So I have been using eToro for awhile now and i decided i would like to do an eToro Review 2017 to give my views on it. I would like to post updates every so often so people can follow my progress. I considered signing up to eToro for awhile and read numerous reviews myself. After interest rates in the UK have been so low for awhile now i decided to jump in and give it a go. I work in finance myself and i have been warned that CFD’s can be risky products (CFD’s are the products you invest in on eToro). A friend told me they knew someone who bankrupt themselves and another friend lost about £400 personally on eToro. Still undeterred i decided to give it a go and try to play it safe which i will explain throughout my eToro Review 2017.
Disclaimer: Please note this article contains affiliate links which means I receive a profit if you sign up to eToro and make a deposit over a certain amount. This does not affect my review in anyway and all views expressed below are my own. I have tried to make everything correct at the time of writing but apologise if there are any mistakes. I also accept no responsibility if you do decide to sign up and lose money, anything you do is at your own risk. Please do your own research before investing in financial products especially if there is the potential to lose money.
On signing up, eToro phoned me to discuss what i would like to achieve from the platform. I told them i would like to potentially get a return higher than a bank, which at present in the UK is anything above 0.8% on a good savings account. The guy was very helpful and answered all my questions. He also gave me lots of links to educational material so that i could get to grips with trading, copy trading and the platform itself. He also gave me an incentive to deposit and i told him i would like to play with the virtual account first before i made any commitments. The incentive to deposit was that you would be given differing amounts of free eToro credits depending on how much you deposited. Now please note i use the word “credits”, and i still don’t fully understand this but it is not just free money that they give you otherwise every person would just cash out the free money. The incentive on signing up also had a time limit on which you needed to deposit by for you to get the free credits, so please bare this in mind if you are considering signing up and want to deposit at a later date. When you receive the free credits they also have an expiry date on them, i think mine lasted around 5-6 months. Although, after every trade you close, you receive a proportion of it as real money. The amount you get depends on the products your investing in whether its FX, cryptocurrencies, indices etc and the information is explained fully on the eToro website. Recently these credits expired and from the 300 USD i received originally, only 7 or 8 were converted to real USD afterwards. Was it worth it? Perhaps, as i was able to invest a higher amount into trades so maybe I made more of a profit than i would have with my initial deposit, but don’t expect to receive 300 USD for free easily. Please bare in mind this applied when i signed up in October 2016 and this may have all changed by now.
What is the virtual account?
eToro gives you a virtual account with 100,000 USD to play with. This is not real money and allows you to get used to the system and trading in general. For awhile i have looked at companies and thought they would be great to hold stocks or shares in, so straight away i went for these. I quickly learned that what i thought was a good company had no indication of how they would fair on the markets.
I also played around with the copy trader logic which allows you to find someone who (hopefully) knows what they are doing and whatever they invest in, you will also invest in the same trades with a direct correlation of your invested balance into that user. The virtual account is a great way to see who is potentially a good trader before using real money but obviously you can only really tell this over time and past performance is not an indication of future results but eToro gives you lots of stats to view about people. I quickly lost quite a bit of money on the virtual account which in some respects was good because it taught me a few lessons and hopefully i would not make the same mistakes when it came to depositing real money.
Depositing real money in my eToro Review 2017
So i think in the end i deposited about 1,000 USD which translated to about £830 ish at the time. Unfortunately you cannot trade in GBP but eToro actually gives you a pretty decent FX rate on any money you do deposit. But this is definitely a factor to consider when cashing out. I deposited at a pretty bad time soon after Brexit so the amount of USD i got for my GBP was lower than its ever been. One thing to consider is that if the markets go the other way and the GBP was to strengthen (which at the time of writing it currently is) then this would mean that my money is worth less when i come to cash out. To keep a track of this i have created my own spreadsheet of my deposits in GBP and its current value in USD converted back to GBP as eToro does not seem to do this, or if they do i am not aware. (eToro if your reading this, then this would be a very helpful report, it would be even more helpful if you let me keep my money in GBP). If people would like this spreadsheet to use themselves i may even give it as a download at a later date or if i get time then i may develop a real application for this. Now i would highly recommend you do not deposit your life savings. Only deposit what you are happy to lose. You will see warnings all over eToro stating:
“Past performance is not an indication of future results. Also, leveraged products can carry a high degree of risk. eToro offers protective measures to manage risk effectively, but in rare occasions it is possible to lose more money than invested.”
