eToro Review: Selecting eToro Traders to Copy

Once you signed up to eToro using a demo or real money account, you can start trading yourself, or select other people in OpenBook (called “Popular Investors”) you’d like to follow or copy. The OpenBook interface (click here to visit) provides you with a real-time feed with all the trades being made on the eToro social trading platform (see image). From this screen you can directly copy any trades you see by simply clicking on the ‘Copy’ link. You can also comment on the trade, mention you ‘like it’ or follow the trader. Following a trader means you see all their trades in your “My Feed”, which is one of the filters available above the main live feed screen. The other one “Popular Investors” shows the activity of everyone with 10 copiers or more.

eToro Live Trading Feed Screenshot

eToro Live Trading Feed Screen

Copying a trader means all their live trades will be automatically copied in your account. When a trade is copied, it will be copied proportionally. I.e. if the Guru risks 2% of their account, the trade will be scaled to risk 2% of your allocation for that Guru.

If want to search for a specific type of trader to follow or copy you can use the “Discover People” tool (which btw is a notable improvement on the old Guru Finder tool).

The Discover People screen (see image below) allows you to filter and rank traders against a number of criteria. To filter, you can select one of the popular searches, or manually filter eToro “Popular Investors” using the following criteria:

  • Profile country and verification status
  • Amount of copiers and change in the amount of copiers
  • Amount of money following the trader
  • Gain %. % of profitable weeks and % of profitable trades
  • Average risk score
  • Maximum weekly or daily drawdown %
  • Maximum high leverage %
  • Instruments traded (stocks, currencies, indices, commodities or other people)
  • Average trade size and exposure %
  • % of weeks active, total amount of trades to date and exposure %

eToro will have some predefined levels for you to choose from though on most filters you can enter your custom amount as well. This is also a good improvement since the last version of the tool only allowed you to use preset searches and filters.

eToro Discover People tool

eToro Discover People tool 2015

The performance indicators displayed in the rankings have gone through quite a few transitions and used to be ordered win ratio (which brought back 100% – high risk – profitable traders at the top, and hence was fairly misleading).

Since February 2015, the ranking results can be ordered against all the indicators above over a number of time intervals (from past 30 days to last full calender year):

The indicators in each column can be changed (very useful) though by default they are listed and ranked as:

Copiers:
This is the amount of people copying the Guru’s trades with real money (default ranking).

Weekly Drawdown:
This is the maximum weekly drawdown and shows the highest weekly decrease of total equity during the period. We feel this figure could be more useful if it included account level or open trades drawdown numbers.

Daily Drawdown:
Average daily turnover illustrates how much of a trader’s funds are used for trading. The average daily turnover is the average daily trading volume divided by the average daily equity. A high number here would indicate that the trader is using a large portion of his account on a regular basis.

Profitable Weeks:
Was introduced on May 9th 2012 as profitable days. Now changed to weeks, this is a ratio of total “profitable weeks” divided by total weeks in the chosen time period. A week is considered profitable when the trader’s total weekly closing equity is higher than their opening weekly equity. Total equity includes their available un-invested balance, the invested amounts and the unrealized P&L.

Gain %:
The gain percentage is now calculated using a simple formula which takes into account profit, loss, deposits and withdrawals.

It’s worth nothing here that the old pre Feb 2015 gain calculation was extremely confusing and not transparent, making it one of the main negative points we always highlighted about eToro.

The current formula on the other hand is pretty straightforward.

Monthly gain % = ((E1 + D) – (E0 + W)) / (E0 + W)

E1 – is the equity at the end of the month

W – is the total withdrawals made within the month

E- is the equity at the beginning of the month

D – is the total deposits made within the month

You can view a full detailed example of the gain % calculation here. Unfortunately because eToro doesn’t share all individual historical trade data or account balances it’s not possible to calculate the actual numbers yourself. I.e. you need to have some level of trust that the figures are correct, though any trader can verify the gain % calculation for their own account (since obviously they have all that data).

So in summary, both the trader search capability and ranking features have gone through a number of incarnations since 2014. Yes, there are certainly a few additional filters which expert users and investors would like to see (e.g. max open trades) and some additional data can also be shared to make the service more transparent (e.g. actual account balance). But in terms of usefulness the current eToro trader selection features are a significant improvement on what was offered before. I.e. looking for traders to copy who match your risk profile and investment criteria has become easier over time.


 

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