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How to invest in the stock,forex market using eToro (past four)

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Monitoring your performance

Click ‘Trading’ to open up your WebTrader and see your open positions.
etoro webtrader
My WebTrader showing Open Trades
If you look at the highlighted Apple stock, you can see that I bought $500 worth 68 days ago, and that I’m currently down 1.1% on this trade, which translates to -$5.49. This is the amount I would lose if I decided to sell these stocks (close my position) right now by clicking on the ‘Close’ button.
As I warned earlier, do not fall into the trap of checking the real-time performance of your trades every hour! This just leads to over-trading which again, is very costly.
I’ve had to develop the discipline to let the markets take their course, and be confident that over the longer term the value of my portfolio will rise (which it has). It’s a strategy that has served me well and means I don’t make rash spontaneous decisions just because a company released some ‘bad’ news and the market overreacted in the short-term.

Advanced trading

Only once you really feel like you know what you’re doing on eToro (ie. been actively trading for a few months) should you even consider trading indices, currencies (forex) and commodities. There is much more risk involved in these markets compared to stocks, so I’m only going to briefly cover these to the extent that you know what you’re doing.

Becoming a ‘Popular Investor’

star burstThis program acts an incentive for users to trade responsibly and be an active part of the community. As soon as you start performing well on eToro you’ll notice other people will start copying you! This is a really rewarding and exciting moment, and leads to another way for you to earn money.
You need just 10 copiers before eToro starts paying you commission every month, starting from $100. As your copiers increase, so will your commission… up to a maximum of $10,000 a month!
etoro popular investor
eToro’s Popular Investor commission levels
I personally have around 150 copiers for which eToro is paying me $300 a month. Once I reach 250 this will be bumped up to $600 and so on, according to the chart above.
etoro payout
My own Popular Investor payouts
It can take some time to build up your copier numbers, but 10 really isn’t that hard to achieve so long as you make consistent solid trades, following my advice in this guide.
It also pays to be active in the community. Posting regular updates, getting involved in discussions and answering other people’s questions all help get your name out there to attract interest.

Understanding (and reducing) the costs

percentageJust like any company, eToro exists to make money from providing a service. Primarily they do this by charging users a small fee on placing or holding positions (clearly outlined on the order windows). The costs of trading here are far less than traditional stockbrokers and fund managers.
Trading stocks has the lowest fees on eToro, which is one reason why I recommend you stick to this market when starting out.
When copying another user you’ll be charged the same fees as they are on trades (which may not always be stocks), so it’s worth checking your WebTrader to see what positions they have opened.

Stocks

eToro summarise their fees for buying stock as follows:
Fee of 0.1% of the execution price or a minimum of 1 cent per transaction.
Simple enough, but a quick example never hurts:
If you buy $200 worth of Apple stock you will pay on eToro: $200 + (200 * 0.001) which is $200 + $0.20 = $200.20. Their fee is just the extra 20 cents.
There are no recurring fees for holding stock positions open, nor are there any fees charged when you sell the stock.
As the fees on trading stocks are already so low and fixed only when buying, the only way you can minimise the costs is by not over-trading and investing for the longer term.

Forex, indicies & commodities

I feel like I should give you a quick overview of the fees for other kinds of trades too. Firstly to reinforce the benefits of sticking to stocks and secondly because people you copy may be opening other kinds of trades which will affect your account too.

Withdrawing

The only other fees you will encounter on eToro are the withdrawal fees if you want to transfer funds out of your account. These are shown in the table below.
etoro withdrawal fees
eToro withdrawal fees
In terms of reducing the cost associated with withdrawing money, it would be most advantageous for you to wait until you have above $500 (say $1,000) and withdraw in one lump sum. You would then only be charged the $25 once.

Recap: Avoiding the common mistakes

 I’ve gone through A LOT over the course of this guide and covered up plenty of pitfalls along the way (high five for making it this far!).

Before we finish up I just wanted to summarise for you the main mistakes in one list:
  • Over-trading – this is a poor strategy for beginners and quickly racks up the fees
  • Allocating more than 25% of your total equity (funds) to one single trader (copy)
  • Blindly copying the most copied traders
  • Copying people with absurd rates of return (what goes up often comes down)
  • Copying people without properly researching their profile and activity
  • Not doing your homework on stocks before investing
  • Allocating more than 10% of your total equity to one of your own trades
  • Using too high a leverage (advanced trading)
  • Trying to close every single trade in the green (don’t chase losses!)

A final word on over-trading

This is a point that I want to expand on a little more, specifically in relation to copying other traders. Below is a screenshot of my equity chart over the past six months. The red line shows the number of people copying me.
etoro copiers chart
My equity vs copiers chart
As you can see, copiers tend to flood in when my total equity (blue line) peaks and leave when my gains fall. To the lay-person it seems like rational behavior, but actually it’s a clear sign of knee-jerk reactions without considering that the overall long-term trend is upward.
Even the best traders in the world will have some fluctuations, but most copiers lose money by copying at the peaks and stop copying shortly after because they’re down a few dollars.
In my case, if these people had stuck with me for the longer term (as I recommend throughout the guide), they would have been much better off!
The same holds true for the stock market in general.
ftse history chart
Long-term growth of UK stock market
Despite short-term market crashes, the trend over the long-term is UP. Why? Because all the companies in any stock market are constantly striving to create VALUE!

Useful resources

You may find the following resources useful on your journey to becoming a successful eToro trader:
Don’t forget to get yourself on my free mailing list for the latest on eToro including special promotional codes for existing users:
Got a question? Please feel free to leave a comment below or drop me a message on eToro (@misterg23).
If you have used this guide and found it helpful, I’d be very grateful if you can share it with your friends :)
Thank you, good luck and happy trading!
smiley_face
Disclaimer: This guide is not a guarantee that you will make profits from trading on eToro.com. There is always the potential for losses when investing or trading and you do so at your own risk. The author and publisher are not liable for any losses or damages you may incur as a result of you following the advice given on this page

How to invest in the stock,forex market using eToro (past three)

 

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