What is eToro?
I came across this in my travels, really looking for electronic advisors (or robots). On the surface it seems to be a stable of traders with all their stats listed - eg: maximum drawdown, weekly, monthly and yearly profit & loss, daily turnover, gain etc... These are real people doing real trades and the eToro service allows you to follow them. Obviously one can choose the risk to reward profile that you're comfortable with (they're all there!) and literally copy their trades in real time with the lot sizes adjusted to the size of your account. The idea would be to follow (and copy) few of your favourite traders and allocate a percentage of your account to each one, similar to a hedge fund.
To clarify, the software copies their trades automatically. You dont have to be looking at the screen, waiting for your trading guru to decide to place a trade, hoping it doesn't happen while you snuck upt for a pee.
The traders being followed and copied get payed according to the amount of followers they have (up to $10k/ month) this money has to come from somewhere. Presumably the client.
The upside is obvious: you have your pick of a long list of traders who will place trades for you like an electronic advisor. They have a great track record, you can screen heavily for risk and you can follow them or get rid of them at will.
The downside seems a little more dificult to see. Who wouldn't want to spread your account over several high probability human traders with great track records?
Ok, so a little personal disclosure. I'm am optomist. I have real trouble seeing the downside in situations. This comes in handy when making friends and influencing people, but can run you into trouble in the business world! So I'm putting a call out to anybody who would be kind enough to show me the downside of this scheme (scam?)
I'm currently in a part of the world where high speed internet is hard to find (Laos- and it's beautiful. But I would say that wouldn't I?) so I've been unable to get active membership. maybe someone has some active experience in eToro?
I'll be running a demo with them when I get back to Melbourne and will let you know how it goes.
Thanks for reading.
Here is the link eToro The World's Largest Social Trading Network
Last edited by Micah; January 1st, 2013 at 10:26 AM.
Reason: Update info
The following user says Thank You to Micah for this post:
well the best way is to open a demo and see for yourself what the platform is.
I went further on - opened and live and lost all my money. Their algo's just not made for small accounts to win.
Thank god, there is always a back-up plan.
Good luck trading ~~
The following user says Thank You to fxfollower for this post:
So I now have the demo account and am slowly working out a method for testing this eToro trading platform.
The demo account is worth $10000 so I'm comitting $100 or 1% to each trader that I like the look of. Because the trades are relative (ie: if they make a $10000 short position on their $10000 account, my account will make a $100 short position. If they make a $20000 position, my account will make a $200 position etc...) this means that I'm taking tiny positions, but I'm really only interested in the stats at the moment.
I have two rules at the moment which may change as time goes by. 1: If a trader loses 10% of their allocation, I get rid of them. 2: If a trader makes $10%, then I add another $100 to their account. For every further 10% they close, I will add another $100. Rule one still applies, but only to the principal. They are allowed to lose profits. I feel that this will protect my account and still allow for small losing straks- which happen to everybody.
For the sake of diversification I would like to use about ten traders. Some high frequency, some low. Some specialists (some people choose to only trade EURUSD for example, but obviously I wouldn't have two similar specialists) and some who trade like Noah (they buy two of everything. Haha.)
The risk profile is quite easy to screen and it baffles me that a lot of people follow traders with a terrible track record despite there being some real pros available. That's their problem. I'm looking for traders with 0 losing weeks- yes, they exist! People who make their own trades and don't copy (I wouldn't follow myself). People with a history of mostly winning trades- some show almost no losers! There is a maximum drawdown stat and I like to see that below 10%. And finally a growth chart that looks pretty smooth and obviously goes from the bottom left to the top right.
My demo account is down at the moment. This is because I had a few favourites who I allocated more money to. One made a few losing trades in a row and blew his 10%, and of course I had too much riding on him. Always always always trade smaller than you think. Live and learn. Apart from that I'm doing really well. I estimate about 95% of my closed trades have been winners. I'm starting to see a tendancy for the average loser to be bigger than the average winner but you can see who made the loss and I think with my 10% cut off rule described above, the biggest losers will get weeded out pretty quickly.
