When you’re sitting in the office staring at the computer screen in a daze, do you ever imagine being able to make a living from home with just a computer and an internet connection?
Working from home in your pyjamas is a not a new concept, and as the millions of freelancers that live this perceived fantasy will tell you, it is not a fantasy.
Freelancers have to work long, tiring hours to scrape a living. But for many, the grind still beats having to get out of bed and endure the commute to the office.
This is a dream of many, but many don’t have a transferable skill into the home study.
However, the eToro Social Trading platform provides a potential solution that could be your escape plan.
Intrigued? You should be.
In this article we will explain what the eToro social trading platform is all about and how to use it:
- A brief introduction to the eToro social trading platform.
- What is a CopyTrader?
- How to become a popular eToro trader?
- How to select winning traders on eToro?
eToro In a Nutshell
In 2008, eToro launched a web-based trading platform that allows anybody and everybody to earn from the stock market.
Ordinarily, you might think that is a high-risk gamble, and while dealing with stocks and shares does have an element of risk, the eToro social trading model provides subscribers with bullet-proof protection and guidance:
You copy other traders.
The innovative trading platform is arguably one of the most exciting ideas to emerge from the FinTech revolution.
eToro and the experts that are already signed up to the enigma act as brokers and a social investment network with a wealth of knowledge.
You can just copy other traders and invest what they’re investing in. But to learn more about the pros and cons of investing, the trading platform also provides subscribers with a social trading news feed, tips from the experts and easy-to-use trading tools.
The social trading system works on some levels; copyTrading and Popular Traders.
Read more in our eToro Review.
What Is eToro CopyTrader?
The overall idea of the eToro social trading platform is to make money – but also to make other people money, hence the two roles mentioned above.
Beginners should start as a CopyTrader which is very simple: you copy what other traders are doing.
Although you don’t have to deposit to open an account on the eToro platform, there is a minimum $200 starters fee before you can open your trading portfolio.
You have two options under this system; copy the entire investment portfolio of traders you want to follow or just copy existing trades.
The best strategy is to select three or four traders to diversify your portfolio and copy the commodities they have backed that are performing well.
Incidentally, it’s possible to trade on anything in the stock market – stocks, indices, forex, commodities, ETF’s, cryptocurrencies – albeit they are CFD (contract for difference) derivatives which is basically making a call whether a particular trade will be higher or lower than its current value at a time specified by the CFD.
Once you are more confident about making trades, you should branch out and be more independent.
Rather than copying other traders, build your portfolio and credibility by choosing your trades. Successful traders become popular traders who give you an opportunity to create an additional revenue stream.
Read more in our guide to eToro Crypto CopyFund.
How To Become a Popular eToro Trader?
Anyone can become a popular trader.
As soon as you join the eToro social trading network and start copying other traders, your wins and losses and recorded on your account. Traders that have a good track record attract more investors and earn more revenue.
‘Elite’ traders earn a 2% annual bonus calculated on funds in their management portfolio.
Selecting which traders to follow can be misleading. Copying the top performers don’t always mean they are necessarily the best. Always analyse profiles before choosing to follow somebody.
The most important metric is their recent successes.
Also, opt for traders that have been on the platform for more than 6-months and have maintained reasonable performance levels. However, some of the analysis stats can also be misleading.
For example, the gain ratio indicator may show a trader has a winning ration over 90%, but this often means they left the position open until it became profitable.
What the traders are doing here is widening their stop levels which will ultimately drain your capital.
Therefore, only follow traders that don’t leave their trade positions open for extended periods. Short-term traders get you the best profits.
Also look for traders that cut down their losses when they do not think a trade is likely to work.
You won’t be a winner every day but look for graphs that have a reasonably steady upward trend rather than sudden peaks and dips. Traders with a slow and steady growth rate are the most credible traders.
Understanding a trader’s strategy is essential. If you are willing to copy someone else’s trading patterns, you want to have faith and confidence in them. So study the analytical charts before you dive straight in.
Managing Trading Risks
eToro promotes responsible trading by offering features such as pre-set leverage settings to help users quantify risks.
CopyTraders are also restricted to allocate a maximum of 20% of your total capital to anyone trader thus protecting your equity.
UK residents that register with the UK client eToro social trading platform are also protected by the Financial Conduct Authority (FCA). This protects users to the tune of £50,000 which you can claim back from the Financial Services Compensation Scheme (FSCS).
Non-UK members are regulated by the Cypriot watchdog CySEC that cover losses up to a maximum of €20,000 if eToro falls into liquidation.
Although the eToro Social Trading platform gives anyone the opportunity to make a little extra cash from day trading, there have been instances whereby people make a living from trading on the platform.
In the digital age, anything is possible.