With the demand for cryptocurrency trading increasing exponentially and the global market cap of cryptocurrencies reaching over $100bn, eToro, the popular social trading and investing network, launched its Crypto CopyFund earlier this month.
Click Here to view eToro’s Crypto CopyFund’s latest performance
eToro Crypto CopyFund Methodology
The CopyFund offers investors a balanced exposure to six of the most popular cryptocurrencies currently available. As well as popular cryptos Bitcoin and Ethereum, both available to trade individually on the eToro platform, you will now be able to gain exposure to DASH, LiteCoin, Ripple and Ethereum Classic via the CopyFund as well.
eToro Crypto CopyFund Asset Allocation Jul 17
To be included, a cryptocurrency needs to have a minimum market cap of $1 billion and a minimum average monthly trading volume of $20 million. The weight of the cryptocurrencies in the CopyFund is based on market cap, with a minimum of 5%. If one of the cryptocurrencies market cap falls below $1 billion or their monthly trading volume drops below $20 million, they will be excluded from the CopyFund.
The Crypto CopyFund is regularly analysed and automatically rebalanced by eToro’s investment committee on the first trading day of each month.
The minimum investment in this Crypto CopyFund, as well as eToro’s other CopyFunds, is $5,000. There is however a daily limit set on how much can be newly invested in the CopyFund. When this limit is reached, it will be closed for new investors, but re-opened the next day. You can however close your investment in the Crypto CopyFund at any time during trading hours.
Please don’t confuse this with a traditional professionally managed asset fund. The eToro Crypto CopyFund follows a strategy (in the case going long on cryptocurrencies) and when you invest you’re basically copying this strategy.
What Yoni Assia, Co-founder and CEO of eToro, said:
“2017 has been a defining year for cryptocurrencies. The global market has now topped $100 billion and the last few months alone have seen an influx of new cryptos entering the space.
We believe that $100B is a milestone on the way to a Trillion USD market cap, and that a good strategy to capture this growth is by simply investing in the top billion dollar cryptocurrencies on a market cap weighted average.
As the popularity of the market grows, and more investors are learning about its potential, we want to ensure that our clients have as much access to it as possible. Investing in the top cryptocurrencies is an extremely complex process today, it requires technical, security and risk management knowledge to buy and hold these new digital assets, at eToro we are simplifying this process to a click of a button.
This CopyFund is the first of its kind globally providing investors access to the world’s biggest digital currencies in one innovative portfolio. For those who believe in the technology’s potential, this is an opportunity to invest in a straightforward and simple way.”
eToro’s Crypto CopFund – Our Opinion
Unless you’ve been living on a deserted island over the past 6 months you’ll have become aware of the exponential rise in the value of cryptocurrencies. Where over the past few years only early speculators invested in them, these days many retail investors are jumping on the bandwagon.
Hence it’s almost a surprise that it’s taken this long for eToro to add CryptoCurrencies to their CopyFunds. I like the idea and concept and see the following key benefits:
- simplicity of transaction process
- reduced risk
Simplicity of transaction process
Anyone who’s tried to purchase Bitcoin or any of the other cryptocurrencies will know that the process isn’t simple and can be very confusing. To start with, you need to find a crypto exchange that you trust. The registration process can take days to weeks (I’m still in a queue for one particular crypto exchange for over a month). You also need to decide where and how to store your digital wallet. And when it comes to selling your coins there’s been plenty of stories of exchanges being hacked and/or suspending trading for hours or days. If you’re concerned about the legitimacy of eToro, we discuss it in-depth in our eToro Scam Guide.
If you already have a funded eToro account, it takes less than a minute to invest in their Crypto CopyFund. Opening an eToro account is also straightforward and quick (the only reservation being that they don’t accept customers from the US).
If you want to close your position you can also do this instantly during trading hours.
If you think that buying and managing one cryptocurrency is a complex process, try doing this for 6.
eToro’s Crypto CopyFund gives you direct access to a balanced portfolio of the major cryptocurrencies AND automatically rebalances the portfolio each month. In addition if new cryptocurrencies become popular (i.e. market cap reaches $1 billion) they’ll be added automatically (and hence become part of your investment portfolio).
In addition, while cryptocurrencies tend to move in the same direction, there are some significant differences in their individual gains over the past year. Unless you have a magic crystal ball, it’s impossible to predict the next big winner (or loser), so the diversified portfolio should in the long run increase the chance to benefit from the exceptional winner(s).
Bitcoin wallets can be lost, just look at the story of James Howells, who’s hard drive with over $8 million worth of bitcoins is in a Newport landfill site. When you invest with eToro on the other hand, you’re not buying any actual assets but CDFs (contract for difference). They move with the values of the underlying asset. Your actual money and risk just sits with eToro, one of the world’s leading social investing platforms.
While no one can guarantee the future of any company, eToro has been trading for over 6 years and no stories so far of cyberhacks or attacks. On the other hand as recently as 2 weeks ago, major bitcoin exchanges were hit by cyberattacks as record rally makes them a target while 45% of bitcoin exchanges end up closing according to WIRED UK.
The eToro Crypto CopyFund’s diversification also means that if one cryptocurrency would fail, you don’t lose your full investment.
The eToro CopyFund’s minimum investment amount of $5,000 may turn some people of (though consider that at the time of writing this buying one Bitcoin would cost you already $2,787 as well). However it’s worth noting that you can trade Bitcoin and Ethereum individually on eToro as well (in much smaller amounts) or copy some of their popular expert traders like Liam Davies or Jay Smith (click to open their latest stats) who’s portfolios have performed very well, focussing on cryptocurrency.
Never EVER think that because cryptocurrencies have gone up in recent years that this trend will continue. In fact their values can be highly volatile, as is the value of the eToro Crypto CopyFund as the graph below demonstrates (click here to view today’s chart).
Within a period of less than 2 months you could have made a profit of 10% or loss of 30% (FYI the CopyFund officially launched on July 12th).
eToro Crypto CopyFund performance first 2 months (click here to view current performance graph)
In any case opinions will vary so feel free to leave yours.
* Investment products offered by eToro are contracts for differences (CFDs) which carry a high degree of risk and are not suitable for many investors. Only risk capital you’re prepared to lose. Past performance is not an indication of future results. Trading history presented is less than 5 years and may not suffice as basis for investment decision. Please note that this is not investment advice.
So you’ve heard of “social trading” and like to give it a go. Please carefully consider these questions before you start … it will likely save you some headaches and money!
1. Do I Want to Trade Socially, Copy Other Traders or Be Copied?
Social Trading works of the basic principle that the knowledge of many is better than the knowledge of one. Less experienced people will be more interested in absorbing information, while experts will be happy to share more information … as long as everyone benefits.
In practise with Social Trading this means you’re part of 3 main user groups and you have to decide which one you belong to:
A) You want to “Trade Socially” which means you want to trade yourself (and maybe already have been in the past), but you like to actively use information from other people to help you with your trading. For example this may mean looking within your Social Trading Network at the overall sentiment (Buy or Sell) of a currency pair you like to trade. Or it could be looking at the newsfeed of a stock symbol to see what people are saying about the company or how they’re trading the stock.
I.e. it’s basically using real-time views and sentiments to make your trading decisions instead of, or in addition too, fundamental and technical analysis.
B) You actually don’t trade yourself, or you don’t have the time, but you do believe that there’re some good traders out there who make some consistent money in the long run. Rather than trading yourself based on their ideas you just automatically copy the trades of these expert traders in your account.
C) You are a top trader yourself and you want to make some additional money by letting other traders copy you. You therefore share your trading signals on a social or copy trading platform, which in return will pay you a commission based on how successful and popular you are.
Please note though that these groups are not totally mutually exclusive. E.g. you can trade socially yourself and copy a few other traders (to spread your risk) … and once you become very proficient you may start offering your trading signals to others (and get extra money).
But nevertheless before you start you have to decide what your main reason is to start Social Trading since it will have an impact on which social trading network or trade copying platform you should join.
2. Can I Afford This?
Social Trading is not some kind of magic potion which means you’ll be making money without risk or effort. No, trading is inherently risky and even when you copy other traders who have an excellent track record, there’s no guarantee they’ll stay successful.
I’m not a financial advisor, but anyone will tell you that if you plan to trade (socially) or copy other traders, you should never invest money you cannot afford to lose!
On the other hand, unlike many other investment options you can try social trading for free (list of demo account here) or start investing with real money from very small amounts (depending on the broker from $10 upwards).
Quite a few platforms such as ZuluTrade and Ayondo also let you send trading signals from a demo account. This means if you have or can acquire the skills to be a good trader, you can actually make money from other people copying you, without having to invest anything yourself. The only thing you’d need to invest is your time and knowledge.