After all the warnings i decided that 1,000 USD was a reasonable amount to start with and even though it is a lot of money, i hoped that i would not lose it all in my eToro Review 2017. Although the longer i have been doing this i would actually recommend depositing a little bit more which i have done over time. This is due to overnight fees and i will go into this later on.
My Strategy in my eToro Review 2017
As i explained earlier, i was aiming to get a return better than the banks so the plan wasn’t to get 100% profit in a year. Some people do this, but others also lose 100% in a year which i would be pretty gutted if i did so I’d be very happy with 5-10%. Every person is assigned a risk score which is decided by how dangerously they trade and anyone with a risk score higher than 7 cannot be copied. So a lower risk score with a higher return was generally what i was looking for.
There are a number of ways i stumble across traders that i copy and i will try to explain my criteria i look for below. As i mentioned earlier, when i find someone i like i will place them on my virtual account so they are on my radar for awhile before copying with my real account.
Filters and my preferences for copy trading in my eToro Review 2017
When you click on “Copy people” in the menu then you are given the option to filter your search results in the “Advanced Search” and below is generally what i do when searching for people to copy. Please note the headings are filterable but not all of the below information is filterable and some are things i just review in the stats page. My understanding may not be 100% correct and i do apologise if anything is wrong so please verify with your own research. If you do see anything wrong then please let me know in the comments. Also please note i am definitely not an expert trader but this is what i use and have used in my eToro review 2017:
- Time Period: Last 12 months. I would rather my filter is applicable to how someone is currently trading. Someone could have been amazing at the start, but gone off the rails, so i would rather go for a current view. I also like to see that they have been on the system for potentially 2 years or longer so i can get a grasp of the way they trade. If i see any big red percentages which is out of the ordinary and not at a time where there is volatility in the market then i will avoid. I especially avoid those who have lost anywhere over 40-50% of their balance in one month as it screams that someone was potentially reckless and possibly trying to recover losses. I will sometimes make an exception with time frames here and allow a trader who has only been on eToro for one year if i read on their profile blurb that they are qualified in trading and have been trading for awhile (probably not the safest but oh well).
- Status: I would rather someone was “Verified” as it at least gives them some legitimacy to the person because they will have had to supply some proof of identity.
- Country: I am not fussed where a person is from. They either know what they are doing or they don’t.
- Name & Picture: I am not fussed about this because a picture could be of anything.
- Copiers: Again, i’m not fussed about this as i’m doing my own research. If you want to jump in and find people quickly then perhaps filtering by people that are copied by a Medium or High amount of people then it maybe a good starting point
- Copiers change: I can’t confirm exactly what this does as i’ve read differing things but in general its whether a person is going up or down. Either way i don’t normally touch this because i am doing my own research.
- Copy AUM: This relates to how much other copiers have invested in this trader. Again this doesn’t really make a difference to me as i’m doing my own research. One trader could have 1 user copying him with $1,000,000 which doesn’t really mean anything other than 1 person puts trust in the trader.
- Return: This is a key filter and its where you specify how much you would like a user to return in profit. I would normally set this to 10% minimum with no maximum bound. I also believe this is affected by the time period originally specified. Therefore if you want 10% per year you may need to put 20% in here if your searching over a period of 2 years.
- Profitable months: Now every trader will have a bad month and you have to accept that not all months will your copied traders make a profit but saying that if a person has a few bad months in a row i will look elsewhere to find someone who is potentially performing better. I normally like to see someone making a profit for 8 or 9 months of the year so ill normally set the minimum to 65-75% and with no maximum.
