Etoro: How to Find and Copy Successful Traders

This is a longer post as I go through my process of investing my money in copy trading. I’ve known about it for a relatively long time but it’s taken me ages to get around to looking into it properly. I’ve found out that hard way that it’s all too easy to make mistakes and I felt the need to do lots of research around the internet before asking someone I’ll never meet to invest on my behalf.

Etoro opening a copy trade on phone

For years I’ve been looking for different investments and trying to make the most of my savings. In the past you could put your cash in a savings account and get some return but in these days of low interest rates even the best savings accounts don’t generally keep pace with inflation. This means that in real terms your savings will decrease in value over time unless you do something more active.

I’ve tried investing in gold, peer to peer lending, stocks & shares, bitcoin & cryptocurrencies. All of these can produce returns with varying amounts of time and energy to manage them and everything comes with a risk of loss. Low risk is often associated with low gain, high risk comes with high reward. Avoiding excessive losses while maximising gain is where you can multiply your savings but it can involve a lot of active effort and emotional stress.

Years ago I found Etoro and as a platform it’s easy to use but you still have to work out what to buy, when to buy, when to sell and how to avoid losses. Since then they have developed the copy trader function which automatically mirrors the trades of successful traders with your money. I have a full time job and I don’t want to spend much time every day managing my investments which makes this seem ideal to me. I haven’t dived straight in though, I’ve done research and this is a strong platform with legitimate regulation and lots of people using it. So nobody is likely to just run off with your money which is what some ‘investment schemes’ have done in the past. I’ve had my own money on the platform for years, mostly invested in cryptocurrencies and Etoro hasn’t let me down or done anything that seems shady.

Having gathered some dollars and decided that copying top traders on Etoro is the best thing to do, which traders should I copy? Which ones will make steady gains while minimising losses? You could go with the ‘Editor’s Choice’ or ‘Most Copied’ etc. and I would suggest looking into those traders to see how well they have done in the stats and what sort of gains and drawdowns they have had in the past. In particular look at the losses and think about if you can cope with those losses as well as the gains. Don’t just think about the gain.

About Drawdown

Etoro jaynemesis
Past performance is not an indication of future results.

Drawdown is the largest drop in an investment’s value from the previous high point during a period of time. Look at the stats of the very popular and respected trader ‘jaynemesis’, scroll down a little and there is a panel with risk score and three drawdown (DD) figures. The daily DD is the most amount lost in one 24 hour period during the last 12 months, weekly DD is the biggest loss in one week during the last 12 months and yearly DD the maximum drop over the last 12 months. It gives a yearly drawdown for him of 12.54%. The yearly DD is the most useful as it indicates how much your investment would have drawn down or lost if you had invested 12 months ago. This is compensated by the gains in the profit section and you can weigh up the gains against the losses.

etoro jaynemesis drawdown
Past performance is not an indication of future results.

If we put the monthly stats available into a spreadsheet we can work out that if you put $1,000 into copying jaynemesis at the end of July 2019, by the end of September this would be worth $892.61, a loss of $107.39 or in other words a drawdown of 10.74%. Losing 10 or 12% of your money isn’t fun but that level of loss can be recovered and you can see that by end of January 2020 you would be back up to $1,113, a profit of $113. So we can cope with a small drawdown, hold on and gain it back and more.

If we click on ‘Show More’ on the stats page we get all the history and it’s important to do this as this can show past drawdowns and gains beyond what Etoro shows initially. Personally I’d like to be able to drill deeper into the data and download it as a spreadsheet but this is what we have and it can still be very useful.

etoro jaynemesis history
Past performance is not an indication of future results.

If we show more of the same trader’s history we can see the actual all time drawdown is about 54%. It all happened in 2018 so it shows in the right hand total gain/loss column. $1,000 invested with this trader on the 1st January 2018 would have been worth $462 by the end of 2018. This can be very upsetting. Having lost so much you then have to gain 116% on £462 to have £1,000 again or in other words more than double your money just to get back to where you started which took about another 18 months after 12 months of losses. This is where a sensible copy stop loss could have saved you from the worst of that.

