eToro Full Review & 5 Easy Steps To Make Kick Start
You may have seen Corot’s work like Souvenir de Mortefontaine (the top image) somewhere (stick with me, this article is about FXSocial Trading, eToro review). If you saw it in Louvre, you are lucky because it was purchased by Napoleon III directly from Corot, means it’s a true Corot. Jean-Baptiste-Camille Corot (July 16, 1796 – February 22, 1875) is a French painter, best known for his landscapes (also portrait painter – the below left is his self-portrait), who inspired many Impressionists. It’s ironically said that “Of the 2,500 paintings Corot did in his lifetime, 8,500 are to be found in America” quoted from Newsweek according to freemanart.ca. The Artnews.com said in the article of 10 Most Faked Artists that
“In the recent ARTnewssurvey of art forgery, experts were asked, Who are the ten most faked artists in history? The almost unanimous vote went to Corot. Here is the list, in alphabetical order: Giorgio de Chirico(1888–1978) /Jean-Baptiste-Camille Corot(1796–1875) / Salvador Dalí(1904–89) / Honoré Daumier(1808–79) / Vincent van Gogh(1853–90) / Kazimir Malevich(1878–1935) / Amedeo Modigliani(1884–1920) / Frederic Remington(1861–1909) / Auguste Rodin(1840–1917) / Maurice Utrillo(1883–1955)“. But why are there so many fake Corot’s? Wikipedia explained that
“He allowed his students to copy his works and to even borrow the works for later return, he would touch up and sign student and collector copies, and he would loan works to professional copiers and to rental agencies.“ Obviously Corot’s lax attitude unfortunately encouraged illegal copying and forgery, but when it comes to eToro, fortunately it’s sophisticated social trading platform must allow anybody to copy the master traders legally. Artnews.com,
“Corot authorized poor artists who imitated him to put his name on their paintings so that they would be easier to sell, and while that was mighty generous of him, it’s obviously left the task of separating the fakes from the real ones somewhat more complicated.”, well you at least don’t have to worry, whatever, however you copy the other experts’ trading in eToro, no regulator will consider it as fake but as genuine method to make money.
Just in case, you have not been familiar with Social Copy Trading, suggest you visit 【 Six Simple Things That Allow You To Start Social Copy Trading 】 click HERE before going further in this article.
What is eToro?
eToro is a Forex Broker that offers Global Social Trading Platform founded by the brothers Yoni Assia & Ronen Assia together with David Ring in 2007 in Tel-Aviv, Israel. They started as a simple on-line FX broker but expanded its product offering by introducing a professional trader’s application Expert Mode and a web based trading platform WebTrader in 2008.
The “OpenBook” social investment network was launched in July 2010, with the “CopyTrader” feature released in May 2011. The Copy Trader enables users to view, follow and copy the network’s top traders real-time, as such allows you to create a so-called people-based portfolio. Since August 2011 eToro also made Mobile trader applications available on Android, iPhone and Blackberry devices. Thanks to the over $30 million funding in the first 5 years, it expanded the business smoothly by establishing research and development office in Israel and additional offices in UK, Cyprus, the US and Australia. eToro currently have over 1.75 million users in over 140 countries serviced by over 250 employees who have a very wide experience in tech, innovation, trading, marketing, customer service and social media.
- Company Name: eToro Ltd.
- Type: Private-Held Company
- Address: Stephanie House, 2 Griva Digeni, 3101 Limassol, Cyprus
- Managements: Jonathan Assia (CEO) / David Ring (CTO) / Ronen Assia (CPO)
- Funding: Total $33.9 million in 5 rounds from 12 investors
- Major Shareholders: BRM Capital / Cubit Investment / Spark Capital
*For the technical facts of broker account, see the below 5 Quick Steps To Avoid Mistakes section.
eToro’s PR and communications Manager, Nadav Avidan made comments in the interview by Littlegate Publishing regarding, key focus, strength and employee developments etc, the belows are a few excerpts;
“We maintain a startup mentality, encouraging all employees to think “outside the box”. There are no clear borders between departments, and every employee can offer the next innovative idea that will change the world we live in,”
“Individual staff development is very important, We consider eToro as a place to grow with and our employees often change departments after gaining enough experience in their current position, thus enabling them as well as eToro to enjoy the great benefit of someone who’s passionate about the company, its vision and it’s goals.”