- Profitable Trades: This is another factor i tend to not use. Firstly some people tend to keep open trades which are not doing well in the hope they may go back up, so when inspecting users it is definitely worth looking at their losing trades in their portfolio and how bad the trade is at a loss and how long its been open. Also for example, someone may close out trades very quickly if they start going losing money because they have a quick stop loss so as a result overall they may have a lot of unprofitable trades but at the other end of the spectrum they may leave 1 profitable trade open for ages so its not about the number of profitable trades but more about the overall profit. If you really want to put a minimum on here then feel free but its something i don’t bother with.
- Risk Score: As explained above i normally stick to people with a risk score up to the 5 maximum but in the odd occasion i will go a little bit higher. I tend to not put in a minimum risk score because as unlikely as it maybe you may exclude someone with a risk score of 1 who is making a very large profit.
- Daily Drawdown: Drawdown is the maximum amount a trader lost of their overall account balance in a day. Therefore a high daily drawdown can show a trader who is a risk taker whether it be through leverage or not diversifying their portfolio enough therefore i will try and set it at 10% max.
- Weekly drawdown: This is the same as above but over the period of a week. Again losing a large portion of your balance over a short period of time shows a risk taker but as its over the period of a week i I will normally try to look for a max of 15%.
- Allocation: I am pretty open to a person trading anything in the form of currencies, commodities, indices, stocks or ETFS but if they are copying people then they aren’t trading themselves. Even if the person i am copying knows what they are doing, when they copy someone else then i will also and the person they have copied will not be selected to my criteria so i will filter out those that copy others by setting the Copied Trades to 0%.
- Average Trade Size:This is a key factor in that it shows how much a trader will risk on average in one trade. I’ll generally put this to a max of 10% as i would prefer that a person i am copying is looking to diversify their portfolio and not put all their eggs in one basket.
- Exposure: This is how much of the traders balance they have invested over a period and I’m not personally fussed about this. I will generally invest 100% of my balance at once because If its just sitting there then its not earning anything but i appreciate this differs as i am only copying others and the traders are investing in the trades themselves. Feel free to set this if you like.
- Active Weeks: This is how often a person is active over a time period. Whether or not the active weeks is down to the user logging on and checking there trades or whether it is based on actual trading i’m not 100%. If anyone knows can you please leave me a comment but i would prefer this to be higher as it shows the user is keeping an eye on eToro and potentially monitoring their trades.
- Trades: This figure indicates the number of trades performed in a selected time frame. I’m happy to leave this blank. Sometimes traders will stay out of the markets if volatility is high and i would prefer someone plays it safe rather than aiming to trade all the time.
In my eToro Review 2017 i would recommend to copy at least 10 people and divide your investment up among them so then your not “putting all your eggs in one basket”. This way if one person goes off the rails or isn’t as good as you expected then it should help to minimise the risk. I’m currently copying 12 people, of which 1 of them is at a loss. I previously had 3 at a loss, of which 2 i have closed out as they had a few months of successive losses. I am quite confident the current person who i am copying that is at a loss should recover but we shall see over time.
If you are following my eToro Review 2017 then another way to find good investors is through the CopyFunds. eToro have introduced CopyFunds where i think some are managed algorithmically and others are managed by their team. Some of these CopyFunds are basically a collection of traders that are doing well under different criteria and i would recommend a quick browse every now and then but again apply your own sense check against them and verify whether they are right for you. If i’m being honest, when i review these i would say 80% of people do not hold up to the criteria i like to see but you may find the odd person here.
UPDATE (2017-07-22): I have since invested in a CopyFund and have done an eToro CopyFund Review.
One other thing i would recommend in my eToro Review 2017 is that you analyse the assets people are holding and try to make sure they are diverse. Sometimes when there is instability in the currency markets people will look to safe havens like Gold or alternatives like cryptocurrencies. Therefore if one kind of assets takes a fall hopefully you should be protected by some of the others.
