them off early, and you can do that with minimal losses by using the Pause Copy function. This way you won’t copy any new trades from the investor in question, but you’ll leave existing trades open, giving them the chance to rebound and be closed in profit.