Do you dream of becoming Warren Buffett? This etoro app review will show you how to trade stocks online on a social trading platform.
Since childhood, I have been interested in the financial markets. However, I didn’t know how to trade stocks online on the stock exchange.
The City gatekeepers have worked hard to keep the masses away so that they can charge high trading fees.
All that changed about a year back. As a final-year student, I came across eToro as a trading platform. It opened the doors to me and allowed me to trade stocks online.
eToro can be up to 20x cheaper than traditional stockbrokers and has a 0% commission for real stocks.
This is my performance in the last year. Past performance does not necessarily indicate future results. The trading history shown is less than five years in length and may not be sufficient to support an investment decision. This is not intended to be a bit of investment advice.
I want you to know that I have had a lot of learning with eToro.
While I enjoyed buying and selling stocks and crypto, I also made rookie trader errors.
The eToro trading platform can seem intimidating to complete beginners.
This eToro review is based on my trading experience and the benefit of hindsight.
What is eToro?
eToro describes themselves as an accessible social trading platform that allows investors to invest. They are like Facebook for trading crypto and stocks.
They were founded in 2006 and are the largest global investment network. eToro offers safe trading platforms with over 20 million members.
Mainstream media have extensively covered eToro as well as the larger phenomenon of social investment. A BBC documentary called Trades: Millions by the Minute.
The best feature of eToro’s is probably’copyTrader‘.
This allows you to search for other traders and view their trading history. It also shows how much they’ve made and lost in any given time period. You can also allocate funds to automatically invest in trade stocks online that you like and copy them if you find a trader who appeals to you.
The popular Investors‘ program is another big plus.
Users are rewarded based on the number of copiers they own in the form a monthly commission. Responsible trading is also encouraged by the program. This will be discussed in greatly detail towards the end.
eToro’s social and copying tools will allow you to quickly learn a lot. You can read this etoro app review and play with a demo account to learn most of the essential information.
Start slow. How the stock market works. Before you invest large amounts of money, make sure you are familiar with the basics.
It can be extremely profitable to trade stocks online on eToro. However, trading on eToro can be very profitable. You could also lose your capital.
Creating an eToro account
- Register for eToro.com
There is no lengthy paperwork. Joining eToro is easy and free.
Fill out the form to choose a username. eToro will ask you for a telephone number in order to protect your account’s safety.
Register on eToro
Now you can trade stocks online in real-time. You will be prompted to create your eToro account in order to actually trade stocks online.
Disclaimer: eToro offers both CFD and Non-CFD products.
68% lose money in retail investor accounts when they trade stocks online ‘CFDs.’ It is worth considering whether you are able to afford the high risk of losing money.
This content is for informational and educational purposes only. It should not be considered a recommendation or investment advice.
CFDs are a type of leveraged product we don’t recommend in this guide. We are focusing on holding and buying actual stocks that you own.
- Complete your profile
This is a crucial step to protecting your account and tailoring the eToro platform for your needs.
The first section covers your basic personal information. If you are unsure, you don’t have to enter an “Identification Number”.
Next, there are two questions about the trading experience. This is not a test, so don’t be too concerned about the answers. Just try to be honest.
Click “Continue to Deposit” (or “Deposit funds”) at the bottom of the page.
You can only deposit $10 but I recommend that you start with at least $50.
Notice: Although $USD is the main currency of eToro, you can also deposit in PSGBP or other major currencies. It will be converted into $USD in your account.
- Get familiar with the eToro platform
For now, I will only give you a brief overview of the main sections on eToro. Each section will be covered in more detail as I show you how to trade stocks online and browse.
Organize the markets and people you are interested in investing in or copying. Multiple lists can be created, including ‘promising stocks’ or ‘people you want to copy’.
Your investment journey’s nerve center. Monitor your performance by monitoring all open trades and comparing live tickers and values.
It’s just like your Facebook News Feed. This allows you to see what traders have been saying and doing recently.
trade stocks online Markets
Stocks (eg.) are the place to trade stocks online on the available markets. Apple), currencies (eg. GBP/USD, crypto (eg. Bitcoin), commodities (eg. Gold) and indices (eg. UK100 and ETFs.
The heart of the community. You can search for other traders you might like to follow or copy. You can use a variety of filters to narrow down the results to what you need, such as performance and markets.
After you have explored eToro and become a member of the community, I will share with you the three main ways you can invest in eToro.
Copying other successful traders (Copy People).
This is the easiest way to invest in eToro. Read Liam’s story. Every trade stocks online you copy is opened simultaneously in your account. It can also be sold on eToro when it’s finished.