As mentioned previously in my eToro Review 2017, i would now consider starting with more than 1000$ if you plan to follow the above due to fees. I don’t know the exact fee amounts or calculations eToro applies but i’m pretty sure when i started that some of my returns were less than the fees. Now i’m not 100% so i apologise if this is incorrect but eToro charges you to keep certain trades open over night and so when your investment is small this didn’t always work in my favour. I believe eToro has also changed the way they calculate fees so this may no longer be the case and i would recommend you to review this yourself. For example, if you have $100 invested in 10 different people (100$ is the minimum amount to copy someone with) then they will be placing trades as a portion of the 100$. The portioned trade created through copying may place a trade for $5 and your profit could only be pennies when the person your copying decides to close the trade and this profit could be less than the fees incurred.
My Returns in my eToro Review 2017
In only my 9th month of trading i’ve been pretty successful in my eToro Review 2017. I have exceeded my aim and my profit to date is 17.99% of which 2.84% was in the last day and 5.23% in June alone.
You can see in the screenshot below that the majority of this was due to two months (May and June) where Crypotocurrencies have soared. The months prior to that i was making between 0.65 and 2.02% so on average without the cryptocurrencies i would still expect my year average to be around the 5-10% mark if not higher if it carried on at that rate.
Its not all been great though… When i first joined my first few months led me to being down by 2.47% at the end of 2016 but i had faith as there was a lot of things in the news that were causing disruption at the time like the US elections and a referendum in Italy among other things. If you want to trade then i highly recommend you keep up with the news as this will give you an indication of when their is volatility in the market. eToro will also send you a daily email giving you an overview of some of the greater risks coming up and they also put in leverage stops every now and then to save you against potential volatility in the market.
The 17.99% figure sounds great, but going back to what i mentioned earlier i will always be affected by the USD to GBP FX rate when i come to cash out. So when comparing my original investment in GBP against my current value in USD converted to GBP it looks like i have made a profit of 14.07% which is still amazing and better than the banks but it shows how dependent your profit is against fluctuations in the USD to GBP rate. This is due to my original investment being made at a time when the GBP to USD rate was about 1.2163 and it has now recovered to around the 1.29 mark. Now i spoke to eToro on the phone about this the other week and they stated that i am not the only person who has raised this and i was going to be added to a list of people who would like to see investments in GBP. Whether or not this happens in the future, we will see.
Another great thing i must mention in my eToro Review 2017 is about compound interest. Basically when you are copying someone and each time you earn profit on a trade then that profit is reinvested. For example if you are copying a trader and as a result of copy trading you place a trade for $100 which earns $10 profit. Next time a trade is placed for $110 on which you earn another 10% which would be $11 so now your balance is $121 and so on etc etc.
Conclusion of my eToro review 2017
Wow what a long article! This is by far the longest article i have ever written so i hope you enjoy my my eToro review 2017. In conclusion, it seems that i have currently beaten the interest rates of the bank considerably but at the same time i am still slightly hesitant to put all my life savings in here especially when using the copy trading functionality and putting my trust in other users. I have been considering investing in the CopyFunds products as these have had some pretty decent returns recently and the specific Gaming one i was looking at is based on a 1x leverage. Now the minimum investment for these is 5000 USD which is quite a jump from my original investment and you could still lose it all but because of the 1x leverage i would never lose more than i invested and as the CopyFund itself is diversified i can’t see all 10 companies going down at once.
If you have invested in eToro or are debating investing at present or even know any good people to copy or a different criteria for filtering, i would love to here from you so please comment below and let me know what you think about eToro or my eToro review 2017. If you are thinking of signing up then sign up here. I hope all of the above information in my eToro Review 2017 is correct and if there are mistakes then please let me know and i will update this article. I will also try to do an update again in the near future.
Updates to this article:
2017-07-12: I have been informed that unfortunately eToro do not offer any deposit bonuses or eToro credits anymore due to new regulations requirements.
2017-07-22: I have since invested in a CopyFund and have done an eToro CopyFund Review.