How does the etoro copytrader works via percentages?

Fijal

Hey guys, can anyone here explain to me how copy trader work based on percentages? So if I'm a trader and I'm using let's say $9000 but invests 10% on stock A, 10% in stock B and 80% in stock C. If I use $500, would the same percentages be applied but just based on my stock investments so I would only ever risk the $500 invested and no more? I assume leverage does not apply unless I use it. So when a trader then sells, would my stocks out sell as I am set to copy?

micofav

Fijal If you copy open positions then the allocation of stocks in your copy should closely match the allocation of stocks in the portfolio that you copy.
And your performance going forward should match the person you copy quite closely - but from that point in time.
There is an initial loss because of the spread when you buy.
If you copy when some of the markets where the PI have positions are closed, it takes until those markets are open before you actually buy all the positions.
But your performance should be quite the same as the one you copy, once you have all the same positions. But only your performance from that point in time and going forward.
At least that's how i understand things. I suggest you read more about the eToro copy trading article to understand it better.

faisal

Leverage does apply to the copy. The positions are closed when the trader closes his.

Fijal

faisal Is there a way to copy trader but stop the leverage? Am I correct, if you leverage and stock goes down, you could end up owing etoro?

faisal

Fijal You can always close individual positions. But if you don't like leverage, then only copy traders who don't use it. Usually they write this. I am no expert on leverage, but yeah, I think so.

DeCaf

Copy trading sounds easy, but is very complex. It really only works if you copy the trader for a long time (like years) as your investment is not synced with theirs. For example, a trader buys XYZ at $1 2 years ago, and is now $2 and you copy. Your trade will in XYZ will be the percentage the $1 was to his investment at the time but you buy at $2 up to the same percentage of your invest. OK, it drops to $1.50 and the trader sells, showing a 50% gain but it is a 25% loss for you. You are not copying in sync so trades have completely different outcomes to his.

PS: I copy all my investments but don't expect to copy their returns for at lest a year. It is very frustrating to see your copyee up 20% when you're down 20% copying him (or her). That's what I'm facing at the moment.

faisal

DeCaf I don't find it complex. Percentage is relative and of course you don't copy gains from the past. You make your copy and from then, you get gains. Of course it will take some time before it mirrors the copied investor 1 - 1, as only new trades are copied right away and are identical in your portfolio and the copied one.