I want to start broadening my horizons with the traders profile. Maybe try a few 'high risk' guys and see how they go. So long as I run them through a demo account first, only trade the winners with real $$ and always start small I can look at practically anyone and may find a few nice surprises.
Keep doing what works, stop doing what doesn't.
Your critical feedback is, as ever, very welcome.
yes indeed. same here. demo was working so fine, and the rest of the comments everywhere were so good, so I decided to go live with 500 bucks..........and then i was banging my head on ..........lost it by following the best gurus at that moment in a matter of 10 days ;( the customer support were trying to convinse me that if i put more money my ROI was going to be higher and so on and so on, regardless there are many other good services that can i use that generate me more with the same. anyhow, of course, i am not saying that you might not make money out of it, it goes without saying that you may have, go ahead and post your results afterwards
The following user says Thank You to fxfollower for this post:
I've been trying etoro too but i havent managed to receive any exceptional gains in there , too few gains and then losses and you are at the same level again if not lower... for better gains there is this zulutrade platform which is hosting a lot of traders and you can manually set your exposure unlike etoro when copying them.
The following user says Thank You to silvested for this post:
First of all, Thankyou for your responses.
I've followed up on your leads regarding Zulu and Tradency. The worst first...... I couldn't find a single well performing provider on Tradency! They all lost money. In my opinion EAs (Electronic Advisors or Robots) do not represent a good trading strategy because of their inflexibility. The Markets are an incredibly dynamic and changable place and something that blindly follows rules- even complicated rules- will fall over eventually. Tradency is a collection of EAs that FXCM has bought from software developers, then promote to their clients. They probably represent some of the best available to the public, but they're still rubbish. If you developed an EA that traded profitably, would you sell the rights? I would keep it and use it.
Zulu look to be pretty good (again, in my opinion). I'm running a demo with them and so far the traders I have chosen to follow are doing quite well for me. It's very early days but here's a few drawbacks I can see with Zulu: Their demo accounts only last for a month, then you have to start again. The strategy I intent to take will require two demos running along side my live account, so this won't work for me. They lack depth- they certainly have some quality traders on their books, but nothing like the quality and quantity of Etoro.
For me the winner is still Etoro. I'm running two demos with them because there is a limit of 20 traders that you are allowed to follow, live or demo. So I have 32 of my favourite traders (if you would like names and my method of selection then just ask, but I'm selecting the best and wont bore you with the details right now) and I will run them for a month. At the moment the obvious thing to do would be to put money behind the traders who had the best month, ie: whoever makes the most on my demo accounts will get put on my live account. Once they are live, they can have an open loss (open trades showing a loss) but if they close a loss, or a series of losses of greater than 10% of their account size then I will put them back on the demo account. My reasoning is this: Looking back at peoples past performance, it seems clear that we ganerally operate in streaks. Sports people call it 'hot hands'. If a trader has hot hands, I want them on my account. If they are going through a losing streak, then I can tolerate the first little bit of it, but then I want to just watch them for a while on my demo, get them back when they are more in tune with the market and meanwhile replace them with someone with 'hot hands'.
This means that my live account will be a changing roll of my current maybe ten favourites out of my generally favourite 30 to 40. This is certainly not a 'set it and forget it' strategy. It will be dynamic and will require constant monitoring.
There are still a few details to be sorted out, such as from which point can they lose 10%? I think I will call it on the close of every Friday, that way I have a number that gets updated regularly.
How do I stop myself from becoming reactionary and meddling with the details of the trades? This is really tricky and I think a reason why people fail at this game. Imagine one of your traders making a trade that seems like madness to you. Do you close it? Do you move their stops? Do you move their profit target? Do you send them a nasty message (I hope not!) It is possible with this software to NOT LOOK AT THE OPEN TRADES. This will be my position. I chose these people because they are better traders than me. If I disagree with their trade, it probably says more about me than it does about them.
Ok, well that was half a friggin book.
As always, your responses, criticism, ideas and general feedback are very welcome indeed!