Best Traders To Copy On eToro (2024)

There are three main categories of copy trading:

• Automated: any trades placed by the copied trader are automatically made in the copier’s portfolio. This is the easiest method of copy trading. Copy traders usually have the option to copy all trades (buying all the shares in the portfolio) or just new trades placed after the copy portfolio is started.
• Manual: investors monitor the copied trader’s portfolio and manually place the trades. This gives them more control over their portfolio but the transactions are likely to be executed at different prices.
• Coaching: copied traders provide one-to-one sessions for new investors alongside helping them invest their money.

This will depend on the platform but they will typically receive either a fixed monthly payment or percentage of the value of the assets invested by copying traders.

eToro has a Popular Investor Program for copy traders, with Cadets being the lowest level, followed by Champion, Elite and Elite Pro.

There are different qualification requirements for each level, for example:

1. Champions: must have a minimum of $50,000 of assets under copy (total value of assets held by copying investors) and $5,000 equity (value of personal assets invested) on average per month. They must also have at least five copiers and a maximum daily risk score of seven or below. Champions receive a monthly payment of $500.
2. Elite: must have a minimum of $500,000 of assets under copy and $25,000 equity on average per month. They must also have at least 10 copiers and a maximum daily risk score of seven or below. Champions receive a monthly payment of 1.5% of the value of the assets under copy.

Investors should consider which assets they would like to invest in. Some copy traders invest mainly in one class of asset (such as equities, commodities or cryptocurrency) whereas others have a more diversified portfolio of different assets.

Dan Moczulski, UK managing director of eToro, comments: “It’s worth considering the assets that they’re invested in. Are they companies that you’re comfortable owning stock in? Does the balance between different asset classes suit your own beliefs and long term goals?”

It’s also worth considering risk and volatility. Although these terms are often used interchangeably, they refer to different things. Risk relates to the possibility of an asset not achieving its expected returns or falling in value, whereas volatility measures fluctuations or variations in returns.

How can investors look at risk and volatility for copy trading? Well, different assets have different levels of risk with cryptocurrency seen as a higher-risk asset (due to the higher risk of losing money).

Investors can also look at volatility by looking at the variations in returns. For example, two portfolios may both deliver a five-year return of 50%, but one might have more volatile returns, such as a gain of 80% in one year and a loss of 50% in another.

Pietari Laurila, a copy trader for eToro, comments: “I like the last two years’ performance as the first filter as it includes two very different years.

“In 2021 tech stocks did well while, in 2022, tech stocks did badly and value stocks did well. If a trader had good performance over both years, they were able to perform through the cycle.”

Mr Moczulski adds: “It’s important that you do your due diligence and ensure that the Popular Investor (PI) you’re copying aligns with your own goals and risk appetite. It’s natural to focus purely on a PI’s past success, but you may also want to consider how long a PI recommends that you copy them for. This will vary and needs to align with your own timeframe.”

Another factor to consider is the amount personally invested by the copy trader and how many copied traders they have. Some copy traders are also more active in terms of posting updates and answering questions.

Mr Moczulski advises: “Before you invest in a particular copy trader, you might like to follow them on the platform for an initial period and read their regular posts. This will give you a clearer picture of their strategy and the way in which they communicate.”

Overall, investors should be comfortable that the copy trader meets their individual objectives before deciding to invest.

Stop losses can be a useful tool for investors to limit losses if the value of their investments fall. They can also be used for copy portfolios (known as ‘copy stop losses’ or ‘CSLs’).

Copy stop losses may be mandatory for investors copying portfolios (eToro requires a CSL of between 5% to 95% to be set).

For example, an investor chooses to copy a trader with £1,000 and sets the CSL at 70%. If the copy value, including the profit and losses over all trades, drops below 70% of £1,000, the whole copy would close, and the remaining funds (£700) would be returned to the investor.

Many investment platforms also offer ready-made portfolios, which can be held in a tax-efficient wrapper. To help with this, we’ve reviewed our pick of the best ISA providers and SIPP providers.

Another option is robo-advisers who construct a portfolio based on an investor’s risk and other preferences. Portfolios invested with robo-advisers are typically reviewed on a regular basis and the portfolio is rebalanced as required.

However, investors will typically pay an annual management fee for both of the above options.