3. Do I Have The Patience To Be Successful?
Whichever type of social trading user group you belong too, this is not a get rich quick scheme (and too be honest I don’t think those exist, otherwise please get in touch).
If you trade yourself or copy other traders you need to view your results over a reasonable period of time. Everyone will make mistakes and make some losses at some stage. That is the nature of trading. The key is to make sure you understand the key principles of money and risk management to ensure you when you go through a bad run your losses are minimised and limited.
The more time you can spend trading and educating yourself, the more likely you will be successful (whether you trade yourself or just copy others!). We’ve written some useful social trading tips on this website, but there’s a lots of information available elsewhere online too.
eToro is probably the best network for beginners and less experienced social traders. Not just because their easy interface and unlimited demo but also because of the amount of training materials on their website and active trading community.
If you’re not patient and don’t want to put in any effort, then don’t start!
4. Which Social Trading Network or Platform is Right for Me?
There are many social trading networks and copy trading platforms you can join. However, depending on your profile and preferences some will be more suited than others. Things to consider include:
- Do you want to be able to try with a demo account first or not?
- If you invest with real money, what’s your initial investment?
- Do you want to trade via your tablet or mobile phone as well?
- Do you want to get paid if other people copy you?
- What currency do you want to use for your account?
- What financial instruments to you want to trade?
- How do you want to manage your risk?
These questions will all have an impact on which network or platform is best suited for you.
To help you though we’ve got two useful features:
And of course feel free to contact us with any questions you have too. We’re always happy to help.
Please note that the information on this website is intended for informational purposes only. This is not investment advise. Trading is risky and you may lose part or all of your investment. If you’re unsure whether social trading or fx trading is for you, please consult an independent financial advisor.
Earlier this week eToro, the leading social trading platform and broker, launched “Copy Funds”, their next generation investment product.
Yoni Assia, CEO and Founder of eToro, says:
“Our Copy Funds are a unique investment instrument, which allows you to invest in a group of assets, bundled together according to different market strategies. “Copy Funds” are alternative investment products, tailor-made for serious investors looking to generate returns in today’s low interest-rate environment.”
How does it work:
In addition to trading themselves and copying other eToro trades, investors can now also invest in two types of funds: “Market Copy Funds” or “Top Trader Copy Funds”. Look at the current Copy Funds choice here.
Market Copy Funds bundle together different CFD stocks, commodities and ETFs under a chosen market strategy, idea or theme.
Current Market Copy Funds include “InTheGame”, with all stocks relating to the gaming industry, “BigTech”, which follows the leading technology companies, and “PanicMode”, which shorts leading indices and goes long on gold and silver. The current Market CopyFunds were created and are managed by eToro’s investment committee which, with the help of algorithms, periodically re-balances the allocations.
So while on the first glance these Market Copy Funds may look similar to the standard Exchange Traded Funds (ETFs), the “PanicMode” fund is a clear example where this differs. This fund shorts leading indices as part of its strategy, something your standard ETF isn’t allowed to do.
Top Trader Copy Funds on the other hand compromise of the best performing and most suitable traders on eToro. I.e. they don’t track instruments but people (traders).
The “CopiersPlusR4” fund for example is made up of traders which have show a growth in copier in the last month and have a risk score of 4 or less. The “GaindersQtr” fund on the other hand focuses on selecting “solid” performing traders.
To maximise the potential of returns for investors, these Top Trader Copy Funds are selected, analysed and re-balanced automatically by machine learning algorithms. However eToro’s investment committee also periodically monitors them.
eToro BigTech CopyFund Prospectus
Each fund has an online prospectus which you can review. This includes the strategy, allocation and real historical performance for the past six months. The back-tested results of how the Copy Fund would have performed over the past 3 years are also displayed.
All the funds are fully regulated, eToro works under the regulation of the FCA and CySEC, and your funds are kept safe in tier 1 European banks.
There are no management fees to pay on these funds. However, the underlying financial transactions initiated by a Copy Fund in your account incur eToro spreads. Overnight and roll-over fees also apply.
The minimum investment you need to make is $5,000.
Overall I believe the “Copy Funds” are a nice offering to eToro’s trading and investment platform.
Funds which track certain industries (e.g. tech) are nothing new. However the fact that these funds can comprise of long AND short positions (e.g. the “PanicMode” Copy Fund) is something less common. Normally this is only possible for hedge funds though, which require minimum investments of $100K or even $1 million. Hence this broadens the scope of investment options available to retail investors like ourselves.
In addition when you normally buy into a fund, you pay the full capital. However with eToro’s CopyFunds you can leverage your investment. I.e. increase your potential returns, bearing in mind though that this also increases the risk.
The Top Trader Copy Funds are also fairly unique, though eToro isn’t the first company to create them. Darwinex already launched their Darwinia Index earlier this year which also invests in their top performing traders (and is performing ok). However eToro does offer more than one choice.
There are also no management, entry or exit fees to pay with eToro’s Copy Funds. Compared to the usual 1-5% fees on normal funds this does look like a nice saving. However you do pay the spreads for the instruments bought as part of the fund strategy. For the Market Copy Funds the spread cost is likely to be low since they’re pretty much ‘buy and hold’ strategies (i.e. the CFDs which are part of the fund are bought when you enter the fund and sold when you exit). Top Trader Copy Funds on the other hand will lead to more transaction in your account, basically each time a trader in the fund opens or closes a position.
In addition the overnight and roll-over fees apply if you use leverage. The higher the leverage, the higher those fees are. Something to bear in mind if you want to invest long term in a long position fund using high leverage in your account.
We may try a real live comparison in the next few months and buy one eToro Market Copy Fund and compare it’s performance (including fees) against a comparative ETF we buy. I’ll let you know the results here.
eToro customers can currently also make suggestions for new funds which is interesting. The minimum $5,000 investment requirement may however be high for some investors. However most ETFs have some minimum investment level as well, while hedge funds certainly have much higher requirements.
It’s too early to have an opinion on the performance and popularity of these funds … time will tell. As always we’ll keep you updated here and feel free to share your own experience or thoughts as well.
Visit eToro Copy Funds
Please not that this is not investment advice and our opinion is given for educational purposes only. As with any type of trading, these eToro CopyFunds involve risk. Hence only investcapital you’re prepared to lose. Past performance does never guarantee future results. Contact an independent financial advisor if you’re unsure whether this type of investment is right for you.
The 2016 US presidential election is imminent, and they’ll have a significant impact on the global financial markets.
To benefit from these trading conditions by either trading yourself or by copying other experienced traders, ayondo are offering a special bonus.
To qualify for this US election offer, you must meet the following conditions:
- You are an existing customer and have a live trading account or a Social Trading account with ayondo markets
- You make a new deposit of at least £/€3,000 between 24th October 2016 and 11th November 2016.
The ayondo US election offer has the following bonus levels:
- A deposit between £/€3,000 and £/€5,999.99 = 10%
- A deposit between £/€6,000 and £/€11,999.99 = 15%
- A deposit of £/€12,000 or more = 25%
So the more you deposit the bigger the bonus you get.
Please refer to the full details and terms and conditions on the ayondo website.
Ayondo are one of the leading social trading networks and their key selling points are the features they offer to safeguard the money of their customers:
- ayondo markets is authorised and regulated by the FCA
- Client funds are held separately from the company funds, in separate bank accounts
- Protection provided by the FSCS for up to £50,000
- In addition to the FSCS, there is also free insurance of up to £500,000 per client
Click Here for the ayondo 2016 US Elections offer
When it comes to online trading, everyone wants to turn a profit. And yet, some do it more often than others. Here are five tips that might give you a better understanding of online trading.
Online trading is becoming increasingly popular as more and more people realize the relative simplicity of using social trading platforms for investing. While never an easy task, honing your skills as a day-trader is very possible, if you know what you’re doing and understand that there are simple rules you could follow to increase your chances of becoming a successful investor. We’ve gathered a few tips that can make you better at online trading:
1 – Stay informed
The global market is always changing, with stocks, commodities and indices constantly going up and down. In fact, there are so many moving parts, that it is impossible for one person to know all of the different factors that influence the market’s movement (if that were the case – we’d all be rich). However, there are ways to gain a better understanding of which stocks or currencies might go up or down, and one of the main ways is to follow the news.
Reading leading financial publications, dedicated forex and day-trading blogs, and signing up for newsletters are great ways to make sure you’re up to speed on relevant topics, trends, announcements and updates. The more information you have over time – the better your understanding and ability to predict changes in the global markets will be.