If you look further back to 2017 there was a huge gain that year before the big loss of 2018. This could however be seen as a streak of luck more than skill followed by overconfidence and poor decisions causing this boom and bust. For this reason I’m not going to invest in this trader.

Filtering The Traders To Narrow The Field

Etoro Copytraders
Past performance is not an indication of future results.

Let’s find some traders with the best performance. First, click on ‘Copy People’, then the first thing I do is change the time frame to ‘Last 2 years’ as consistent good performance over a long time is more important than short term gains and ‘Last 2Y’ is the longest available. Next click on ‘Filter’ and more options become available. The default trader status is verified and we want that as it means the trader has proved their identity. Leave the minimum return at 10% as you can sort results for the best return anyway. Risk score of 1-6 is also fine, the risk score is a measure of volatility or violent ups and downs and also the amount of leverage and other factors that can amplify risk as well as return. You can remove the risk score filter later if you understand what a high risk score means and you’re OK with high risk. Copy AUM I leave blank as that doesn’t work in a way that’s useful to me.

Etoro trader filter

I will go with 500 copiers minimum. Less than that and they are very new or they have been doing badly and losing all their copiers. For example the default copy stop loss is 60%, meaning if a portfolio drop 40% in value the copy is ended automatically, everything is sold and a copier is lost. So click on High and the back arrow not ‘Apply’. If you do click apply you can get back to the filter by clicking ‘Advanced’.

Etoro trader filter

Next is Allocation and I leave that blank. You can use this if you want to find specifically forex, share or crypto traders for example. I don’t mind what’s traded as long as the risk/return is good for me. Active weeks is important as we want someone that’s working to maximise gains and cut losses all the time. I would choose over 50 weeks or even 100 weeks minimum. Higher minimum weeks than that doesn’t seem to work. Then the back arrow to see the next choices.

Etoro trader filter

Next is ‘Profitable Trades’ and you could look for a high minimum here to find the best stock picker but a skilled trader can make good profits with less than 50% profitable trades by managing those trades well, cutting losses quickly and making the most of profitable trades. So leave this blank at first.

Number of trades is how many positions a trader has opened and closed and you want to choose high here, ‘over 50’ or minimum 50 and no maximum. This is another sign of a trader actively managing trades.

Etoro trader filter

Average Position Size is the amount of the portfolio invested in each trade. A lower number indicates a more diversified portfolio. I set no minimum and a 10% maximum as that avoids traders who put too many eggs in one basket.

Now the two drawdown settings. As discussed above, drawdown is an important indicator as that’s where the pain lies. For the Daily Drawdown I set a maximum of 15% and no minimum as I don’t know why you would want to set a minimum drawdown. Drawdown over a longer period is a better indicator, maximum over 3 years being industry standard, so the daily is not that useful but set it anyway as an extra safety. Weekly Drawdown is important and I would set a maximum of 15% with no minimum. It’s also important to not just rely on this and also drill down into a traders history to check the drawdowns there. It’s not that clear how the weekly drawdown is calculated for this filter but it’s still a useful filter.

Etoro weekly drawgown

Country I would leave as ‘Everywhere’ as I don’t mind where someone is from if they can make me money. Then we can click on ‘Apply’. I use the buttons to the top right of the list to choose list view and change the columns to show Profitable months, Number of copiers and Weekly Drawdown. Click the top of the ‘Return’ column to see who got the best results over the last 2 years out of those who fit our set of criteria. We can use the ‘Prof. Months’ column to see who has more consistent monthly returns. More than 65% profitable months is good.

Etoro trader search
Past performance is not an indication of future results.

The top 3 traders on this search result on 19th June 2021 all look great with a high percentage of profitable months, good number of copiers, a weekly drawdown that isn’t too scary and excellent returns over 2 years. This isn’t an annual percentage rate but a return since 24 months ago. In theory if we had invested $1000 with campervans May 2019 we would have £4007.30 in June 2021 and that’s excellent but it’s not without risk. Next we should click the trader’s name to see their whole profile and find out if there is anything we don’t like.