“We are constantly engaging with our community and making sure that they are a major part in future developments and upcoming features,” “A lot of our features have emerged from customer suggestions and requests, and we take great pride in this.”“Retention is a very important goal for us,” “As a social investment network, we aim for users to stay with us for the long term, and every action we take is with that in mind.”
*Currently they don’t accept US traders – customer support replied to me that “Please note that we were previously offering our trading services in the USA. However, due to changes in regulations conflicting with the trading laws of the country, eToro is no longer able to supply our services there. We understand that this is very frustrating, but we are working with the respective country in order to allow our trading services again in the future. We very much apologize for any inconvenience this may cause.”
Strength & Weakness
☑ Simple & Easy Use of Interface: The information made available in OpenBook is kept basic, making it easy for newbies to use. There are a few simple tools in Openbook to help you find the Traders or Professional Investors you want to follow and copy.
☑ Convenience: Because eToro operates both social investment network and broker, you can manage everything through the same interface (no need to sign up with a different broker).
☑ Low Slippage: Thanks to the above integration between social trading network (OpenBook) and broker (WebTrader), when you automatically copy trades from other traders, you’ll notice that in most cases (>90%) there’s no slippage. Only on very few occasions does the price slightly differ though normally that would only be about 1 pip difference for Forex trades. Hence with eToro, unlike with some other social trading networks, slippage isn’t really an issue, the trade copy execution time should be quicker and more reliable (since it’s all within 1 broker and not between connecting brokers).
☑ Automatic Risk Management: eToro also provides a range of responsible trading features such as pre-set leverage settings to help investors to calculate their risk easily. When you copy other traders you’re also restricted to allocating a maximum of 20% of your total capital per Guru, hence you protect your equity by limiting your exposure.
☑ Free & Fully Functional Demo Account: eToro allows you to trade with a fully functioning demo account free. You can follow Traders using virtual money to evaluate and review their performance in $ gain terms. This will give you a more realistic view of what you can expect when you finally allocate the real money, say $1000 to a certain Trader.
☑ Expert Trader Verification: Traders should displays real name / photo in profile (verified by eToro), which adds some level of trust that you’re following real people.
☑ Huge Choices Of Expert Traders: There’s a massive choice of traders available on the eToro social trading platform which you can copy.
☑ Full Range Of Training Materials: If you’re a FX novice, there’s a wide range of training materials available to get you up to speed. There are weekly webcasts, reviews and daily news to keep you informed & updated. The eToro OpenBook social network is very active and any questions you might have are normally answered very quickly by your fellow investors.
☑ Wide Trading Choices: In addition to Forex Trading, you can also trade on major indices AND commodities (oil, gold and silver) and shares.
☠ Limited Information of Traders: Given the focus on novice investers, you’re unable to view the full history of all trading details of each trader, calculation in OpenBook is confusing and lack of transparency. Thus very large % gain numbers may set some wrong expectations.
☠ Deviation: Actual results in your account will often not totally match the ones displayed for the trader you copy in the eToro interface, mainly because they often use their commission payments to add to their balance at the end of each month, which could be included in return calculation.
☠ High Spread: The eToro spreads on each trade are arguably slightly higher than most brokers (e.g. 3 pips for EURUSD).
☠ Rollover Fee: The overnight rollover fees (for any trades positions left open overnight and over the weekend) charged by eToro are also a bit higher than most brokers. You need to watch this closely since most of the traders have a tendency to keep positions open for weeks or months, meaning over time these rollover fees will add up if open trades aren’t managed carefully.
Can We Really Make Money?
As reported in my previous article 【 6 Facts You Should Know Before Starting Social Copy Trading 】click HERE, MIT & eToro have been doing joint research, so firstly watch the below Hangout video which Professor Alex Pentland and Dr. Yaniv Altshuler of MIT explain the goal of their ambitious research on eToro Social Trading and Investment network to find a sustainable mechanism that allows inexperienced people (none professionals) to make sustainable profits,
According to the news of accedamic research done by MIT Media Lab
Working with the eToro investment network, Altshuler distributed $20 trading coupons to 500 active financial traders out of the more than two million eToro members. Matches between traders and recommendations were based on an innovative algorithm designed to optimize information flow within the network. Even this small number of coupons was enough to move the entire network away from dangerously high levels of groupthink, and as a consequence, the entire trading community–not just the 500 coupon users–saw a significant increase to their rate of return. The increase in return was more than 10 percent compared to those who traded without guidance from the social network, and 4 percent higher than those who only followed the highest-performing gurus.