Announcements from official sources are particularly important, since they frequently have an effect on the market. Interest rates, job data, oil inventory reports and other stats are all great indicators for where the market is going. To stay posted, try following an economic calendar to make sure you don’t miss anything major.
2 – Determine your style
There are two main approaches to trading: Technical and Fundamental. Simply put: Technical investors follow charts and try to determine recurring trends and movements in the market, then invest accordingly, thinking that the past could be an indication of the future. Fundamental investors on the other hand, try to determine what will happen next by gathering current data on specific companies, markets and currencies.
For example, is we’re discussing the USD/EUR exchange rate, a technical investor would look at the history of the pairing, try to find patterns and see if any of the other factors that existed during a certain fluctuation point exist today. A fundamental investor would wait for an announcement from a central bank, a change in a certain index or any other real-time financial event that could indicate a change in rates.
3 – Manage your risks
There’s always risk when it comes to investing. No investment is foolproof and you should always take precautions to minimize risk. One good way to reduce the risk of losing too much of your funds is setting a stop-loss point. A stop-loss is an order that automatically stops an action you decided upon (buying or selling a stock for instance) if your losses hit a certain mark. This way, with each transaction, you can decide beforehand what’s the maximum amount you’re willing to risk and know that your losses will not amount to more than that.
The same mentality should be applied for gains, and there’s an order called “take-profit” for that. This order is for when you have a certain prediction for a transaction, such as a specific currency going up ten pips against another, but you’re not sure where it’ll go after. This way, the transaction will automatically end when you reach that mark. While it could be tempting to “let it ride” – the take profit order safeguards you from surprise reversals in trends, and should always be considered.
Combining both of the above as a predetermined strategy should be a decision you make with most transactions, and you should stick to your strategy. It is natural to try and cut your losses when you lose, or continue a certain transaction when you win – but the market is volatile. Which is why, if your trading decisions are based on solid information and smart analysis, you should always operate between these two margins, and not be tempted to change strategy mid-way.
The most important piece of advice when it comes to trading is this: Don’t be a gambler. Try not to be emotionally involved. Make your decisions based on calculations and strategy, rather than feelings. True, sometimes “gut feelings” pay off, but more often than not they don’t – which is why “the house always wins” when it comes to gambling.
4 – Diversify your portfolio
This point also has to do with risk management, but it is important enough to be given special attention. Regardless of whether you trade just one type of instrument (currencies, commodities, stocks or indices), you should never put all of your eggs in one basket. Diversity is the name of the game, and since there are numerous options for investments, it could be smart to spread your funds across several transactions.
The logic behind splitting your funds to a number of investments is quite simple. Let’s say that you’re a smart trader, and you only go for low-risk transactions for which you have a pretty solid idea of the outcome. However, low-risk is not “no risk” and when it comes to the global market, there are always surprises. Therefore, if for example you’ve made 10 presumably-good investments, and three or four fail due to unforeseen circumstances, you still have the safety of the other ones who went according to your prediction. Remember: Even the best traders win only about 60% of the time, but with a diverse portfolio, and stop-loss and take-profit orders in place – you could have a better chance of turning a profit.
5 – Copy successful investors
On social trading platforms, such as eToro, you have the option of attaching your funds to an experienced investor’s portfolio. Basically, you choose an investor whose investment style you like, and has a successful track record, and allocate a certain amount of your funds to follow their lead. This way you don’t have to constantly check the status of your transactions and can put your money in the hands of investors who have shown profit in the past. Of course, there are no guarantees in trading, and even the most successful traders have losing streaks – so even when copying an incredibly successful traders you should have a stop-loss in place, and spread-out your portfolio.
You could use eToro’s people discovery tool to find the right investor to copy, and to see other people’s portfolios, trading history and risk rating, and make your decision accordingly. You could also spread your funds over several investors, but always be sure to choose the ones with a lower risk rating. Additionally, you should thoroughly investigate each investor before copying them, paying attention to their style, strategy and make sure they match yours. Some traders go for short-term profits, while others focus on long-term returns, taking into consideration short-term losses in order to achieve long-term gains.
We hope these educational eToro tips are useful for you.
* All trading involves risk. Only risk capital you’re prepared to lose.
* Past performance does not guarantee future results. Trading history presented is less than 5 years and may not suffice as basis for investment decision
* This post is not investment advice.
If you’re a resident of the United States and you’ve been looking for a social trading network or platform to join you’ve likely come across the following message many times: “I’m sorry but at the moment we cannot accept customer from the USA.” Or if they do, the service offering you get access too is restricted compared to non US customers.
The reason for this is that the US government passed a law called the Dodd-Frank Act. Aimed at avoided another financial crisis the law puts many restrictions on banks in terms of the investments they can make and basically terminated currency trading in the USA. They key restrictions impacting social and copy trading are:
- No hedging of trades, i.e. you cannot have a trade in the same instrument open in 2 opposite directions (BUY and SELL). So while most traders you might copy on social trading platforms don’t hedge themselves, this restriction becomes a problem if you copy more than one trader and they both open for example a EURUSD position in different directions.
- First In First Out (FIFO) trades rule. While it is possible to have multiple trades open of the same pair in the same direction, they must however be closed in the order they are opened. Plenty of traders and trading systems do open multiple trades in the same direction, and they don’t necessarily close them on a FIFO basis.
These government restrictions meant that even brokers which used to be happy to accept customers from the USA no longer do so. Your social trading options have become much more limited though not impossible …
Available Social Trading Plaforms for US customers:
Of the mainstream social trading networks which let you follow and automatically copy other traders, ZuluTrade is the only one which still accepts clients from the USA. But unfortunately there are quite a few restrictions put on the service:
- While non-US customers can choose from about 10 to 30 brokers to open their accounts, US ones are limited to 2. Currently these are: Forex.com (Gain) and FXCM. I.e. very limited though we have ourselves accounts with both of them and had no complaints of the service so far.
- US resident are also restricted to opening one trade pair at the time because ZuluTrade has no control over the strategy their signal providers follow. This means you best look for traders to copy who normally only open one trade at the time themselves. If you copy traders who normally open many positions, your results will differ significantly from those of the trader you copy.
ZuluTrade is free to join and try.
Trading Motion gives you access to over 900 automated trading systems which trade everything from S&P futures to Euro Bonds and Gold. You pay a monthly fee to subscribe to a system and the trades will be copied directly in your broker account. Currently about 600 of their systems are available to US customers (i.e. their strategies fall within the restrictions) and over 20 US brokers and FCMs are supported.
We’ve not tried this service ourselves though and no demo option is available. However you can freely look at the past performance of the trading systems on their website.
Peeptrade call themselves the “Social Network for Investors”. Instead of copying other traders or systems, Peeptrade allows you to look at (‘peep’) the portfolios of professional investors (such as IFAs and wealth managers). You pay a monthly subscription fee per investors you ‘peep’. You also get email alerts when they make a new trade or close a position, and you can be “trade socially” by interacting with the investor privately via the Peeptrade dashboard. But basically it is up to you whether you want to copy the actual trade or not.
Peeptrade itself is based in the USA and so are most of the investors on the platform, meaning most trading strategies are fully compatible for US customers. In addition, their platform is now connected to all brokers and financial institutions in the US.
You can join the network for free and some investors offer a free trial.
Collective2 US based copy trading network also brings “Trade Leaders” together with “Investors”. They’re broker independent so you’ll have to sign up with one of their partner brokers, most of which accept clients from the USA (although when we tried to sign up it only gave us the option to sign up with their preferred broker: Interactive Brokers).
There’s a good choice of Trading Systems you can copy, and we’ve been told that all of them are compatible with the US trading restrictions (which seems correct from the ones we looked at so far). Depending on the system you want to copy there’s a subscription fee ranging from $20 to $150 per month.
Some Trade Leaders do offer a 7 or 30-day free trial period.
Porter Finance (Social Option Trading):
There are a few binary options brokers which started offering a social trading feature which allows you to copy the best performing traders on their platform. Unfortunately most of these don’t allow US customer.
Porter Finance however is an exception. The have local support numbers in NY and LA. And via their social trading solution you can find and automatically copy the best binary option traders on their platform (i.e. the ones with the highest win %).
MQL5 Trading Signals:
MetaTrader is a trading platform used by over 600 brokers worldwide (we don’t have the list of US one though we know there are quite a few). Through the MQL5 website you can subscribe to automated signals or buy systems developed by MetaTrader4 and MetaTrader5 developers.
You can copy the signals or run the systems direct from your MetaTrader terminal. However this would mean you have to leave your computer on 24/7 so a cleaner solution is to find a broker which offers a VPS service or use virtual hosting.
