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How to invest in eToro...and win.
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| eToro |
Can we earn with eToro?
Interesting question, isn't it?
If you've come this far looking for an easy way to earn with eToro, we're sorry to disappoint you because it's not possible.
There is no magic formula for earning with eToro or any other broker.
Unfortunately, there are many myths about eToro that make people believe that this is the case.
Therefore, in this article, we will examine the myths about eToro and the reality.
Finally, we will explain how you can increase your chances of winning with eToro, albeit without a magic formula, but with professional effort.
Watch our video on how eToro works and how you can start copying the best:
On the other hand, if you already know eToro and want to start trading with it right away, you can do so from its official website.
eToro: Debunking the Myths
Next, let's debunk the myths about making easy money with eToro and also look at the reality.
The truth is that making money with eToro is possible, although it does take a bit of effort. You can open a demo to check it out here.
However, due to the lies about making easy money, some have lost their capital.
Therefore, it is essential to remember right away that the only way to earn effectively with eToro is to invest in the financial markets.
As we learned in this article, eToro offers CFDs on currency pairs, commodities, indices, stocks, and so on.
In addition, we saw how to use leverage in the right way.
Indeed, leverage used well could increase our potential profits.
However, there is also the myth that increasing it more than it should, makes us earn more.
Myth #1: "you will be able to double your capital immediately".
This is a myth.
Social Trading indeed increases the probability that our capital will grow, more than with any other investment tool.
However, one must be careful that the myth "you could double your capital immediately" does not lead you to double your losses immediately.
If you are convinced that you can double your capital in a short period, you should be aware that there is a possibility that you could lose everything in a short period.
#1 Reality: Social trading with eToro is a long-term career.
Here's the reality.
Suppose we were to make a steady 5% profit every month at low risk, it could lead to an annual income of 100%.
As we learn and practice new strategies and see good results, the annual percentage gain increases.
At the same time, we must learn to balance risk.
Trading is an activity that requires commitment and not something to be taken lightly as some say.
#2 Myth: "You only have to pick the top traders in the rankings and nothing else".
This is a myth.
We cannot leave the choice of the trader we will copy to some automatic system without doing anything else.
This is certainly not a wise choice and neither is it the one we recommend.
Often the traders who were in the first place in the ranking, have exposed themselves to high, almost fatal risks.
On the other hand, it has sometimes happened that traders who were in a losing position have later succeeded.
This is known as drawdown.
Of course, this technique can be effective if the investor's strategy has been proven over time.
Read our article on winning traders with eToro.
#2 Reality: You can't win every time in eToro trading
It's a reality that we can't win every time in trading.
Gains go hand in hand with losses.
Consider the following.
With eToro as with trading in general, it is best to start out losing, in a controlled manner.
Over time, losses can be turned into experiences that we can use to improve our strategies in the future.
It is essential to know that not all traders are the same. Learn how to spot the best traders and copy them with eToro.
A trader may have experience in one sector and not in others.
Therefore, factors such as:
- account size
- performance
- risk sensitivity
- variety of investors with #different characteristics in our portfolio
can lead us to the right choice of the investor.
#3 Myth: "If you don't trust the rankings, trust the ones the majority follows."
It certainly seems like logical reasoning.
This way of thinking arose from the opinion: "in social trading, follow what the majority follows".
Although this myth is based somewhat on what has brought Google and Wikipedia to fame, other principles prevail in trading.
Popular opinion does not always lead to effective results.
The problem lies in the fact that most of us have independently followed a trader just because he was successful at one time or another.
And in the end, the choice of trader is not made by strategy but by the unverified influence of others.
#3 Reality: the number of followers of a trader on eToro is not always based on the personal evaluation.
The reality is that eToro, like other Social Trading companies, has users who influence each other.
In other words, they manipulate each other.
However, an investor in the community who can be copied perhaps succeeded once just by chance.
In turn, this made him famous and made many follow him as a chain reaction, dragging inexperienced investors to invest in him as well.
#4 Myth: "You can start earning right away with eToro even with minimal risk".
The above claim that you can earn right away with eToro with little risk is also a myth.
If we don't know how the system of copying other traders' trading signals works before we start, we could lose the little we invest.
eToro's signal copying system is based on the proportional copying of trades made by that trader.
