With the Copy Trading feature, you can automatically copy the portfolios of talented investors and get the same returns as them. The service is available at eToro and is suitable for both amateurs and experienced investors.
Learn about Copy Trading in this complete guide that explains how investing is done, risk management and advantages and disadvantages.
Note that the Piggy Banks do not give any investment tips. All information on this page is only intended to serve as inspiration! We recommend contacting a licensed independent financial advisor.
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- What is Copy Trading?
- Get started – How it works
- Can affect manually
- Example: How it works in practice
- Which investor should be copied?
- Risk management
- CSL
- Not all eggs in one basket
- Pause Copy
- Pros and Cons of eToros CopyTrading
- Advantages
- Disadvantages
< li class='ez-toc-page-1 ez-toc-heading-level-2'>FAQ
What is Copy Trading?
Copy trading is a strategy that means that holdings and trades are automatically copied from skilled investors. You choose the amount you want to invest and then your portfolio will reflect the percentage of the investor you chose to copy. It is explained more clearly under upcoming headings.
(Copy Trading 101 – Part 1 – What is Copy Trading?)
Come running – How it works
- Open account on eToro
Opening an account with eToro is free and takes a few minutes. When registering, only name and email address are required. In order to then be able to deposit money and start investing, address details and a copy of the ID card must be uploaded.
- Deposit money
The next step is to deposit money with the broker. The easiest way to deposit is with card payment, but it is also possible via, among other things, bank transfer and PayPal. Trading at eToro can be done from 1 Euro, but to carry out Copy Trading a minimum of 200 USD is required.
- Choose investors to copy
Click on “Copy people” in the menu to get to the investors who choose to have a public portfolio that can therefore be followed.
Filter investors via “Find your match”. Among other things, it is possible to choose the risk level, how long-term the investment is and which asset types the investment is desired in.
- Review history and strategy
Click on a profile to see its historical returns, current portfolio and risk level. The investors who are big in Copy Trading also usually post blog posts or videos where they present the development and how they reason about the holdings.
- “Copy people”
- “Copy people”
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Click “Copy” at the top of the profile page to start Copy Trading against that person.
- Select amount
The minimum amount required to start using Copy Trading is $200. After that, even smaller amounts can be added to this service. However, the amount must never be less than USD 200.
- Automatically shop
Agree to Copy Trading to be carried out whereupon your deposited capital will automatically be used to purchase the assets currently held by the investor. Should that person make changes to their portfolio, the exact same changes will occur in your portfolio.
(CopyTrading 101 – Part 3 – How to copy? – Get started!)
Can affect manually
The investments that take place at eToro via Copy Trading become available on the person's own investment account. There is thus the possibility to add, or remove, individual holdings.
This is to take part in the advantage of copying someone who is good at the same time that the portfolio can be adjusted according to one's own interests. For example, it may be that shares in the oil industry or the arms industry are not wanted in the portfolio.
(CopyTrading 101 Part 4 – The Functions)
Example: This is how it works in practice
Jeppe Kirk Bonde is one of the most copied investors on eToro with over 25,000 followers. Below is a portion of his portfolio which consists of, among other things, 5.82% IBE.MIC and 3.70% NVIDA.
Whoever chooses to follow Kirk Bonde will thus have his capital (regardless of amount) distributed so that the portfolio has the same distribution as him. A person who invests SEK 10,000 will thus receive SEK 370 (3.70%) in NVIDA.
Which investor should be copied?
All customers on eToro can choose for their portfolio to be public and thus possible to copy. This means that there are thousands of people to choose from. Via various filtering functions, it is possible to find people who suit your own interests. Among other things, it is possible to start from:
- Risk level
Do you want a portfolio with lower or higher risk? What should be chosen depends in part on other investments and how this portfolio can complement them.
- Asset types
Stocks, commodities, cryptocurrencies or interest rates? If you yourself have an interest in a specific type of asset, it can be an advantage to copy someone who has the same interest. In addition to asset types, geographic focus can be interesting to consider.
- Historical return
Historical return is no guarantee of future return. However, it can show roughly what knowledge the person has. This is not least if the return is set against a relevant index.
- Commitment
Some choose to invest via Copy Trading to learn more about shares, commodities and other assets. This is by reading the blog posts that the profile makes when updating the portfolio, asking questions and discussing online. A factor to consider can thus be how engaged the profile is in interaction with its followers.
(Copy Trading 101 Part 2 – Choosing Investors)
Risk Management
As with any investment, it is important to have a risk management strategy. This could, for example, involve having at least 8 different assets or using functions that limit losses. Within Copy Trading at eToro there are, among other things, the following risk management tools.
CSL
CSL (Copy Stop Loss) works like classic Stop Loss but on your entire portfolio instead of a single asset. Choose how much loss you can accept and set the CSL at this level. Should the value of the portfolio fall that much, you will automatically stop following the investor and sell the holding.
Not all eggs in the same basket
A risk management is to copy several investors and in this way not “putting all eggs in one basket”. It creates a diversification that, in the long term, often reduces the risk in relation to the return.
Paus Copy
With the “Pause Copy” function activated, no trade will be automatically executed anymore. Your holding remains the same as when you activated the feature which can be an advantage if you want to take a break and just maintain your holding.
Pros and Cons of eToros CopyTrading
There is a similarity between Copy Trading and buying mutual funds. This is because you entrust the decisions about trading to someone with greater expertise. But the comparison also has several major differences. It is also these differences that primarily show the advantages and disadvantages of Copy Trading via eToro.
Advantages
- Get insight into the trade
Almost all investors, who have many followers, are careful to publish market analyzes and explanations about why the portfolio is updated. This creates a transparency that is not at all present in traditional trading in equity funds. With the chat function, it is even possible to ask questions directly to the person being followed.
- Easy to influence
Copy Trading means that your holdings always follow the holdings of a skilled investor. But at the same time, you have the opportunity to influence your portfolio by increasing/decreasing certain holdings. It will be a flexible solution that combines traditional management with a “personal touch”.
- In it to win it
Everyone who using eToro invests their own money. An investor who fails to achieve a good return will therefore both lose followers and lose money. The fact that they invest themselves makes the function extra credible as very few wish to “speculate” away their own capital.
Disadvantages
- No regulated fund trading
Managers of traditional funds need to comply with a large number of laws and regulations. There are, for example, rules for the minimum number of shares a fund must consist of and how the comparison index must be calculated.
Those who trade at eToro never have to follow these rules, but can freely decide which assets to buy. It thus creates a higher risk as the holding can change significantly from one day to another.
- Not within ISK
Trade at eToro cannot not take place within an ISK or capital insurance. In practice, this means that every sale needs to be reported on the income tax return (form K4). However, this is generally easy as eToro clearly shows statistics of all trades on the account.
- Minimum 200 USD
The $200 limit creates some limitation on this type of investment. It is admittedly not a large amount, but those who want to spread risk, and copy several, need a larger amount. To copy five people, close to SEK 10,000 is needed.
FAQ
How much does Copy Trading on eToro cost?
CopyTrading on eToro has no extra fee. It therefore costs exactly the same as if manual trading had taken place with the same assets and amount.
Is it possible to copy daytraders on eToro?
Yes, it There are several day traders that can be copied. These investors are looking for short and smaller profits as all trades are closed on the same day they are opened.
Does the copy trader get paid on eToro?
Yes, those who are copied get part of the commission paid on the trade. For the person who copies, however, there is no additional cost.
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- “Copy people”
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