I will look at campervans for example as he seems to be the best. Reading his feed, his communication is good and he gives lots of information about himself including a minimum amount to copy with. Next the stats page and we have a yearly drawdown of 15.81% and also we can see a loss of 27.61% for 2018. These past losses are of some concern and you have to think about if you can accept that sort of loss on your investment and maybe you should invest less with this copytrader to reduce the amount you could also lose. But the returns on other years are great so after that loss followed great rewards. You could have made the losses back and more if you had stuck with it. This is what you have to weigh up, your risk/reward or R/R ratio. We can also look at the portfolio and see if there is anything we don’t like here. Check for a high balance on the bottom right which would indicate that not all of your money would be put to work and this comes with something called ‘Opportunity Cost’ as your money could be making gains instead of doing nothing. Finally the chart tab may be of interest to illustrate performance visually.

Etoro campervans stats
Past performance is not an indication of future results.

I entered the past 36 full months of returns from the stats page, June 2108 to May 2021 into a spreadsheet and did some calculations on that. The results look good if you don’t mind some risk. Annualised return of 60.8% and a max drawdown over the 36 months of 17.61% gives a Calmar Ratio of 3.45 and 3 or higher is considered excellent. Sortino ratio and Sharpe ratio are very good as well. Add this one to a watchlist list of traders you want to copy. I’m investing my own money with this trader but only some of it as I would recommend spreading your funds over at least five of the best traders as this will reduce downside while combining gains.

We can consider the next few traders on our filtered list. The next is IshfaaqPeerally with 379.38% return. If we look into the profile though we find that most of those gains were in one month, 148.36% in January 2021 and it looks like he had some luck with Gamestop shares so without that lucky month the performance is not bad but only average so you might invest hoping to cash in on some future luck but I probably wouldn’t copy him. After that we have Miyoshi who is quite new and currently has copying disabled so we can maybe put this one on our watchlist to look at later and move on. The next one has less than 60% profitable months so we can look past to other traders though the gains reduce as we go down the list looking at each trader in a similar way.

Lower Risk Copytraders Using The Flawed Risk Score System.

If you are looking for low risk which will come with lower return you can click on ‘Advanced’ and filter differently. Specify a high return of 50% which is 22.5% annualised yearly over the two years, increase active weeks to 104, number of trades to over 100 and reduce both drawdowns to max 10%. Sort this list by lowest risk score and we have 3 traders to look at with risk score of 4, low drawdowns and some impressive gains when compared with your average investment.

Etoro trader search
Past performance is not an indication of future results.

Clicking into daniel4653’s portfolio I can see a balance of 32.64% so that will be lowering the risk score and this is a flaw in the Etoro risk score but in his feed he is adding funds so this will be why and we can maybe give a pass for that. In the stats there is also a loss of 40.87% for 2018 but this was his first year and most traders lost money in 2018 so maybe we can forgive that. However for those reasons it’s not looking that low risk so I’m not going to invest at this time.

If we look at tradefx525 the balance is 56.77% so that will heavily skew the risk score as well as the drawdowns. I feel like it should be possible to filter out traders with a high balance like this. The portfolio also has open positions with high leverage which means high risk and also positions in deep loss showing that stop losses are not used well. This is not one for me to copy.

NestorArmstrong has the lowest weekly drawdown here. Portfolio looks good with a 19.18% balance which is some cash on hand but not too much and it won’t have skewed the risk score as much as the others here. Look at the stats and in 2018 where many traders lost money there is a loss of 18.39% which is better than most did that year and apart from that the gains are steady and the losses small. Yearly drawdown shows as 9.97% which also not too bad. Communication is good as well. This a solid lower risk trader to copy and a good addition to a portfolio of traders.

Finding Low Risk Traders By Ignoring The Risk Score

I found that using the Etoro risk score to sort traders just found two with high balances but otherwise bad risk factors and one good trader. It’s a flawed system. Lets try finding lower risk using drawdown. Keep the same filters, but remove the risk score filter. High return of 50% over 2 years, over 500 copiers, 104 active weeks, number of trades over 100 and both drawdowns max 10%. Then click on ‘Weekly DD’ to sort for the lowest drawdown and we see this result:

Etoro copytrader filter results
Past performance is not an indication of future results.

