Most people seem to be having a keen interest in ways to escape salary dependency and want to know how they can make good money online. eToro, the pioneer in social trading online network can claim to be offering one of the few scam-free, transparent and innovative ways that lead to money making, with many of its users managing to generate sums of more than $1500 per month. On this information alone I am sure you are convinced that merits some looking into, but before delve deeper into the eToro phenomenon, let us take a step back and start off by explaining that those who want to escape from the hand to mouth lifestyle, need to find ways to make their money work for them, in a passive manner, that does not require their own time and effort and ideally find a way that these money will be “creating” more money on a 24/7 basis.
Investing in financial instruments, like stocks or bonds, is one such method by which you can put your money to work and make more money for you, however successfully engaging in day-trading and achieving profits requires commitment and attention to a high level which is usually not sustainable in the long run. In this sense, it is not a passive income generation method but one that entails the investor’s own intervention.
Therefore, we need to look elsewhere for a passive income generation method that multiplies one’s savings through investment with minimal intervention. Of course, you can always put your money in a savings account but this yields a very low return, while the other option, which is stocks and mutual funds, is a safer, low risk method, but still brings in very low potential profits of around 5% per annum.
The revolution in trading which made the investment in stocks, bonds, commodities or currencies accessible to anyone who has a computer, through the online retailing of such instruments, opened up an array of new and lucrative opportunities. However, the problem remained that successfully trading these markets still requires experience and knowledge, being able to rightly determine, based on the market conditions, when to buy and when to sell.
Such expertise, knowledge and skill is acquired through experience over the years that enables the experienced traders to be in a position to correctly predict the price movements of assets and thus trade in a profitable manner. And here is where eToro has launched a real revolution that renders this kind of trading an attractive and lucrative alternative for virtually everyone.
eToro, by creating a true and open social investment network, resolves the problem of those average people who do not have the adequate knowledge and experience required to successfully engage with trading in the long term.
Through eToro’s online platform all participating traders can connect in a way similar to their connection in other social networks, such as Facebook, with the difference being that this social investment network is geared for traders and investors alone. Everyone can easily and quickly open an account with eToro and fund it with a small amount to be able to immediately start trading, especially because through eToro;s offering and tools the required learning is made very simple and exceptionally straightforward.
The previously secluded financial markets become truly and entirely accessible to all since the process of buying or selling any financial instrument becomes as easy as one click, through the capability to automatically copy the trades of the best, and most experienced traders around. Even absolute novices can immediately start benefitting from trading without having to undergo months of reading and training on financial issues and market operations.
Thanks to eToro literally anyone can gain an insider’s view on each trade in real time as it placed by others, and consequently capitalize from the collective knowledge, wisdom and experience of expert traders. This development is a real game-changer in the field of online retail trading.
Copying other traders through eToro raises some all important issues, such as knowing which traders we can trust to follow with our money. Trading inherently contains risks and even if you trade on others’ decisions the risks are still there. So, some risk minimizing tips are in order, if your endeavor to achieve passive income generation is to succeed:
-Since eToro allows the copying of several traders at any one time, it is wiser to diversify your portfolio to the maximum and also take the time and due care necessary when selecting which trader to copy, while also remaining vigilant in order to be able to minimize the losses that can occur if a trader performs badly.
-The minimization of risk should be your first priority and you should make all your decisions with this in mind, even if the result is earning smaller profits over a longer period of time instead of going for very high profits, fast.
- Prefer to copy traders with low to medium risk portfolios who also exhibit proven and consistent earning records. Luckily, through the stats and analytics provided by eToro checking an expert trader’s history is indeed very easy.
- By making sure you maintain a highly diversified portfolio of expert traders to be following, you render yourself and your money less vulnerable to the trading performance of each individual trader that you are copying.
In order be able to find the best traders to copy you are urged to use the new search function and its advanced filters. To do so simply click on the ‘People ’ tab in the top menu, which will display the default search screen. From here you can fully customize your search results by filtering and sorting the available expert traders by country, by investment type, by how much they earned etc. Alternatively, you can also use the popular searches feature to study the most usual combinations that other potential copiers have used in order to locate and identify which expert traders to follow and copy.
During your analysis on which “guru” to prospectively copy/follow, bear in mind the following:
1. Trading History: to gain a good insight of a trader’s performance and track record, to determine if they trade well and effectively, if they make profits, avoid losses and evade mistakes and most importantly how they handle risk and if they know how to handle a loss when it occurs, you need to review at least their trading history over the last six months. In general, prefer to choose frequent traders, completing at least 30 trades per month, which is an indication that they take their trading seriously and not as a pastime. Don’t reject a possible trader just because they experience some losing trades every now and then. None can win all the time, and it is much preferable to select a trader that knows how to lose, than those who deliberately leave losing trades open for months to avoid taking a loss.
