eToro User Experience

This is when you may find our platform’s selection of key articles on trading strategies, tools and other basics useful with plenty available well-explained educational material. Learning and understanding the underlying processes involved in trading is vital even if you decide to just copy a trader rather than combine a portfolio yourself to avoid capital losses and generate returns.

Trading tools

There are many tools available on the platform to facilitate opening new positions and completing trades. These include the instruments needed for both technical and fundamental analysis, as well as the addition of social interaction and feedback on the platform to stay updated on market trends and innovations. There is a lot of historical data available for each asset as well the related charts and graphs. You can take both short and long positions on the platform, use leverage and schedule trades. Currently there is no time-schedules trading available and the option is limited to scheduling based on price.

Stop Loss

Stop Loss value is necessary for every position on the platform to restrict the maximum amount of losses for the trade and protect traders’ capital. You can choose various levels of Stop Loss of your preferences. Additionally, eToro has actually adjusted its stop-loss tool by introducing a new feature of trailing stop loss, which links the value of stop loss to the price level of the asset to allow a co-movement between SL and favorable price changes.

As a note of caution for trading indices, if a position was opened during the actual trading hours with a value for a SL applied and there were price movements after the market closed around the values of Stop Loss, your position can be affected accordingly and that is something each trader needst to consider.

Changing the order

In case you decide to alter the details of your order somehow, for example if the market is moving in a favorable direction and you wish to increse order size, you need to open additional/ new orders and close the old ones if necessary. There is no option to amend your initial order that was not yet executed and this could be a great potential addition on the platform.

Beware however, that there is no default leverage value when you open a new trade so you need to make sure to adjust it when opening a position. There is likewise no way to implement default trader preferences when opening new trades.

Trading Statistics

There are several statistics available for traders when they are choosing who to copy on the platform, such as the profit to loss values, maximum drawdown etc.  Risk rating is one of the most widely used one, however the components that make up this indicator are however not explained by the platform and it is said to be determined by an elaborate formula based on leverage and trader’s past performance that was developed by the team.

Popular Investor

Being able to copy another trader is a heavily advertized innovative feature on the platform. However, there are still several shortcomings one should be aware of. Although any trader can observe the portfolio composition of their Popular Investor when they decide on whom to copy, the chosen investor might make several unfavorable alterations that may slip out of your attention unless you are constantly monitoring. For instance, they may invest heavily into one of their chosen assets (such as a trending company or a commodity) and overexpose themselves to its risks, as there is no limit as to the proportion of the total investment allocated to a single asset. This could result in overexposure to market specific risks and result in great losses in case of an unfavorable changes or volatility.

A note of caution on risk assessment

Although there are time periods for each tier that each Popular Investor has to abide by, there is no probation period as such which would allow to see how well that trader is doing. Furthermore, the trading history is actually not taken into account when a trader wants to become a Popular Investor. Taking trading history into consideration may assist in minimizing risks for the copiers while this is not yet done on the platform. Each Popular Investor has to spend at least 2 or 4 month in each tier before getting promoted, and although this seems to be a relatively sufficient period of time one’s successful performance over this time period may just coincide with a favorable market movement rather than a well determined strategy. Thus someone who has just joined the platform can theorerically spend only as little as 6 month trading and be already promoted to the level of Elite, given they satisfy the criteria.

Furthermore, there is actually no treshold for the maximum proportion of portfolio a Popular Investor is allowed to loose over a certain time period. Currently a Popular Investor is allowed to undergo large losses as long as they still comprise to the risk regulations and other requirements, while there are no limitations to the maximum value of a portfolio drawdown (total loss).

Getting promoted as a Popular Investor on the platform can be greatly beneficial but seems to be releatively hard to achieve. It appears that a selection of well performing investors is being constantly featured and there seems to be no restriction as to the period of time this happens.

Finally, every Popular Investor gets a chance to see how their Copiers are doing by viewing their history; that is however limited to a time period of 12 months and no longer term overview is available.

What happens if the Popular Investor you are copying has been suspended?

The explanation as to what happens after is fairly limited on eToro. Popular Investors can be suspended from the program in case they breach the regulations of the terms and conditions, for example surpass the permitted risk level. When this happens, traders are not allowed to execute trades or be followed by new copiers as their account is essentially frozen for a certain time period.

The existing copiers’ options after that are very few, as they can either choose to wait in case the Popular Investor will be approved back into the program or end the copying at that point.

Copying based on originally invested amount

Once you decide to copy a trader, the amount of your total investment will be split in proportion to the original % of the Popular Investor. In case one of the positions of a trader is highly successful its value may be higher than the originally invested proportion.

The trader above for example, invested 15.87% of their portfolio into GOOG stock and it now generated a higher value of 20.33% with 39.05% profit. If you decide to copy this portfolio you will be replicating the initial 15.87% investment and not the actual value amount. In case the trader decides to close this trade and this value amount of 20.33% will be converted into a cash amount to be added into their account while the cash converted amount into your account is equivalent only to the original invested amount of 15.87%, which is lower than the desirable amount.

Notifications

eToro offers several options with regards to notification policy. The email notifications are limited to news regarding social activity, such as if someone begins to follow or copy you and marketing updates. There are multiple browser push notifications directly related to the trading process, including reaching the chosen Take Profit level, volatility alerts, balance withdrawal information and so on. All of these can be adjusted under the settings sections on your interface.

Currently there is no option for notifications upon setting up of an order or its execution, as well as for logging in into your account.

Dividend Policy

Currently eToro pays out any dividends that you might receive on your positions (if you are trading assets like stocks, indices or ETFs) and your trading account (total equity available) will be debited or credited depending on whether you are holding a Buy or a Sell position.

However, the platform doesn’t provide any dividends re-investment program as an available choice for its users that would allow you to automatically use the dividend payouts to purchase more of the assets you have invested into. Furtheremore, the dividend policy with regards to each stock is not presented very clearly. Currently, any dividend payments can be seen under the ‘fees’ section for each asset, however the amount and the time of the payment are not visible. You can see the dividends paid out in your account statement but not for what they have been distributed.