NestorArmstrong we looked at previously and he is a strong trader with low risk and sorting for the lowest weekly drawdown is confirmation of this. Second on the list is Richardstroud with a weekly DD of 4.39%, 86.67% profitable months and 135.69% return over two years which is all great. Click into the profile to find out more. The communication feed and portfolio both look very good with 0% cash in reserve. Stats also look very good with mostly consistent gains, a yearly DD of just 7.33% and just 15.44% loss in 2018 which was a bad year for most traders. With that sort of risk/reward you could do a lot worse. Weekly drawdown is better than risk score to find good low risk traders to copy. Filtering for yearly drawdown would be better and 3 year drawdown better still but that’s not in the Etoro search system at the moment.

Finding The Highest Returns With Moderate Risk

We want to add some higher return with higher risk traders to our selection of traders by accepting slightly higher weekly DD and looking for the best gain over 2 years. Set the filter to over 500 copiers, 104 active weeks, number of trades over 100 and both drawdowns max 15%. Sort them for highest return and we see this result:

Etoro high returns
Past performance is not an indication of future results.

The result differs from the first in that we now have emfasciani at the top with a risk score of 7 but a weekly DD of just 11.78%, good profitable months and an excellent return. In his stats page the yearly drawdown is 11.56%, the loss in 2018 is 48.06% which is quite high but the gains in following years more than make up for that. Check the portfolio for anything we don’t like and make sure communication is good and we could have a trader to copy using a smaller share of your portfolio for potentially great gains and more risk. You can open up to higher drawdowns in your filter such as 20% weekly if you are open to more risk but the drawdowns with those traders could be potentially unacceptable.

Using these searches you can build a list of great traders that suit your style of investing. The next thing is to decide how many to copy and how much to place with each. I won’t go into this too much as this post is already quite long and it could be a subject on it’s own. As you spread your money across more traders, the overall downsides will reduce, improving your R/R ratio. This does depend on how much you’re investing as well. Most of the good traders suggest a minimum copy of $500 or $1000 so if you only have £1000 you might only be able to copy one trader. You might be putting an amount away each month or week and when that reaches another $1000 you could add another copytrader to your portfolio. If you have a larger initial lump sum a simple approach would be to divide that equally between five or more traders.

Etoro copy campervans James Campion
Past performance is not an indication of future results.

Having decided to invest and having put your money into Etoro it’s as simple as clicking on the copy button, setting how much and the copy stop loss and clicking copy at the bottom. Where to place stop loss is also a whole topic worthy of it’s own page but a simple approach is to use the weekly or yearly drawdown as a guide. In the case of campervans he has a yearly drawdown of 15.81% and weekly 12.62% so we allow a bit more than that and in this case I set 80% which allows for 20% drawdown. If the stop loss is hit every trade I’m copying with that trader will be automatically closed or sold. We hope to choose good people who won’t let that happen though. Ideally all copytraders should never have large drawdowns but a stop loss is a good safety net.

I hope this post will help you to find a good return on your investment and build everyone a better financial future. Here is a link to etoro for you to use:

https://med.etoro.com/B13974_A77970_TClick.aspx

If you make a new account from that link, fund it and start copying traders I will get a small reward as thanks for writing this page. A win/win for both of us!

Have you found a good trader to copy yet?

Sources:

https://www.etoro.com/news-and-analysis/trading/weekly-drawdown-explained/

https://www.etoro.com/news-and-analysis/etoro-updates/new-user-stats-page/

https://www.investopedia.com/terms/s/sharperatio.asp#formula-and-calculation-of-sharpe-ratio

https://www.investopedia.com/terms/s/sortinoratio.asp

https://investexcel.net/calmar-ratio/

Other blogs on investing:

https://forcashheaven.com/2021/03/28/etoro/

https://squawktraders.wordpress.com/why-mastering-forex-is-so-difficult-for-most-people/

Disclamer: It’s important to know about the risks before going to Etoro.

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.