Unless you’re a little bit technical these options are obviously a little complicated. You’ll also still have to look through the systems yourself to find one which are compatible with your US broker account. There’s unfortunately no option to search specifically for USA compatible signal providers or systems.
We know that being a USA resident is fairly restrictive when it comes to trading and finding a broker. However we hope that the above solutions at least provide you with some options to try social and copy trading. This list is certainly not exhaustive and we tried to focus on different types of solutions. When we come across any new relevant networks or platforms that accept US customers we will add them to this list. Your comments are welcome too?
Trading in CFDs and other leveraged products related to FX, commodities,indices, stocks and other underlying variables, carries a high level of risk and can result in the loss of all of your investment. Always consult an independent financial advisor. Never invest money you cannot afford to lose. Content on this website does not constitute advice and is for educational purposes only!
eToro is a revolutionary online trading site that is shaping the future of forex trading and leaving conventional broker sites behind. They’re one of the pioneers of social trading and copy trading, and eToro offers its most successful traders (known as Popular Investors) the chance to run their own financial businesses and earn extra income under the wider eToro structure.
There’s little doubt that this makes eToro one of the most interesting, innovative and potentially profitable online brokers in the world. However, new traders shouldn’t sign up and expect to become top Popular Investors overnight. There is a definite learning curve and a lot of hard work before you can expect to start earning a lucrative second income on top of your day to day trading profits.
Visit eToro website and try for free
We’ll start with some basic explanations of the key terms involved, and then look at eToro’s trading platform and Popular Investor Program in greater detail. Hopefully by the end of this article you’ll have a clear idea how to approach online trading and investing at eToro and get the very most out of your trading experience.
Social trading has been described as the Facebook of online investing. eToro connects millions of traders across the world and encourages them to talk and communicate with each other about every aspect of the financial markets and trading. Social traders use their News Feeds to discuss open trades, news releases and trading strategies. Generally there is a very friendly and vibrant feel to the site. Experience levels range from beginners to experts who trade for a living. The atmosphere is mutually supportive and there is real enthusiasm for investing.
Copy trading developed as a logical extension of social trading. If you see somebody whose investments impress you, it’s possible to set your account to automatically copy all their trades. When they profit – you profit. You can build a people portfolio as easily as you can build a portfolio of conventional assets.
Popular Investors are social traders at eToro who’ve attracted a minimum number of copiers. They join the Popular Investor program and receive monthly payments in addition to their own trading profits. The best can earn up to 2% AUM (assets under management) + $1,000 / month. Being a Popular Investor at eToro is in effect a financial business and program members receive help to develop their businesses.
Becoming a Social trader
Before you can become a Popular Investor you need to get some solid trading experience and build a strong public profile. People will usually only copy successful investors who communicate openly with others on their News Feeds and have a profitable trading history spanning several months in their profile.
The best approach is to start gradually and don’t be greedy. You will need to accept from the outset that some of your trades will fail. It’s inevitable and happens to even the world’s most experienced and talented investors.
The goal of many investors is to build a diversified portfolio containing a selection of different asset classes. These include commodities, stocks, indices, currencies and ETFs. Even if you don’t trade those yourself, a small number of copy trades can give you full exposure to other assets through the popular Investors who you copy.
Don’t wait to develop in experience and confidence before you begin talking to other social traders and asking questions about their strategies. You can add interesting assets and people to custom Watchlists and monitor their performance closely. When you’re happy that you understand them, and that the market conditions are in your favour, you can open trades with a single click.
And don’t forget … you can try eToro for as long as you want for free.
How to Copy Trade
eToro Discover People tool (click to enlarge)
eToro’s Discover People tool allows you to make filtered searches through its database of millions of traders. You can narrow your search down by country, markets, percentage gains and over a dozen other criteria. When you find Popular Investors who have potential, don’t be in too much of a hurry to copy them. At this stage it can really pay to do some deeper research. The public section of each trading account shows the owner’s News Feed, portfolio (open trades), Stats and trading history going back a whole year. There is also a User Chart that shows you how a copy trade could have performed over a previous time period.
Most people will first check a Popular Investor’s Stats to see how he performed on a monthly basis since he joined eToro. Is his current success just a fluke or is he a long term winner? You can also see at a glance whether the Popular Investor has a diversified portfolio, or whether he focuses on a narrow range of assets. This is not necessarily an issue if you are copying a number of people – but it is a factor to be aware of.
We also highly recommend looking at their portfolio to see the number of current open trades. If the Popular Investor has a lot of their capital locked in only negative open trades they’re likely to operate a “martingale” type strategy, which is something to avoid.
But don’t just look at the past performance and and also consider how the Popular Investor interacts with other traders on his Feed. Does he take the time to answer their questions and explain his trading strategies? Does he get good feedback? Check how many copiers and followers he currently has and what his risk level is.
Risk Management and Stop Loss Tools
Online trading and investing is inherently risky. Any broker or reviewer who says differently should not be believed. People lose money all the time on the financial markets – just as they do in other business ventures or investments. The first key to successful investment and sustained profits is effective risk management. We already covered some of the basics in the previous paragraph, but there are some more very important tools that you can use to minimise risk and protect your investments.
For most ordinary investors it’s not practical to monitor your trades on a full time basis. Mobile trading allows greater flexibility, but at some point you will have to leave your open trades running. eToro’s Stop Loss tools allow you to do that with peace of mind. When you open a trade it takes another couple of seconds to set a Stop Loss, Copy Stop loss or Trailing Stop Loss. These tools will automatically close any trade or copy trade that begins to make unacceptable losses. The Trailing Stop Loss self adjusts to allow your to preserve your profits.
eToro is possibly the ideal online broker for anybody who is looking for a long term approach to trading and investing, and an opportunity to learn and develop as an investor. The site is dynamic, fully mobile responsive and continually improved. And also, very importantly, eToro is regulated, not just by CySEC but also by the UK’s FCA. Levels of transparency and fairness are very high. Ambitious traders are encouraged to aim for a place in eToro’s tiered Popular Investor Program. The system is progressive, allowing traders to build their businesses at their own pace and receive clearly defined financial rewards. eToro is probably one of the very few sites that can be wholly recommended both for new traders AND experienced investors.
Try eToro here
Please note that:
* All trading involves risk. Only risk capital you’re prepared to lose.
* Past performance is not an indication of future results.
Effective risk management is the foundation of all successful online trading and investing. In fact, it’s fair to say that it’s the key to any investment or even any activity in life. A lot of people get caught up in the excitement of opening a trading account and the very real possibility of making money. Their enthusiasm is understandable, but they sometimes forget that investing in the financial markets is inherently risky and that it’s possible to lose money on any trade.
Successful traders work systematically to reduce the number of risks involved in trading and keep unpleasant surprises to a minimum. Some losses are inevitable (even for top investors like Warren Buffet and George Soros) it comes with the territory. The challenge is to reduce the number of losses to a level where they are consistently outweighed by profits. There are some investors who manage to do this month after month. And using social and copy trading you can now connect to them directly and copy their investments.
The Basics of Copy Trading
Copy trading is a revolutionary system that is being pioneered by a small number of online brokers. It allows so called ‘social traders’ to directly copy each other’s investments and profit whenever the person being copied profits. This is done automatically by setting your trading account with a single click.
There’s however a misconception that copy trading is mainly beneficial for new and inexperienced traders. In fact, copy trading is potentially a superb investment tool even for highly experienced traders, and here’s why …
Diversify your Portfolio
One of the first rules of risk management is diversification. If you invest all your funds in a small number of core assets you are placing yourself at the mercy of the markets – this is seldom a good place to be – unless you are a hardcore day trader or scalper. If your assets crash you will lose your money. If you maintain a diversified portfolio with a wide range of assets you will be less vulnerable. For example, a currency may suddenly fall in value causing you losses, but share prices and gold may rise at the same time, bringing you profits. The idea is to be covered through exposure to a wide range of assets with different risk levels.
Copy trading can be a fast and effective way to obtain that level of diversification. When you copy another trader you are normally copying all their investments. Even a small number of copy trades can expose you to a large number of assets, including stocks, currencies, commodities, indices and ETFs. And obviously when you also trade yourself, it exposes you to the trading skills and insights of other successful traders, meaning diversification against your own trading results (and let’s face it, nobody doesn’t have the occasional bad run).
Copy trading is not a random process, you need to select the traders who you copy as carefully and as systematically as you choose the ordinary assets that you trade. All social trading networks and brokers provide you with search filters to find other traders. Some brokers like eToro even allow and encourage you to talk directly to their top Popular Investors and ask them questions about their investments.