“This study demonstrates how an efficient collaborative trading community can be formed by carefully balancing the complex mixture of ‘trend setters’ and ‘bellwethers’ who govern the behavior of the crowd,” says Altshuler.” For more details about the algorithm developed by MIT Media Lab, visit HERE. Anyhow, it proved copy trading results in at least 6% better even without such algorithm.
Then, can we expect to gain exactly the same % as the popular traders in OpenBook if we copy them?
Well, firstly, unlike some other social trading networks that use outside broker, slippage does not seem to be a big issue. Means you can expect the same trading as the trader you copy in almost all trades. However, trader’s result (especially the popular traders’) could be distorted because they automatically get more capital comes from the bonuses they received from eToro for every investor who copies them – reportedly eToro pays $10 for each copier who actually invested. All in all the best strategy is testing by yourself using Free Demo Account with Virtual Money as
explained later. Let me introduce the indicative numbers I found in the eToro forum as below;
First of all, the financial markets are risky and unpredictable and there is no such thing as a guaranteed profit.
Secondly, even the best traders can’t maintain exactly the same level of gains week by week, it all depends on the opportunities the market offers at a specific point in time. Sometimes they’ll have large gains, sometimes small ones and sometimes they’ll have to absorb losses.
Thirdly different traders have different trading styles – some take more risks, which means bigger gains but sometimes also bigger losses, and some play it safe which usually means smaller gains but also less chance of losses.
It also depends on how many trades they open per day, if they’re scalping or making long term investments, what their profit goals are for each trade etc.
Having said that, here are some figures that’ll help you calculate the gains you can expect when copying a successful trader with good money management and low risk:
- 1) The average trade of such a trader would take up 3-4% of their total account.
- 2) They would use low to medium leverage, let’s say x25-50 on average.
- 3) Their average take profit would be 30%
- 4) They would open approximately 20 trades per week.
Keeping in mind that these are just estimated figures, not based on anyone in particular, we can calculate that if you allot $50 to copy this imaginary trader you would invest on average $1.5 per trade, with a x50 leverage that makes 75 currency units, and a 30% profit amounts to 0.45 cents. With 20 trades per week that comes out to $9 for the first week. Calculate some losses into that and you’ll get around $8. The next week you have to make the same calculation starting with $58 as your copy amount. Again, these figures are purely theoretical. What I would suggest, to get a more substantiated estimate, is to open an eToro demo account and try copying with just $50 of your virtual money. This way you don’t risk any real money and you can see how much profit you’re making per week.
I hope this helps and I wish you happy trading!
Abby, eToro Team
I think when it comes to the average, there must be a survivorship bias, means the traders who failed are eliminated in the list and only successful traders are remined in the list which are the basis of entire universe of traders. Having said the above numbers could be pretty optimistic and MIT Media Lab result must be much more realistic though this system is really worth trying.
5 Quick Steps To Avoid Mistakes
Broker Account Summary
Firstly let me summarize a few technical facts of eToro Web Trader for you to make a brief look at its broker function as follows;
- Broker Type: Market Maker
- Traders From USA:Yes / Islamic Account:Yes / Free Demo Account: Yes
- Trading Platforms: OpenBook / Mobile / WebTrader / MetaTrader 4 By Meta Quotes
- Account Currencies: USD / EUR / GBP
- Minimum account size: $50 / Minimum lot size: 0.1 lot / Minimum Trade Size: 10000
- Leverage: Maximum 400:1
- Spreads (pips): EUR/USD3, GBP/USD4, USD/JPY2
- Payment options: Credit & debit cards, Neteller, PayPal, Skrill, Wiretransfer etc.
- Fee & Commissions: Margin Interest:No / Depositing Fees:No / Withdrawal Fees:$5-$25
- Scalping:No / Hedging:Yes / Free Demo Account:Yes
- Trading Tools:
Stop Order:Yes / Limit Order:Yes / Market Order:Yes / Trailing Stop Order:Yes / OCO Orders:Yes / One Click Trading:Yes / 24hr Trading:Yes / Charting Package:Yes / Trade off Charts:Yes / Streaming News Feed:Yes / Email Alerts:Yes / Mobile Alerts:Yes / Telephone Orders:Yes Personal Account Manager:Yes
- Supported Languages:Arabic, English, French, German, Italian, Russian, Spanish
- Customer Service By:Newsletter, Call Back, Phone, Chat, Email
- Customer Service Hours:24/5
5 Quick Steps
The sign-up procedures are very straightforward and only once you decide to invest with real money are you required to provided a copy of your passport/id card and proof of residence.
