I have talked a few times on Make Money Your Way about how I like to diversify my investments, and online trading, Forex in particular, is part of it. When I started back in 2003, the platforms were quite similar to what they look like today, but there has been a lot of change regarding the features trading companies offer. I wanted to talk today about eToro, which is a social trading network allowing you to trade in Forex, shares, ETFs, commodities and indices, and the company have recently launched their new social investment platform. That means you are not alone doing your trades anymore. You can copy successful people, you can be an inspiration to other traders and you can imitate other traders within your own budget, for example, if an investor makes a £1,500 trade you can execute the same order for £150 or an amount that suits your budget.
It takes just a few minutes to register on etoro.com, and you can even do so with your Facebook account in a click.
Then on your first visit, eToro takes you on a little tour of the different features. There is your Watchlist, where you can follow both stocks or an index, or people. Some of the most popular people have been pre-selected to help you get started. You can also follow people based on the type of trades you wish to make.
You are then able to use virtual money to make your first trade. It is very important that you start trading with virtual money until you are confident and know the platform well, because trading carries a high level of risk. And while it is exciting to get big profits, big losses can happen too. Make sure that is not because you clicked the wrong button at the wrong time!
The demo trade shows you how to open a trade and set the parameters, such as stop loss and take profit.
Then you can look up people, the popular ones, the ones who have the best returns, etc. and copy their trades.
You will see their public profile with their activity, stats and current investments.
In a couple of clicks, you can reciprocate their trading style, within your budget. And obviously setting the maximum amount of money you are willing to risk.
You can contact traders directly to discuss strategies, or join online discussions and learn more thanks to eToro’s social community.
eToro reports that out of 124 million copied trade positions, 80% were profitable. If you are just getting started, I would recommend that you invest small sums, and never put your eggs in one basket. For as stellar a track record a trader may have, he or she may have bad days as well. So in order to spread your risk, instead of copying one trade with a budget of, say, £2,000, I recommend you copy trades from 20 traders for £100 each. Then you could set, for example, that the stop loss will be whenever the trade loses 5% of its value. These are only examples, please do your research before you invest.
eToro has 5 million registered traders so there are a lot to choose from!