Every trader is normally also assigned a numbered risk level that changes to reflect their historic trading activity. Depending on the platform you can also see all their open trades, trading history, a lifetime graph showing monthly profit and loss and their News Feed dialogues with other traders. Copy trading allows total transparency (without compromising on individual privacy or account information).
Practice Additional Risk Management
The financial markets are vast, spanning continents and time zones. Even experienced traders are unlikely to have specialist knowledge of all the different assets and niche investments that are available to online traders. Copy trading allows you to identify the experts and learn from their investments. The process comes with its own risk management tools, specifically “Copy Stop Loss”. You can decide in advance what is an acceptable level of loss for any particular trader (or trade) you copy and set your account to automatically close the copy trade if that level is exceeded. The “Copy Stop Loss” tool takes away the need to continually monitor your copy trades. You can let them run in the background – even for days if necessary – and check them at your convenience.
A number of analysts and financial commentators are already saying that copy trading is the future of online trading. Social traders are very receptive to the combination of Facebook style News Feeds and open communication with other traders from across the world. Many experienced traders are now also realising that it’s also perfectly possible to earn a second income in return for “being copied”. Which is of course also good news for investors looking to find profitable traders to copy.
The earning potential varies per network. eToro’s Popular Investor Program for example is currently paying its best Popular Investors up to 2% on the AUM (assets under management) as monthly cash payments. And with some of their top traders having over $300,000 in assets under management the extra earnings potential is clearly visible.
Copy Trading In Brief:
- Risk management through diversification
- Filter potential copies by risk level
- Reduce risk using Copy Stop Loss
- Learn to trade new assets and markets
- Get paid for being copied by others
Copy trading offers traders of all experience levels the opportunity to quickly build a diversified personal portfolio and learn about new investment opportunities the easy way. Those who persevere and develop a strong public profile can attract copiers and earn more money. Most traders have the potential to reduce the element of risk and invest more effectively.
Please note that:
* All trading involves risk. Only risk capital you’re prepared to lose.
* Past performance is not an indication of future results.
The first trade on ayondo was made on 23rd April 2009. This means they’ve not been 7 years active in the social trading industry and are one of the largest and most respected platforms.
To celebrate this event ayondo has created a special bonus offer which gives you up to £/€ 7,777 extra bonus when make your next deposit until 10th June 2016. Minimum deposit is £/€ 1000.
|£/€1,000 – £/€4,999.99
|The maximum bonus amount is £/€ 7,777 (view full offer terms)
The key benefits of ayondo’s birthday offer include:
- Valid for both new and existing customers
- No restrictions on trading in certain products (use ayondo’s full product range)
- No time limit by when you must have achieved the bonus
Click Here to visit ayondo and benefit from this offer, either by registering for a new account. Or instead use the ayondo birthday promotion for a deposit on your existing social trading or spread betting account.
In the 7 years since ayondo has been active in the social trading world they’ve grown into one of the largest and best renown networks and platforms. Their spreads are very low and the number of top traders you can copy keeps increasing all the time. You can always read our in-depth review for more information.
ZuluTrade have announced the official launch of The Automator, a powerful and easy-to-use new tool that enables you to create and execute your own automated rules.
The ZuluTrade Automator (try here) kind of acts like your personal assistant. It can watch and notify you when things happen on your account. And it can also automatically execute any actions you would do yourself when certain things happen.
Setting up a new rule is pretty easy. The picture below shows how to add a rule which adds a trailing stop of 10 pips to any trade from trader ConradBFX.
ZuluTrade Automator rule example
Other examples of ZuluTrade Automator rules:
• if PnL from Trader XYZ is higher than $500 then send me a notification email
• if floating PnL of my account is more than $1000 then close all trades
• if PnL from Trader XYZ is less than $500 then don’t open any further trades from this Trader
Among the social trading networks and copy trading platforms, ZuluTrade already had the widest range of features to help their customers manage their risk settings. Personally we think this tool is a very useful addition. We’ve not fully looked at or tried all combinations, but we will update our ZuluTrade tips soon to take into account this new tool and give some suggestions on how to make the best use of it.
So far we particularly like the options it gives us to lock in profits at individual Trader level, as well as adding more granular capital protection options in addition to the existing ZuluGuard Capital protection.
IF RULE CONDITIONS include:
- On Account properties
- my balance
- my equity
- my free margin
- my margin level
- PnL (floating) of my account
- PnL (realized) of my account
- On Open trades
- floating PnL of all Trader trades
- floating PnL of my manual trades
- number of open trades
- PnL of any manual trade
- PnL of any trade
- PnL of any trade from Traders
- On ZuluGuard
THEN RULE CONDITIONS include:
- apply Fixed Stop to trades matching the condition at
- apply Limit to trades matching the condition at
- apply Trailing Stop to trades matching the condition to
- close trades matching the condition
- lock profit of Trades matching the condition
- lock trades matching the condition
- send notification email
- stop receiving new trades from Traders
Feel free to add your comments or follow us for more updates on new features and releases in the social trading space.
Darwinex announced the launch of their revolutionary new Darwinia Index. The aim of this new feature is to offer a secure way for you to profit from Darwinex.
To date, when you invested with Darwinex, you had to select the traders you want to allocate your money too yourself. Darwinex gives you a wealth of indicators about the traders’ past performance, but ultimately you choose which ones you want to invest in (this is the same with any other social or copy trading platform).
With the new Darwinia Index however, you’re able to invest, lean back and let the Index do all the work for you. I.e. when investing in this Index you don’t choose the traders for yourself, the Index does it for you. It’s very similar to an investment fund which chooses the stocks for you, and you in essence only invest in the overall fund.
When it comes to choosing the traders or systems to invest in, The Darwinia Index will leverage all the foundations that have been developed by Darwinex in the past few years. I.e. it will use their proprietary D-Score indicator and risk management algorithm to make the selections. It is expected the fund will invest in between 40 and 50 different strategies.
Existing Darwinex customer exclusively are able to invest from €500 to €5,000 in the Index until the end of today, 4th March 2016. After today the subscription will be closed and the funds will be invested live in the fund on Monday March 7th 2016.
For the first 4 weeks, all investments will be lock and no withdrawals can be made. After the first 4 weeks, customers can make withdrawals or make extra investments, though the minimum investment limits will be increased.
The target return, as mentioned by Darwinex CEO Juan Juan Colón in the launch webinar on March 1st 2016, is between 20 and 25% per year (with a maximum drawdown of 5%). I agree that if these returns are achieved this will be a very successful investment product. Obviously at this stage this it is too early to say if this will be achieved.
We have however invested a small amount ourselves in the Index and will update our readers and this blog post on the results. Since we joined Darwinex in the Beta testing phase last year our overall performance has been mixed. Overall we’re slightly down by about 5% in our live account. We did however only spread our investment over an average of 4 strategies. So we’re keen to see as well how this compares to the performance of the new Darwinia Index, which, as a concept, we like very much.
Click Here to register with Darwinex (free demo is available too)
Please note that this post reviews the New eToro platform which was released officially on November 5th 2015. It discusses the new features compared to the old version. Please refer to our in-depth eToro review (which is kept up to date with each new release) for our general opinion of the eToro social trading network and platform.
Click Here to Explore the New eToro
OpenBook and WebTrader become one
With this new release, eToro takes inspiration from a Spice Girls song and “2 become 1”. OpenBook, the social trading community, and WebTrader, the investment/trading platform have been merged.
Anyone who’s used eToro in the past must agree that this is a massive usability improvement. No longer do you need to login separately to WebTrader to view your detailed portfolio and manage your trades. All can now be done from the same interface view.
In fact you can now practically open trades from any view or screen.
At the moment you can still access the old WebTrader from the menu, though we fully expect eToro to retire the old version in the near future.
The new design is fully mobile responsive. We tested on Firefox web browser, Google Nexus 10 tablet and Samsung S5 Android phone (please note that, as recommended by eToro, you have to use Chrome browser on mobile devices – we tried and it does not really work well on the native S5 browser). The experience on all devices is very consistent and intuitive. Screens and views also render very fast (and much faster than the previous eToro version).
The screen real estate usage is also appropriate for each device. I feel some companies make the mistake of focusing too much on mobile devices when going through a mobile responsive site conversion, meaning that the web browser experience feels empty (i.e. the extra screen real estate is not used). This is not the case with this “New eToro” release as more information is displayed as the screen sizes get bigger (which is actually the key concept of building a mobile responsive site or platform).
New eToro watchlist feature (click to enlarge)
Watchlist is a new feature and it allows you to create a personal trading dashboard with the trading instrument and/or people you like to follow on eToro. It gives you an instant view of the performance of the instruments or people you selected, and allows you to trade instantly from this dashboard view.
