Have you already heard of the social trading platform from eToro? If not, read on. The Copytrader from eToro is a revolution in the area online FX trading. It is very simple, yet very effective. Basically, you can follow traders with one single mouse click and then have Copytrader automatically copy the trades of these people. This means that you can earn money with Forex trading while sleeping if you chose successful traders.
So How Exactly Does eToro Copytrader Work?
First of all, you need an account at eToro. But you don’t have to deposit real money. You can also just open a free demo account and use it to gain some experiences with this automated trading tool. Once you are logged into your account, go to the eToro Openbook. There you will see what other traders are currently trading. Click on “rankings” to see the best-performing traders during the last week, month of quarter. Here you will have to spend some time on identifying the really successful traders. Many traders were just lucky. We suggest that you follow people who have proven in the past that they were able to earn money under different market conditions. And rather select people who made small, but steady profits instead of choosing a lucky gambler how doesn’t really understand what FX trading means.
Once you have chosen a trader (you can copy up to ten different persons), just click on “Copytrader” and allocate a certain amount of your balance to that person. If the trader now opens a position, you will instantly open the same position. This is done automatically, you don’t have to sit in front of your computer and you don’t have to do anything. That position will be closed as soon as the followed trader sells its currency pair. Of course, you can always chose to un-follow a trader and close the positions manually.
The size of the order is proportional to the funds that you allocate to a certain trader. For example, you invest 500$ to follow a person. If that person has 2,000$ and buys EURUSD for 400$ (20%), then eToro will automatically invest 100$ from your 500$ into the same currency pair.
Implications of Copytrader on FX Trading
This new tool from eToro changes the world of FX trading. Never before was the foreign exchange market that transparent. You can become part of this trading club by joining eToro.
While Openbook and Copytrader are anonymous, you can interact using your username with other traders similar to Facebook. This means that you can post comments on the pages from other traders and discuss their strategies with them.
Also other FX brokers believe in the future of this innovation. For example Instaforex has announced in early 2012 a tool named “ForexCopy”, which is very similar to Copytrader from eToro. The main difference is that it allows successful traders to earn more money. The can chose between three options on how copiers have to pay to them for duplicating their trading strategies and actions. These options are 1) fixed commission per day, 2) commission per copied trade and 3) a model based on revenue share. So each trader who is followed by people using ForexCopy on his positions starts earning more money.
It is yet too early draw conclusions on how the FX trading market will change due to these innovations. But with social trading just gaining traction, the Forex exchange market might be quite different in five years than it is now.
You can be an early adopter without having to risk your money. Just open a free demo account at eToro and have a closer look at Copytrader now.
Forex Broker Reviews
When you want to find the right forex broker you have to pay attention to lots of things and compare a lot of different brokers before you commit and make a deposit. Even though you can withdraw your money again, it’s just painful and expensive (both in terms of time and money) when you pick the wrong broker. There are a lot of factors that make you think that quitting is the only option you have. First of all it’s the trading platform. It’s very important that you will get used to it quickly and it offers everything you need. This is not the case for every platform out there. And that’s the reason why so many traders stick to Metatrader although it’s not perfect. But they are already used to it and know how to deal with it. So it makes it very easy to switch brokers without the need of working on a new and unknown platform.
In my opinion, a good customer service is also very important but something you can only test in real trading situations. Obviously everybody claims to have the best customer support but the real quality can only be judged when it’s time to act. When you have a serious problem you want to resolve quickly. Then you will find out whether a broker offers a good support or not. But the good thing is that when a support is not available in a certain way or language (live chat or your native language you prefer) then you already know that this broker may not be the best option for you – at least support wise.
Spread is another topic but something that can be done easier. You can make a spread comparison pretty easily when you know how. After that you will know if broker x or broker y is better. Some Forex broker reviews will help you in this case and they often list the actual spread of different brokers accurately. But you should always pay attention when the review is written. Chances are that there have been some adjustments and changes after 2 years for example. To sum it up, spreads are very important because they immediately affect your profit. But that does not mean that you should go with the cheapest broker out there. Most of the time, a cheap broker has disadvantages that also impact your trading experience. So you really have to make a solid broker comparison without ignoring other facts than the spread.