2. Risk: Be as informed about the risk level taken by each trader before you select them. You can gain such information from their portfolio allocation graph. Your own risk tolerance and appetite is entirely up to you to determine and decide on, keeping in mind that high returns on investment require the taking of higher risk. Be aware that those traders who are making 10% ROI on eToro are probably involved in very high-risk trades and stand to lose a lot if they are unsuccessful.
3. Authenticity: Several million traders are already available for copying on eToro and thus it is important to ensure that those you single out to copy them are real experts and experienced traders and no amateurs. By pressing the button called “Copied Traders” you can see if a trader is placing their own trades or whether they are copying others. Usually, the genuine market and trading experts are those who make their own transactions, based on their own skills and are not copying anyone.
4. Open Trades: As already hinted at above, traders who keep losing trades open for long periods should be avoided, because this is usually an indication of irresponsible trading and a lack of expertise. Since you can view each trader’s active trades at any time, check this information out before you choose, and remember that if one has many current open trades it is fine if they are just a few hours or a few days old.
It may look a bit intimidating at first, but once you get started and get going you will see how easy it is to learn to use the eToro network and that you will become more at ease and wise in selecting the best experts to copy and mimic.
A very positive aspect of eToro is that it gives you a completely free demo/practice account funded with virtual money so that you can practice and learn hands on, before you actually deposit any real money and risk any funds.
Moreover, there are no fees whatsoever for signing up to eToro and its various services. The only thing you will have to pay are small commission amounts on the real trades that you will be making, either manually or through copy trading.
Another beauty of the business model proposed by eToro is that it is based on a win-win logic that is beneficial all around. This is evident in the fact that expert traders get commissions on the number of copiers they get, giving them an extra motive to perform well for their copiers and giving every trader an extra incentive to learn about trading and become an expert trader who will in turn be gaining traders to follow and copy him/her.
Another good think about eToro is that they often run bonus credit offers on all initial deposits, as well as other promotions, meaning that the more you deposit the more you will get either in terms of bonus or in terms of special perks.
Finally, through its dedicated mobile application for both Android and iOS devices, eToro makes it super easy and convenient for all users to monitor and update their portfolio whenever they want, wherever they are.
Once you open your account and have located the experts that you will be copying, there is still some work to be done in a systematic manner, as least during the initial period. More specifically, you will need to be closely monitoring the performance and trading behavior of your selected traders to be able to verify the correctness of your choices and to be able to switch to someone else or making any other changes to your portfolio.
Moreover, by keeping a close eye on what is going on you will train to timely spot a failing transaction and close it before it goes horribly wrong. It is important to be able to timely react to negative trends by un-following a poorly-performing expert.
In online trading and in fact in any type of financial investment, there is a concept that if understood and implemented correctly can work wonders for you. This method is called compounding and it is suited for those traders who are ready and willing not to chase the quicker, lower profits, but instead to keep their patience, leave money in your portfolio and wait for more money to come.
The notion of compounding entails leaving or adding smaller amounts of extra funds for longer periods in the “investment system” and allow it to generate big profits. Let us see an example:
An initial investment sum of $200, yielding a 10% ROI every month, will turn into $60.000 after five years. Impressively though, with the same initial investment and the same ROI level, but with another $200 added to the investment amount every month, will in 5 years turn into a whopping $700,000.
Accompanied by sound investing practices and some patience, resorting to compounding may well lead to massive returns. A good long-term goal then for anyone who sets off to start investing and trading online is to manage to achieve a 10% monthly yield with as little risk involved as possible. It is not the easiest task on earth, but it is completely feasible and attainable.
The underlying argument of this post is to showcase how eToro is giving, through its extensive social trading network, a great opportunity for all to easily learn some new skills and to make a decent profit each month by making very little effort. However, as risk is always involved in online trading, even if it is copy trading, we would discourage anyone who is suddenly thinking of quitting their day job and pouring all their money into this venture.
Therefore, if you are intrigued to join and invest, do not invest more than you can afford to lose and take advantage of the demo account to practice first. Moreover, do start off conservatively to test things out and see how well or badly you do in reality. Only invest more if you feel comfortable and confident and are convinced that you are achieving steady profits.
Your prime consideration should be to avoid losing money and then to top the annual return that you would have been earning if you had opted to leave your money sitting in a bank account. Don’t be carried away by greed and always make sure all your trading is done in a safe, secure, smart and wise manner. Good Luck!
George Milios is the founder of onlineforextrading.net, the binary options and forex news portal which is dedicated to providing you with all the information you need to successfully trade.