You can actually create multiple ones if you like. So you can have one for technology stocks, one for currencies, one for people, etc. All depends on your strategy and the reason why you use eToro (is it to trade yourself, copy other people, or combination of both).
Watchlists in itself is nothing new and pretty much any decent broker or trading website will let you create your own watchlists. What we particularly like with the New eToro watchlists is that you can quickly view the current sentiment (i.e. how many other eToro traders are currently buying or selling each instrument) directly under (box view) or next to (list view) the instruments. On a monitor and large tablet the “list view” is better in our opinion while on a phone the “box view” should be used.
And another difference to your usual watchlists is of course that eToro lets you watch (and copy) other people/traders, and not just financial instruments.
Your Portfolio View is now fully integrated in the New eToro, and it certainly looks clearer and simpler than the old WebTrader portfolio view. It shows performance of both your own trades and the people you copy.
To close a trade from the portfolio view you do however need to click on the open trade first and close it on the next screen (while you can actually open more trades direct from the portfolio screen). Adding an ‘X’ on the portfolio view may have been useful. We also didn’t find any option to close all open trades (but that wasn’t available in WebTrader either).
People Search and Profiles
The New eToro Discover People tool (click to enlarge)
When you look for other people to copy on eTore you use the “Discover People” tool to filter through the large amount of traders on their social trading network. The actual functionality hasn’t changed compared to the previous eToro version (i.e. no new or different parameters to search on). However the design is better integrated and the search results look clearer and are easier to re-order on various parameters. The search tool (especially changing filter parameters) is also much easier to use on mobile devices now (using Chrome browser).
The People Profiles haven’t changed much but again look a bit slicker. They still have the following sections:
– Activity Feed: showing real-time updates of their trades and comments. The information displayed on the right hand side next to the feed (on larger screen view) seems more relevant than it was before.
– Stats: performance and risk indicators. Couldn’t see any new or deleted indicators.
– Portfolio: showing the current investments of the trader. The biggest change here is that the last 100 closed trades are no longer displayed. Anyone who’s read our eToro reviews over the past few years will know that one of our comments has always been the lack of access to all the historical trades of a trader. So not the direction we’d have preferred eToro to go here, but to be honest there’s no massive difference between sharing only the last 100 or nothing. For this review post we won’t go into this further (since we only discuss the changes).
Your personalised news feed now includes actual news releases relating to the instruments you watch as well, in addition to just trading activity and comments from other eToro traders.
When you open a trade yourself with the new eToro it automatically displays some proposed take profit and stop loss levels (in actual $ value), which you can easily amend. We also noticed that the Overnight Fees (daily and weekend) are now clearly displayed in the ‘Open Trade’ window, and the values take into account your actual investment amount (very useful).
When you start copying other traders you also get prompted with ‘Stop copying if losses exceed $xxx’ (which is defaulted to 40%).
I.e. customers are actively encouraged to manage (and reduce) risk, though no doubt plenty of high risk takers will still ignore those encouragements in the hope to make exponential gains from small investments.
Pressing Help will guide you through the most common functionality of the New eToro in a few minutes.
Contextual help, specially to explain some of the indicators and search, would have been a useful addition.
The New eToro looks better and feels easier to use than any version before. The seamless merging of their old trading (WebTrader) and social network (OpenBook) platforms also plays to the strengths of where eToro seems to position themselves (in our opinion).
I.e. they’re not just a broker and not just a trade copying service. They look to create an environment where traders can easily interact, learn from each other, trade themselves and copy others.
Click Here to Try The New eToro (free)
In a poll we ran on the social trading website last year, 67% of the respondents said they already lost money with social or copy trading. Based on our experience and feedback we received here are the top 5 most common reasons why investors lose money on social trading networks or copy trading platforms:
- Unrealistic Expectations
- No Diversification
- No Effort
- Poor Risk Management
- No Patience
The big attraction of “social trading” or “copy trading” for most people is the opportunity to make large gains with little investment.
With standard stock trading you purchase the shares and pay for the full amount upfront. Say you want to make $1,000 than you’d need to invest $10,000 if you expect the share price to go up by 10%.
With CFDs (Contracts For Difference), spread betting or Forex trading you can leverage the money invested. Even with an investment of $100 you can potentially make $1,000 in a short period of time.
The adverts and promotional materials used by the social trading networks and brokers like to highlight the huge potential gains. Look at the results of the highest ranked traders on most networks and you’re likely to find historical annual gains (ROI) of over 100% and sometimes even over 500%.
When people see these exceptional results, they set their expectations accordingly. However many fail to realise that by magnifying their potential gains, they’re also magnifying their potential losses!
Pretty much with anything in life, the more time you invest in something, the better you’ll get at it and the more rewarding it is. The is very true in terms of social and copy trading as well.
While some ads may want you believe that you can “sit back and let others trade for you” it certainly isn’t as simple as that. If you diversified your investment in the top 5 most popular traders on ZuluTrade 3 years ago (f8, for333, denganyouqianle, yamatofx2vera and adnan essam maloma), depending on your risk settings, you’d be left with very little. And I could have taken pretty much any social trading network or copy trading platform as an example here.
With a little bit of research you could have noticed that most of these traders were applying a high risk strategy (ROI of > 400% should get some alarm bells going). But even if you’d invested in them you’d pretty soon have worked out the risk if you monitored their trading style, results and comments.
But even if you find a trader or system which makes you good consistent returns, the effort required on your behalf doesn’t stop. If you don’t monitor them (and take your profits) you’ll likely lose in the long run. When a trader or system does well in certain market conditions there’s no guarantee they do well in others. Traders are also human and there are plenty of examples of traders increasing risk and blowing their accounts after a poor run of results (and that’s not only true in the world of retail social trading but also with highly regulated corporate traders).
And just think about it, the same is true for other investments too. If you looked at stocks or funds 3 years ago, based on historical results you’d probably have invested quite a bit in commodity related ones. You might still have done fine with them for a while, though if you kept them for 3 years you’ll likely be left with half or less of your investment by now.
FACT: If you go in with a “fire and forget” attitude you will always lose in the long run.
So DO NOT select the most popular traders and copy them until you eventually lose.
TIP – what effort is required:
- Learn the basic principles of Forex and trading with leverage
- Learn how to use the social trading platform (especially how to manage risk) – try with a demo account
- Analise the traders to follow and copy
- Monitor your performance and refine portfolio
- BONUS – follow the market news yourself
Needless to say that any financial adviser worth their commission would tell you to diversify your investments. And this is also true with social trading.
Why would you put all your eggs in one basket and invest all your funds in just one trader or signal provider?
Spreading your investment between a number of traders should reduce your overall risk. Just in the same way as investing in a portfolio of stocks does compared to buying one single stock.
Every networks has a good choice of different traders available for you to follow and copy. And who says you need to limit yourself to investing or trying one network or copy trading platform?
Each network has their own pros and cons (see our social trading platform reviews), but also, every platforms attracts different types of traders or systems. Hence diversification between networks may give you additional exposure to different risk profiles.
Open platforms where anyone can become a signal provider will attract on average higher risk traders than actively monitored platforms where traders need to stay between pre-defined risk criteria.
And if you cannot find a number of different traders to invest in, make sure you limit the percentage of your funds you invest in the single trader, so when other interesting traders become available, you have the funds ready to invest in them.
I’m not sure why but for some reason loads of people who invest on social trading networks seem to expect that traders they follow or copy don’t make any losing trades. Let’s be clear, occasional losses are inevitable. In fact I’d even be very suspicious of any trader with a win % higher than 85%.
No one can predict the future and high win rates are only achievable by building up large drawdowns. And we all know what happens in the long run with these types of strategies in the long run (HINT: $0 balance).
Hence if you have done your research correct, you should give the trader at least a reasonable amount of time (3 to 9 months depending on their trading style) to prove themselves. Yes, do monitor, and if their strategy or approach changes then intercept early.
However if you did your research and configured the right risk settings appropriately, then you should be able to cope with some initial losses and they should not impact your balance to the point where you panic or lose your allocation.
Poor Risk Management
Poor risk management can occur at a number of levels and pretty much always leads to large losses.
For starters I’m still surprised that some people start investing money on social trading platforms without knowing the difference between a lot and a mini lot, or what 50×1 leverage is. Each platform normally has sufficient features to manage risk. However if you don’t understand how much your allocation is likely to move on an average trading day, then don’t start.
Most platforms offer a demo account for you to try (at least for limited periods). If you’re not sure then try and follow the demo account’s movements every day to see how your investment can fluctuate.