It all depends on how much of your total account funds you allocate to them. More details will follow. In the end, you will get the same rate as them.
It can be difficult to find trustworthy traders to copy on eToro. It is important to be aware of what you should look for and what you should avoid (more details later).
Let me help you master copy trading…
Avoid the most common mistakes!
Being a sheep is the number one mistake that beginners make.
You can find a trader you want to copy by going to the ‘Copy People’ section. It’s easy to search for one in the list and then blindly copy the best results.
It would seem that most people who copy the most often have many copiers. Perhaps the wisdom of the crowd.
However, most people who use eToro don’t know much about what they’re doing.
A trader who is copied by a few people for the wrong reasons can quickly become a viral trader with many more copyists following his lead without even thinking about it.
Let me show you an example.
Popular, but under-performing eToro trader
Despite his poor performance, eToro’s trader still has nearly 2,000 people copying his work! This is a very common occurrence on eToro. I will be sharing my copy-trading process as part of this review.
After warning against traders who consistently fail to perform, another big trap beginners fall into is over-trading.
Although it’s tempting to constantly check how much money you have made or lost, emotions can cloud your judgment and cause you to tinker.
No trader on eToro can make a profit every week or month. It is best to take a long-term, medium-term approach. You’re more likely over time to make better gains if you have patience and discipline.
Finding the best traders to copy
Click on ‘Copy People” on the eToro sidebar.
To see popular and promising investors, you can scroll down the page.
Past performance does not necessarily indicate future performance. The trading history shown is less than five years in length and may not be sufficient to support an investment decision. This is not intended to be a bit of investment advice.
You can also use the advanced search option. You can modify everything in blue to match your criteria for potential traders to copy.
Click ‘GO! Click ‘GO!’ to display a list of matching traders, sorted by how many copiers they possess. You can drill down further using the filters at the top.
5 attributes every trader you copy should have:
- Showcase their market knowledge and experiences on their profile feed
- Low weekly and daily drawdowns (basically, how much they have been ‘down” over a period of time). Any increase in the daily drawdown should be considered a red flag
- Do not expect to earn huge returns. This may sound counterintuitive. However, if someone has 1,000%+ returns in a short time, realize that this is not sustainable luck.
- Do not expect a 100% win rate. It is perfectly normal to lose trades. This is an indication of experience and discipline. While beginners chase their losses, traders who are experienced know when to let loose.
- Communicate well. If you want to learn from someone who is open to sharing their trading methods, then this person should be your copy. They may not respond to your messages because they don’t care or trade stocks online carelessly.
Viewing a trader’s past performance
Now I will show you how to evaluate a trader and then outline the steps for copying a trader. This will help you to understand the process within eToro and what to look out for.
Viewing trader’s stats
Clicking on the “stats” tab within a trader’s profile will give you access to a lot of useful information that can help you decide if they are worth copying.
My eToro performance. Past performance does not guarantee future results. The trading history shown is less than five years in length and may not be sufficient to support an investment decision. This is not intended to be investment advice.
Two other important things are worth mentioning. The risk score shows how risky a trader can be, and the maximum drawdown displays the maximum trader has ‘been able to take down in one week. The same concept applies daily and yearly.
Stats on the risk and reward of traders
It is interesting to compare the current risk with past months to see how their strategy has changed.
Anything green indicates a safe, low-risk, low-return attitude. Next, the spectrum moves to yellow, orange, and red, where there is the greatest risk.
Personally, I avoid traders with more than seven trades. However, it is possible to have traders with different styles.
How to copy a trader on eToro for trade stocks online
It’s easy to copy yourself. After you have found a reliable trader, click the blue “Copy” button.
Then, you will be asked to enter a sum to copy the trader. You’ll also see useful information.
Copying a trader
Let’s suppose you copy a trader who has $200. Then “Avg. We will see how copying works in real dollar terms if we look at the copied trade size.
As you can see, each trade stocks online that you would copy in the above example would cost $2.72 on average.
This is only 2.72% of your total investment ($5.44 of $200) in them. This is a positive sign that you are investing in safe and cautiously.
A “stop loss” can be set to protect against large losses. It defaults at 40%.
Your account will stop copying traders that you copy if they lose 40% of their investment. Depending on the risk you are willing to take, you can adjust this level. Personally, I prefer to keep it closer to 25%.
Monitoring your performance
Clicking on “Portfolio” will take you to your open trades.
This is your actual trading area and nerve centre. This area allows you to monitor your open positions, close them and access a history of your eToro trading activity.
Your eToro Portfolio will list all of your copied traders, as well as any investments you make.