1) Visit eToro Site to Create Your Free Account
Before you sign-up, you may want to watch the short video first by scrolling down a bit (you will find it as below);
Then, go back to the sign-up part to create your Free account by just fill-in your “User Name”, “Password” & “e-mail address”.
2) Select Trader To Make Copy Trading
Immediately after you sign-up, you will be navigated My Feed page as shown below. Suggest you watch the video which explains most of all you need to know for starting up;
At this stage, the most important video section is the process of selecting the trader to copy and how to copy – I’ll issue an article focusing on How To Select The Best Trader To Copy separately though in the meantime you may want to check 【 Ultimate Guide (7 Secrets) To Find Best PAMM FX Trading – Part (2) 】 click HERE just try out traders of your choice in Free Demo Trading.
3) Practice with Demo Management
It is paramountly important that Never Ever Start Trading with Real Money. eToro offers an unlimited free practice account with access to all the same features as their ‘real-money’ accounts (including the CopyTrader functionality). When you command trading (including copy trading), you may be brought to the screen like below;
Then select “Use Virtual Money” tag in blue at the top of the screen, you will see the below screen where you can set set amount & stop loss condition with Virtual Money;
4) Risk Management Review
Review & remember the 2 basic risk managements.First risk management is setting your strategy & target which I personally believe should be conservative. People tend to be attracted by the amazing growth. If you expect to double your account in 1 month, then you have to accept the risk of losing all your equity in that period as well. Be moderate & sustainable. Second risk management is the above 3). Never use your hard earning money from the start, use virtual money to test. Simply you invest $100 evenly in the traders you select (you may select 10 traders that would be $1,000 in total) and leave it for a few months to check the results or if you want to intervene do what you want. Remember, the demo account performs exactly the same as real account, thus simulate what you plan to do with real money in future, so if you intend to invest only $500 then set $500 in demo account rather than $1,000.
The good thing of eToro regarding risk management is its automatic risk setting as;
- you can assign a maximum of 20% of your equity to 1 Guru
- you can copy a maximum of 20 Gurus in your account
Also as the above screenshot indicates, you can control the Stop Loss for the trades you copy, so make the best use of its function by realizing your risk tolerance. Suggest you check the progress at least once a week.
5) Before Trading
As the last step, suggest you watch the below video which gives you a good review of what you have learnt so far about eToro. It explains a bit more detail about Selecting Trader as well as a few administration matters like depositing, withdrawing fund and required ID etc . It’s 30 minutes long video though worth watching before starting your trade.
In short, eToro offers good opportunities for even newbies to make decent profit passively. However, you need to carefully follow the 2 risk management points mentioned above. Never ever be greedy. Empirically, the successful invester aims at sustainable & conservative growth with low risk. Just selecting the most popular traders does not seem to achieve that objective. You need to develop a well-organized People-Based Portfolio to diversify the risk, keep monitoring the progress and re-evaluate your allocations periodically. By doing so, you will expect steady extra passive income from it and it’s really worth trying.
check the 2 sketches of Henri Leroy, as a Child. One is the true work of Corot being displayed in Harvard Art Museums and the other is a masterful one done by Eric Hebborn who published a book of his art forger life.
He showcases his copy of Corot’s work alongside the original, challenging art experts to tell the difference. And that was the problem. Hebborn was so good at forging works that the art market is still haunted by doubts that seemingly authentic works could in fact be his handiwork. (the left: True / the right: Fake, For your information.) BTW Baumanrarebook.com sold the Four-Volume Catalogue RAISONNÉ OF COROT’S WORKS, with supplements, intended to identify literally thousands of contemporary forgeries. Unfortunately, this attempt of the cataloguist Etienne Moreau-Nélaton backfired because forgers used the publications as guides to expand and refine their bogus paintings. Anyhow, I’ll issue the separate article focusing on How To Find The Best Traders in Social Trading soon, which I hope will not create such backfire.
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