eToro - risk management

By clicking on the button to copy a trader, a window appears. You can choose to use this time of real or virtual money and select the amount of money you want to allocate to this guru.

The following restrictions apply:

- You can allocate a maximum of 20% of your capital to 1 guru

- You can copy a maximum of 20 gurus in your account

eToro risk management

You also have the option to copy all of a guru's currently open trades. The default selection copies the open trades with the same parameters (Stop Loss, Take Profit, position size), but you can disable this option.

The trades are always copied to your account in proportion to the funds allocated to the trader, that is to say that if the trader risks 2% of his account on a trade, 2% of your allocation will be risked on this trade. Risk management of your fund allocation is therefore totally dependent on the guru's risk allocation. But in general, you manage risk in your eToro account by allocating a small percentage of your capital on each trader. The gurus manage risk using a stop loss on each trade. When they modify these stops to increase or decrease the risk, these changes are automatically copied to your eToro trading account.

You can track the performance of open positions (either the gurus' or yours) using the WebTrader interface available on the OpenBook social trading network (see image below). The WebTrader trading platform is similar to other forex brokers' commonly available trading platforms, it is available in real or virtual money mode.

For example, when you allocate $1,000 to the trader pyruss, if the platform shows "amount $76.41 of $1,006", this means that currently open trades risk $12.76 of the capital you have allocated to the trader. Net profit and percentage gain are linked to open positions. You can see each position that was opened by the guru and if you wish, you can close the positions from this screen.

Pending orders can be consulted in the "Orders" tab, the "History" tab displays trades that have been completed over the last year.

eToro WebTrader

In short, eToro tries to simplify the management of your account and risk. By limiting the amount that you can allocate to each guru (20%), eToro immediately limits the maximum loss you can incur (by following a trader) to 20% of your capital. The guru manages risk himself in terms of the amount of money you have allocated to him, so it's up to you to assess the level of risk of this trader's strategy by looking at his profile or by testing it in your demo account. You can examine the total performance of each guru that you are following via the WebTrader interface and see his trading history over a one-year period to accurately assess his long-term performance.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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