The overall return on your investment in a trader can be viewed. To see the positions that they have (and yours) open and their performance, click on the individual. You can close copied trades and not have to uncopy a trader.
You can also ‘follow’ traders without copying them or investing in their work. As with Twitter, their updates are displayed in your News Feed and Watchlist.
This is a great way to assess whether they are worth copying, and it can also help you find useful information.
How to sell and buy on eToro Yourself?
After you have familiarized yourself with eToro and copied some other people’s success, you can begin to think about placing your own trades in order to make money from home.
You have to think harder and do some research. You are responsible for any mistakes now.
Putting your efforts into the stock market will get you familiar with the eToro platform, the buying and selling process, and how it works. This will likely be a place where you have some consumer knowledge.
Which stocks should you buy?
That’s up to the partner. I can’t offer investment advice. It pays dividends to read the news regularly, do your research and listen to earnings announcements.
You should only invest in trade stocks online and companies you feel are strong enough to withstand market shocks and have the potential to grow.
If you’re really serious, read up on the price/earnings ratio to identify undervalued/overpriced stock.
I am able to review your trades and guide you through placing them on eToro.
Click on “trade stocks online markets”, then “Stocks”, then “Industry”. Select an industry, such as ‘Consumer goods.
The list of consumer stocks that are tradable through eToro will be displayed to you along with their prices and changes over the last day.
Let’s say we want to purchase Apple stock worth $50.
You will see the first ‘Feed’ when you click on ‘AAPL. This is the Apple ticker on the stock exchange.
This page contains all the most recent news and insightful discussions about the Apple share price, and company activity in general.
To see a chart of the stock price history for the company over the past year, click ‘Chart’. Zooming in or out allows you to adjust the time period.
Information about the stock price of Apple
Click on the ‘Trade” button in the upper right corner if you wish to invest in Apple, assuming that the share price will rise in the medium/long term.
Trades must be at least $10. Below that, you can set the amount at which you want to automatically close the trade for profit or loss.
Take note of the Leverage figure. This number indicates how many times you can multiply your gains ( or losses). Higher risk is associated with a higher number.
The real stock is purchased at X1. Any price movement that occurs if you trade stocks online at X2 is multiplied by 2 (doubles).
It will usually automatically turn on X5. For the purposes of this etoro app review, and for beginners, I recommend clicking on the number and reducing the value to X1.
Once you are ready, click “Set Order”.
Place a trade stocks online
That’s it! Now you have $50 invested in Apple.
Monitoring your etoro app review performance
To see all open positions, click ‘Portfolio.
My Portfolio shows Open Trades
Click on the Apple stock to see more information.
Below is my September purchase of $400. It shows that I am currently up 3.94%.
This is equivalent to +$15.75. Click on the “Close” button (red circle X) to instantly close your position.
You should not, as I said earlier, fall for the trap of constantly checking the performance of your trades. Over-trading can lead to high costs, and again, this is a trap.
I have had to learn the discipline to allow the markets to take their course and to be confident that my portfolio’s value will increase over time (which has happened).
This strategy has worked well for me on eToro. It means that I don’t take rash decisions because of bad news or the market reacting too quickly.
Advanced eToro trading
Only when you feel confident in your eToro (ie.) knowledge will you be able to trade stocks online indices, cryptocurrencies, and commodities. After you have been trading for a while, should you consider trading commodities, indices, cryptocurrencies (forex), and currencies (forex)?
These markets are more volatile than trade stocks online. These markets are riskier than stocks, so I will only briefly touch on them if you are familiar with the subject.
Trading currencies (Forex)
Let’s look at an example of how you can buy EUR/USD (currency exchange). Click on “trade stocks online Markets” then “Currencies”, then scroll down until you find EURUSD.
The sell price and buy price can be seen. To buy, click on the “B” box. You should set the dropdown to ‘Order’ and not ‘trade stocks online.
The current buy price eToro quotes you is EURUSD – in this instance 1.0599.
Simply, the amount of money that you invest in this trade stocks online. It will show the equivalent number of units. This case, $90 at X100 leverage = 9,000 Units
This is a financial concept ( refer to Wikipedia). The number in the box will tell you how much you can multiply your gains ( or losses). Higher risk is associated with a higher number.
This can be changed from a minimum of 1 to a maximum value of X400 and adjust your risk level.
This would be the equivalent of X1 if you were buying real hard currency. Any fluctuation in exchange rates would almost equal your gains/losses. However, if you make the same trade stocks online on eToro at X2, every movement in the exchange rates will double your gain/loss. Personally, I recommend that you reduce your risk as much as possible.