However, the ratios have a limit beyond which eToro cannot go, preventing us from copying some of the trades of the trader we follow.
The problem arises when we copy an investor who trades with very low capital like ours.
The risk is to copy only some signals or none at all.
#4 Reality: it is not necessary to invest large amounts, but it is necessary to understand how Copy Trading works.
The important thing is to understand how the copying system works and the minimum capital required as we saw in the previous lesson.
That is, we must take into account to copy trading signals without falling into too risky situations.
#5 Myth: "To create a diversified portfolio you just need to add many traders to your portfolio and split your capital equally".
Why do we state that the above opinion is a myth?
Because, although portfolio diversification is important, it does not mean filling the portfolio with instruments or people, without following a precise strategy.
Although the process of creating a diversified portfolio at eToro may seem complicated, we have written guides on the subject.
However, it is also not achieved by making any effort, picking investors by chance, and allocating equal parts of your capital to them.
#5 Fact: You must be prudent and carefully allocate the traders that will be part of your diversified eToro portfolio.
This is certainly the best course of action.
Therefore, be careful when choosing which traders to include in your diversified portfolio and how carefully you decide how much capital to allocate to each one.
You should manage your portfolio according to the risk, trading statistics, etc. of the traders you will choose, and don't forget to follow the guidance like the one we give on our site.
#6 Myth: "The important thing is to choose a trader who always wins and never loses".
Thinking that to be successful in social trading with eToro we must choose only winning traders is a misconception.
Losing when making investments is part of the activity of trading.
It is a rule of trading that "the good trader is the one who cuts losses and lets profits run", meaning that it is normal to experience losses from time to time.
When we find a trader on the eToro platform with a very high payout ratio, it does not necessarily mean that he is very skilled.
He may simply be using techniques such as martingale.
You may even find that the payout rate is 100%, so don't be impressed.
Let's explain it better.
When a position is opened and does not get the expected results, the investor does not close it but puts it on hold.
On hold for what?
That sooner or later, that position will produce a profit.
Then, the investor keeps opening positions and leaving them open to recover the investments with losses.
The danger of acting this way is that the trader could keep many open positions and all of them negative.
The result will even be bankruptcy.
#6 Reality: The winning percentage is not enough to determine whether or not to copy an eToro trader.
Therefore, before investing in eToro traders that have a high winning percentage, stop and evaluate it carefully. You can do this by studying different traders through eToro's demo platform.
Also, consider that a successful trader often follows the "try to cut losses" strategy, while maintaining steady profits while keeping risks under control.
Myth #7: "You don't necessarily need to review the trader's complete statistics, it's enough to monitor the last few months".
The last myth we found about eToro is that we don't need to monitor the full activity of the trader we are thinking of copying.
What makes a trader an effective investor is an experience he has gained over time.
So why should you settle for just looking at the last few months of a trader's activity instead of looking at their entire track record?
#7 Fact: Time and experience can prove that you are a successful trader in the eToro community.
Before investing in a trader, we should try to look at the trader's overall profile.
The more history we can observe of the investor the better it will be because it will allow us to observe how the trader has behaved on numerous occasions.
So can you win with eToro?
The answer is yes.
You can earn with eToro.
Despite the lies and myths that may circulate this broker, we can make a yearly return with eToro.
As we have seen but...
The best way to profit with eToro is to invest professionally.
We must know the platform, instruments, and people in detail.
As you can see from reading our series of articles on eToro, there are precise strategies for finding and copying the best traders.
Therefore, we invite you to check out eToro's social trading for yourself by opening a free account from their official website.
Also, read our series of free online articles that will educate and guide you in trading.
This way, you'll increase your chances of trading success, while learning to control risk and enjoy this exciting activity.
How to trade with eToro
- Open an account with eToro Broker You can do it here
- Deposit money into your account
- eToro's minimum deposit is $200
- Choose a financial asset
- Select a stock, a currency, a cryptocurrency, or a commodity to invest your money in
- Analyze the asset's chart or evaluate the news environment
- You can do this through the eToro platform.
- Invest your money
- Copy other traders
If you don't want to act on your own, you can copy other experienced traders.