Top Tips for Trading Successfully

Why are these tips so important?

The first few steps you take in the financial markets can be quite scary, so we’ve assembled our top trading tips to help you through the rough start and onto trading success. Here you can find solid principles for social trading, as it is enabled by eToro social investment network, the eToro OpenBook, along with its many social trading tools.

1. Pick a Style, Any Style

Not all investments are suitable for all investors. In other words, your investment activity, whether you’re investing in markets or in copying other investors, should correspond to your account size, to your availability and other individual factors. If your account is relatively small, you have to scale down your activity so that you don’t risk too much on any one trade. If you’re not available to monitor your portfolio constantly, don’t open high risk short term positions that require quick intervention, and don’t copy high risk traders.

2. Watch and Learn

The eToro OpenBook social investment network is there to connect you with other traders so you can learn from and share ideas with them. Pick traders who have a similar trading style to yours and follow them so you can learn their strategies and techniques. Following other traders can also alert you to potentially profitable investment opportunities.

3. Diversification is the name of the game

A well-diversified portfolio protects your account from the market’s many whims and mood swings. Copying other investors is already a good way to diversify your portfolio, as each investor has positions in many markets. However, it is also important to diversify your copy trading activity and spread your copy trading funds among as many investors as you can find. Just as the markets can have a sudden fall, so an investor you’re copying can have a bad day.

4. Test-drive your investors

When checking out a potential investor to copy, you don’t have to imagine the kind of returns they can make you. That’s what your demo account is for. Simply start copying them with your demo account and see how they do over a certain test period (preferably no less than a month). Then, if you find that their performance lives up to your standards, you can start copying them with your real money account.

5. Learn to cut the strings

Even the most promising investor can let you down. When you see that a trader you’re copying is consistently losing you money, it’s time to cut the strings and uncopy them. Having said that, keep in mind that anyone can have a losing streak, so keep an eye out on the investor’s open positions and available equity to see if there’s still a chance for a turnaround.

6. Manage your CopyTrader Portfolio

Just because you have others trading for you, doesn’t mean that you should let them take over your account completely. Remember that you can always take over a copied trade if you see that it’s not going anywhere, or if it’s conflicting with another position in your portfolio.

7. Keep an eye on your exposure

When copying other investors it’s easy to lose sight of all the individual copies trades that make up your portfolio. That is why the eToro WebTrader has a “Markets” view, where you can view your exposure to the different markets. Make sure to use it, and to adjust your copy trading activity accordingly if you see that your account is too heavily exposed to any one market.

8. Always be looking to recruit

eToro’s investment network has thousands of new investors joining it every day, and there are constantly new “stars” emerging on the network. Make sure to check the “People” page on the eToro OpenBook frequently and to use the different search options to find new investors that you might want to add to your copy trading portfolio.

9. Check the stats

The individual portfolio pages on the eToro OpenBook contain a lot of useful information that you should take in consideration when thinking about copying someone. A few examples of important things to look at are risk, diversification and open trades – an investor who has a lot of equity tied up in open losing positions might not be the best option for you.

Put these trading tips to work today. Click here to login to your eToro account.

This content is intended for educational purposes only, and shouldn’t be considered investment advice

Did you know?

These simple trading tips can boost your trading performance in no time. Get a clue today.

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