To avoid being too affected by a falling price, you can establish a bottom price limit. If the price drops below this level, eToro will sell/close your position to reduce (rather than chase) your losses.
This can be either a $ amount or the EURUSD price at which the trade stocks online should close.
Our EURUSD example shows that our position will be closed if the value drops to $45. This is shown as the red line on the EURUSD chart.
You can set a price that will trigger eToro when you have made the desired return.
Our EURUSD example shows that our position will be closed when its value has increased by $45.
Once you are satisfied with the parameters, click “Send Order” to place your trade stocks online.
Becoming a ‘Popular Investor’
This program encourages eToro users and other community members to trade stocks online responsibly and become active participants in the community.
You’ll start to see other people copy you as soon as you perform well on eToro! This is an exciting and rewarding moment that will allow you to earn monthly commissions as your copiers grow.
Building up your copier number can take time. It’s not difficult to do if you trade stocks online consistently and follow my etoro app review.
Active participation in the community is a great idea. Regular updates, participating in discussions, and answering questions from others are all ways to get your name out there.
eToro is just like any other company. It exists to make money by providing a service.
They do this by charging users a small spread on positions (as outlined in the order windows).
Trading here is free of commission, which means that trading costs are much lower (up to 20x) compared to traditional stockbrokers or fund managers.
Trading stocks usually has the lowest fees on eToro. This is why I recommend that you stick with this market when you first start trading.
Spread is the difference between the buy price and the sell price offered by brokers. This is how eToro earns money (similar to a Bureau de Change and comparable in magnitude to the markup on stocks). This will be applied when you close or sell a position.
All the most recent fees can be found here.
Over-trading is one way to reduce spread fees. These eToro fees can be reduced if you are a popular investor (see above).
It all comes down to your trading preferences and strategies. To give you an idea, I usually keep trade stocks online for at least 6 months. All other trade stocks online have an average duration between two anof d three weeks.
Copying other users will result in the same fees as for trade stocks online (which might not always be stocks). You should check your portfolio to see which positions they have opened.
If you wish to withdraw funds from your account, the only additional fee you will be charged by eToro (flat $5).
Recap: Avoiding common mistakes
This etoro app review has been a long one. I have seen a lot and learned a lot. ).
Before we get to the end, I wanted to summarize for you the most common mistakes in one place:
- Over-trading is not a good strategy for beginners. It quickly adds up to the fees.
- Allocate more than 25% of your equity (funds), to one trader (copy).
- Blindly copying the most copied traders
- Copying people who have insane rates of return (what goes down often goes up)
- You should not copy people without thoroughly researching their activity and profile.
- Do not do your research on trade stocks online before you invest
- Allocate more than 10% of your equity to trades you own
- Too high leverage (advanced trade)
- Try to close every trade stocks online in the green (don’t chase down losses!)
A final word on over-trading
This is an area that I would like to elaborate on, especially in relation to copying other traders.
Below is a screenshot showing my equity chart for six months. The red line indicates the number of people who have copied me on eToro.
As you can see copiers flood in when my total equity (blue line) is high and then leave when my gains drop.
Although it seems rational, it is actually a sign of a knee-jerk reaction, which ignores the fact that the long-term trend is up.
There will be fluctuations, even for the most skilled traders. However, most eToro copyists lose money copying at peak times and then stop copying when they are down a few bucks.
In my case, they would have been much happier if they had stayed with me over the long term (as I recommend throughout this guide).
The same applies to the stock market as a whole.
Despite market crashes in the short term, the long-term trend is UP.
Why? Why? Because every company on any stock exchange is constantly trying to create value.
This article contains useful information about investing
These resources may prove to be helpful in your quest for becoming a successful eToro trader.
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We are grateful for your support and wish you all the best in your trading endeavors.
Disclaimer eToro offers investing in trade stocks online and crypto assets as well as trading CFDs.
CFDs can be complex instruments that could lead to rapid loss of money due to leverage. This provider is responsible for 68% of all retail investor accounts losing money trading CFDs. It is important to understand the basics of CFDs and assess your ability to afford the high risk of losing your money.
Past performance does not necessarily indicate future results. The trading history shown is less than five years in length and may not be sufficient to support an investment decision.
Copy trading is a portfolio-management service offered by eToro Europe Ltd., which has been authorized and regulated in Cyprus by the Cyprus Securities and Exchange Commission. Some EU countries and the UK do not regulate crypto asset investing. There is no protection for consumers. Your capital is at stake.
eToro USA LLC is not a provider of CFDs. It also makes no representations or assumes any liability regarding the accuracy and completeness of this publication. This publication was prepared by our partner using publicly available, non-entity-specific information.