In social trading profits can rack up exponentially, but losses even more so if a trader goes rogue and keeps adding to losing positions using a Martingale type strategy. If you haven’t limited the maximum capital that trader could lose individually, you’ll likely lose your full account, even if you copy 5 other traders who are doing well.
And how much to invest per trader? It obviously depends on your risk profile, but needless to say that if you throw 50% of your allocation at a single trader (however good they were in the past) you’re left with only half your capital if they lose their account balance or you take too much risk on them.
Every trader or system will also have periods of drawdown … that is inevitable! However plenty investors seem to assume that they’ll hit the jackpot with every trader and start copying them at the beginning of a winning streak.
The risk of drawdown needs to be taken into account individually for each and every trader or system copied. Take input from the trader’s strategy description AND also work it out yourself.
And don’t forget that overall, social trading can be very risky. So never invest money you cannot afford to lose!
As always your comments and experiences welcome below:
Today ZuluTrade announced they’re introducing social trading on Binary Options as well.
ZuluTrade is already one of the leading and most innovative Forex social trading platforms, allowing investors to copy the best performing traders on their platform. They launched a binary options service for traders a few months ago, and now they’ve added the social trading aspect to this as well. This means that from now you can copy the top performing binary options traders as well.
The key differences with the existing social trading platform are:
- No slippage – because you get exactly the same quotes as the binary options trader you copy
- Copy additional assets – because binary options traders on ZuluTrade can, in addition to Forex options, also trade popular stocks like Google, Apple and Amazon, as well as indices and commodities
Existing customers can use their existing login details. New customers can sign-up for free here.
This launch from ZuluTrade certainly doesn’t come unexpected. They’re already the leading platform in terms of social forex trading. With the growing popularity of binary options trading, and the fact that binary option site AnyOption launched copyop a few months ago, it looks a logical step for ZuluTrade to expand their offering as well.
Click Here to view the live ZuluTrade Binary Tradewall
ZuluTrade infographic for their social binary options trading launch
Ayondo announced today to their customer base the launch of their NEW Social Trading App, available for iPhone. This is part of ayondo’s aim to constantly improve the trading experience of their customers and provide the best tools to ensure they never miss an opportunity.
With the new App you can follow successful traders, share their investment strategies and reap the benefits. You can also minimise the risks of trading and maximise your potential returns.
Please note that not all the social trading features available on the ayondo website have been made available yet on the iPhone App.
Features do include:
- Current Top Trader rankings
- Your portfolio view
- Up-to-date tracking of trading results as they come in
- Ability to complete your trades and make adjustments
Visit ayondo here
ayondo iphone social trading app screenshot
Visit iTunes here to download the free app
Yesterday eToro, the leading social trading network, and West Ham United, a UK premier league club, announced a 3 year joint marketing partnership. The deal specifically involves West Ham’s digital and social media channels which will be available to spread the eToro brand. Obviously many football fans like to place a bet from time to time, and hence the partnership seems to make sense for eToro as it gives them access to a large potential client base. West Ham Utd also qualified for the Europa League next year via the Fair Play rankings, which means coverage will be larger too. In addition, in one year’s time, the club will move into London’s Olympic stadium.
As part of the official release statement, eToro CEO and cofounder Yoni Assia said: “We are delighted to be partnering West Ham United at this exciting time for both us and the club. This deal reflects a number of positive growth areas for our business as well as the ambitions of the eToro brand in the UK and across the world. We really see this as a leap into the premier league for eToro!”
eToro also announced recently that they secured additional funding from 3 major banks and that they are soon to launch a new version of their social trading which allows traders to copy each others trades. You can read our eToro review for more information on their current platform.
eToro, one of the leading social trading platforms, is running a new limited-time promotion: 30% deposit bonus for all new traders that deposit $500 to $10,000 (with a maximum of up to $3,000 in eToro credits*).
In order to receive the deposit bonus, you must click here to register, and enter the Promotion Code “ebonus” into the cashier at the time you make your first deposit.
Terms and conditions of this eToro can be found on that link as well.
In addition to their interface changes in February, making the stats more transparent, eToro just added another new featureto their platform: Stock CFDs can now be traded in real-time.
You can also look at our article about which traders to follow and copy on eToro or browse any of the other eToro topics we discuss on our site (review, tips, …).
For our first ZuluTrade trader review of 2015 we take a look at manav predictor. At the time of this review, January 14th 2015, this signal provider was ranked 3rd in the ZuluRanking with about $630,000 in real money following them. This trader has a 62 week trading history and based on manav predictor’s ZuluTrade profile, here’s our review of this India based trader:
manav predictor Pros:
- overall profitable
- result have improved over time
- useful status updates
- follows the news and markets (makes reasoned trading decisions)
- over 1 year trade history
- results over time improved (last 6 months the best)
- system managed risk well historical (low open trade drawdown)
- clear stop levels use
manav predictor Cons:
- does not trade on ZuluTrade with own money
- relative high historical drawdown (like high future drawdown)
- no stop levels used
- most trades left open until they eventually turn profitable
- total risk not know
Looking at manav predictor’s profit graph (see below) we notice a fairly gradual increase, especially since May 2014. Before that period results were arguably a bit more erratic. If we include unrealised profits then this ZuluTrade trader ended 2/3 months in profit and 1/3 in loss. It’s worth noting though that over the last six months only one month was a losing one for manav predictor. I.e. performance has improved over time.
In total manav predictor has returned and some 9,600 pips so far. This works out at an average of about 680 pips per month. That’s certainly not about to return. However these results were achieved against a maximum drawndown of 2,230 pips. Hence the maximum historical drawdown is almost four times the average monthly returns. This is certainly something which needs to be considered in terms of risk reward ratio since this is not so great.
The average pips per trade return off manav predictor on ZuluTrade is 30 pips. This number is very good and one of the highest you’ll probably find on ZuluTrade (for traders with 1 year or more trading history). This also means that this impact of slippage will be quite low. Because even if you encounter slippage of 2 pips per trade it’ll only be a small percentage of the average expected pip returns (2/30 = 6.66%).
The winning trades ratio of manav predictor is 97%. This is exceptionally high but as we know is also worrying in terms of risk (read through our ZuluTrade and social training tips). It essentially means that manav predictor pretty much never closes at trades until they end up profitable. This is also the reason why the historical drawdown has been very high. In fact when we look at individual trades in manav predictor’s ZuluTrade history we notice that the worst trade went as low as -523 pips by after the market eventually turned, this AUR/AUD trade got eventually closed at 55 pips profit.
By looking at individual trades we also notice that manav predictor doesn’t use any stop levels (only 5 of the 316 trades so far were closed in loss). Hence the risk you’re taking is pretty much open ended. With a maximum of 14 consecutive open trades and no fixed stock levels it’s extremely likely that the drawdown of this trader in the future will be much higher than the previous historical maximum. This is probably also the reason why even though the results of this ZuluTrade trader in terms of returns are quite good to maximum profit made by a single follower so far has been about $2,000. While manav predictor does seem to have a good amount of followers the only seem to risk small amounts.
So what is the actual strategy manav this traders employs. In their ZuluTrade strategy description they mentioned they’re basically a news trader but also use indicators. They also mention that they have four years of trading experience and in one of their status updates they also mention that they trade themselves with a different real money account. However in terms of their ZuluTrade signals these are being sent from a demo account. So there is no way to verify whether this trader is making the same trades in their own real money account.
In terms of the strategy it’s also worth noting that this trader trades on pretty much every currency pair available. When we look at the status updates it is however clear that their strategy description seems to match their actual trading style. Manav predictor actively updates their followers with the reasoning of their trading decisions and positions. It is clear that they actively follow the markets and news updates. Professional traders may not always make the correct trading decisions, but what is important is that they will always have a valid reasoning why they made a decision at a certain point in time based on the information available at that time. From the updates in their ZuluTrade profile it seems manav predictor does this and from their historical results it also seems their reasoning is more often correct than not.
In summary, the results of manav predictor over the past 14 months have been pretty good, especially over the past 6 months. From the status updates it seems that this trader actively follows the news and makes well reasoned trading decisions. More often than not they seem to have made good decisions in the past. However the main caveat with this trader is that they don’t use stop levels and leave trades open indefinitely until they eventually turn positive. This means the risk you take when following a trader like this is pretty much open ended too. I.e. it’s highly likely some high future drawdowns will occur and you will be totally relying on this trader to manage risk (unless you apply your own ZuluGuard settings of course).
