eToro - risk management

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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 trader.

The following restrictions apply:

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

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

You also have the option to copy all of a trader'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 trader'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 traders 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 traders' 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 trader 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.

In short, eToro tries to simplify the management of your account and risk. By limiting the amount that you can allocate to each trader (20%), eToro immediately limits the maximum loss you can incur (by following a trader) to 20% of your capital. The trader 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 trader 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.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% 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.

Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.

Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.

Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.