Click Here to view manav predictor current performance and open trades
manav predictor ZuluTrade pips profit graph until 15th January 2015
Please note that any ZuluTrade trader reviews are included here for educational purposes only. They should not be considered as advice in any way. The inclusion of a trader here should also not be considered as an endorsement of this trader. Forex trading can be highly risky and you should never invest money you can’t afford to lose. If you’re not sure whether this type of investing in right for you, please consult an independent financial adviser.
In accordance to EU legislation which aims to increase investor protection ZuluTrade has introduced some changes to their social trading service for EU residents.
The following changes came into effect from December the 12th 2014:
- The first time they log in after the 12th, EU customer will to complete a short Suitability Questionnaire
- Only the top 500 Traders will be visible in the ‘ZuluTrade Traders Performance’ table and it will only be possible to follow and copy those. These Traders need to comply with the following criteria: Max DrawDown less than 30%, average pips per trade more than 5 pips and trading history for over 12 weeks. More information can be found on the ZuluTrade Trader Guide. EU customer who’s portfolio includes traders which are non-compliant will automatically have those traders disabled in their Portfolio after December 12th. This means no new trades will be opened for those traders, though the customers will still receive the closing signals for any open trades these customers have open in their portfolio.
- Going forward EU residents will also need to protect each trader in their portfolio using ZuluGuard Capital Protection. Please note that this a good practice anyway!
- In addition, the maximum accumulated Capital Protection for all the traders copied in their account cannot exceed their overall risk allowance (which can be no more than 75% of your available balance).
- Based on the customer settings, capital allowance and historical trader statistics, an upper limit restriction on the maximum lots per trade for each trader will also be applied.
- And finally, whenever an EU customer makes a new deposit they will need to manually re-set their maximum Capital Allowance.
While to some EU customers these changes may sound a bit restrictive, overall they’re no more than good practice which most experienced ZuluTrade users who appropriately manage their overall risk apply anyway. For those who like to gamble and take excessive risk in the faint hope to make large profits with limited capital, this obviously restricts their options (and they may as well visit a casino website instead).
Click Here to visit ZuluTrade
This review of ZuluTrade signal provider ProfitSwing was written on December 3rd 2014. On this date ProfitSwing was ranked first in the ZuluRanking while, with almost $3 million of real money following them, they were also the second most popular trader on ZuluTrade. In total they been trading 182 weeks on this social trading network. Based on ProfitSwing’s ZuluTrade profile and trade history, here’s our review of this Russia based trader:
- overall profitable
- 3.5 year trade history
- results over time improved (last 6 months the best)
- system managed risk well historical (low open trade drawdown)
- clear stop levels used
- focuses on 1 currency pair
- no not trade for end of month commissions
- does not trade on ZuluTrade with own money
- system can endure longer non profitable periods
- maximum number of open trades unknown
- performance not consistent (i.e. long term system)
When we look at ProfitSwing’s profit graph (see below) we notice an overall increase which was pretty much achieved in 2 separate phases with a period of stagnation in between. I.e. the first year of trading saw a fairly gradual increase followed by about 2 years of stagnation (or very small growth) which in turn got followed by 6 months of steep profits. About two thirds of months were closed in profit while one third of months ended up losing. The last losing month though is 7 months ago.
Some key points to take away from this are that ProfitSwing’s system seems to work well in the most recent time period. I.e. the performance has improved and has been profitable in the market conditions of the past half year. In addition, it seems clear the trader is not too concerned about posting losing months and hence losing their ZuluTrade commissions. I.e. it doesn’t look like adjustments are made to the system to try and finish a month in profit, with the focus being overall long term performance.
In terms of strategy used, ProfitSwing is very clear that this is a fully automated EA (automated trading robot) running on a VPS. They mention the system was tested based on 10 years of historical trade data and has been running uninterrupted for the past 3.5 years. Based on what I mentioned before about the losing months I believe this to be fully true. The system only trades the EURUSD pair.
ProfitSwing also mentions tight stops of 50 to 80 pips are used on each opened position. Looking at the historical trades this is mostly correct though in the past one position went as low as -288 pips while in total 6 went to -100 or lower (however not at the same time). Overall the maximum historical open trade drawdown is -373 pips. Considering the system has traded on ZuluTarde for 3.5 years and opened up to 13 trades at the same time (though more on that later) this is quite a low number. It means ProfitSwing’s EA clearly takes into account overall open trade drawdown when managing risk (not just stop levels per trade).
However when looking at the drawdown for a system like this which closes trades in loss as well, it’s important to look at the overall account drawdown as well. Looking at the profit graph we can work out an account drawdown between 11th June 2012 (+4,367) and 1st February 2013 (+2,977) of -1,390 which at the time was about 32% of the profit until then. For most ZuluTrade followers who are looking for quick returns it’s hard to see many hanging in there over a period of 8 months with gradual losses. However in terms of the overall profit of +9,865 pips to date the historical maximum account drawdown represents only 14%. However if we look at it in terms of average monthly returns over time of 235 pips per month it equals 6 months of anticipated returns. ProfitSwing also mentions the system is allowed a maximum drawdown of 50%, it’s clear this hasn’t happened in the past, however as always that’s no guarantee it won’t happen in the future. Nevertheless it does look like the system has managed drawdown well in the past, especially open trade drawdown.
In terms of open trades we normally always have a look at the actual open trades which were opened at maximum to see of the ZuluTrade signal provider uses a Martingale type of trading system or not. The fact that the overall drawdown was fairly low especially over 3.5 years already gave a good indication that no Martingale type of trading was employed. Looking at the actual historical trades for ProfitSwing it’s also clear that sometimes hedging is used so not always all trades are opened in the same direction.
The total maximum number of trades required by the system is not mentioned by ProfitSwing. While, as mentioned before, open trades have been managed well before, it is actually still useful to know the absolute maximum required. Otherwise it difficult to calculate the maximum risk you’re taking as a ZuluTrade followers if you want to set your own maximum allowance levels for this trader.
Average pips profit per trade is 9 pips, which is not massive but very reasonable, especially over such a long time frame. Because ProfitSwing sends their signals from a 3rd party broker account, sometimes the slippage can be a bit higher. However, as reported on ZuluTrade as well, that doesn’t seem to be the case here.
Personally we’re normally a bit sceptic about pure automated trading robots, especially when they can leave multiple positions open during news events. I.e. 10 open positions during a European Central Bank rate release can cause swings of over 100 pips and hence 1,000 pips in your account. However it obviously doesn’t look like this has occurred so far with this system, with the relatively low open account drawdown, though obviously this is something to consider if you’d be following a system like this. Although as always with news releases it could move with you as well, just depends if you want to gamble or not sometimes.
In terms of followers, while ProfitSwing has made some good overall returns on ZuluTrade, their popularity has only risen again in the past few months. So far followers are clearly still cautious when following this trader since in total ProfitSwing has only made about $11,000 for their top 5 followers. No doubt the low risk settings are driven by the potential future drawdown and maximum open trades to consider. It’s also worth mentioning that ProfitSwing only sends their signals from a demo account.
Another point to note is that the system seems to work by opening different lot sizes. However with ZuluTrade, every trade is opened in the same size you specify in your account. Hence the overall performance of the system in terms of $ value in their Alpari demo account will not be the same as on ZuluTrade. However clearly the system has been profitable in terms of pure pips returns too and that what’s important in ZuluTrade and what this review is based on.
In summary, it’s rare to see a trader or system survive on any social trading network for a period of 3.5 years, let alone be in decent profit over that time. However, ProfitSwing bucks this trend. Over its lifetime on ZuluTrade this automated system had 2 very profitable periods with a long stagnated period in between. However, the longevity of the system is clearly related to the fact that it seems to manage overall risk well and while losses are taken, they never get to excessive levels. This clearly isn’t a system for most ZuluTrade followers who seem to be after instant exponential profits. However this does show that a system which manages risk well (and doesn’t employ Martingale type strategies to cover losses) can be nicely profitable over time. Periods of drawdown will be inevitable though and with ProfitSwing mentioning that drawdown could be as high as 50% it therefore could be at some stage higher than any past levels. Nevertheless, in terms of standing time this is clearly one of the best automated systems we’ve come across recently (and as we mentioned before, we’re normally not a fan of just pure automated systems). But again for those expecting short term gains, it’s impossible to predict what the next 6 months will bring.
Click Here to view ProfitSwing current ZuluTrade performance
ProfitSwing ZuluTrade pips profit graph up to December 3rd 2014
Please note we include any ZuluTrade trader reviews here for educational purposes only and they do not constitute investment advice. The inclusion of a trader should be seen in any way as an endorsement of that trader. Forex trading can be very risky. Never invest money you cannot afford to lose and always consult an independent financial advisor if you’re not sure if this type of investing is right for your risk profile.