Copy trading forex - February progress

My first month of copy trading forex live has been quite a ride, between trying to second guess my copied traders and some changes in Etoro I can only say that I have learned a lot.

The first thing to take note of is that the way stats is reported has changed.  I will no longer be able to show graphics of weekly stats as it is now  reported as month to date.  As you can see below, my January month was in the red by 10.9% (prior to copy trading), and after starting to copy trade I managed to bank a profit of 11.22% during the month of February.

There was a huge drawdown on the account all thanks to the uncertainty with Greece.  Me, being me I started to manually close some trades and those who left them alone have banked double the % on interest.  Well, that is just a lesson for me to LET THE COPIED TRADER DO HIS WORK while I focus on my other forex account.

So, here we are for my first month of copy trading....11.2% profit/interest.  This is much better than what a bank would give me so, I'LL TAKE IT!!

Till the next update!

Does copy trading work? - My journey begins

It has been weeks since I updated this blog and I started worrying that some may think that I have abandoned this blog completely.  Well! That is not the case, between the holidays and schools opening...one had to juggle and race against time all in one.

The main reason though that I took so long to blog is because I was testing several traders on my demo account, to make sure that they are worth investing on.  I also had to dig deeper to find traders that fit my profile as discussed on my previous post titled: How to do copy trading successfully

I also do my own trading because my inquisitive mind cannot just sit back while the master traders are having all the fun:)

I have decided to attach my progress chart for this week just so one can see that I am not making up the stats.  I don't believe in flaunting statements on my blog as I believe that one's earnings are their private business....it is good that Etoro  allows me to just show the percentage earnings instead.

So far I have found two popular investors (master traders) that fit my copying criteria..however I chose to go with Investor A (this is how I will call him from hereon) purely because his trading fits my objectives (Intra-day trader)

As you can see, my investment with him has earned me 3,6% for this week.  The figure could have been much higher (actually his copiers achieved 3 times this percentage), however, being the anxious person that I can be sometimes I decided to manually close the trades as soon as I saw decent profits.

This has short changed me somehow so my next goal is to work on my trust issues and let the investor do his own thing while I'm busy trading on my other account.

On the other hand this is a strong point because one can manually manage their  copied trades, you can change your stop losses and take profit levels, close the trade anytime you want to etc.

That is all for this week...I will blog again to keep you updated on how this venture is going.

Start copy trading today and also contact me for a list of my best performing traders!

How to do copy trading successfully

As promised in my previous post, today I'll be talking more about Etoro's social trading platform, as well as how I select master traders to copy.

I may need to remind you that like all investments, FOREX has its fair share of risks (as well as rewards). Copy trading does not necessarily mean that you will not have losses, but when done right it does give you a fair shot at reaping the same rewards that the master traders benefit from.

Etoro's social trading platform is called Openbook. To simplify things, Etoro's openbook has an almost similar platform to that of Facebook. You get to interact with other traders, like, comment and share other's status. What I also love about Openbook is that you get to see the trades done by other traders, drill down further to a trader and study his gains/losses, overall trading history, the level of risk he/she takes and even copy their trades.

This brings me to copy trading......

Copy trading has been a messiah for most traders, especially those who are not confident enough to venture into forex trading on their own. It does have its ugly side though if you do not select the right traders to copy.

As a new trader, you want to make sure that you want to follow a trader who actually knows what they are doing, and share a similar risk appetite to yours.

This brings me to the criteria I use to select traders to follow as well as point out some pitfalls that new copy traders fall into:

1. Trading History

You want to know that the trader you are about to copy has been doing FOREX trading for a while (at least for a year), while showing a steady uptrend on gains. Pay particular focus to the last 6 months of the trader's history. There is no harm if a trader has some losses but shows massive improvements along the way.

2. Risk breakdown

As a new trader, you do not want to copy a trader with high leveraged trades. Such mistakes could blow your FOREX account's bank balance. Etoro classifies the risk breakdown of a trader as LOW, MEDIUM AND HIGH. I'd recommend that you only copy a trader who does low-risk trades only, but that is not always possible. Decide on the amount of risk you want to take. I personally do not copy a trader with less than 80% of low-risk trades. I can only tolerate no more than 5% of high-risk trades.

THIS IS THE POINT WHERE MOST COPY TRADERS LOSE THEIR MONEY.

3. Copiers

Always check a trader's portfolio for “copied trades”. You are doing this because you want to copy traders who are experts in trading, and not those who simply copy others like you'll be doing. I've seen some copy traders deciding to rather copy whoever introduced them to the platform, so that they won't have to go through qualifying traders by themselves. I have mixed feelings about this approach.

4. Open trades

Always lookout for a trader's open trades. I personally do not copy a trader with open trades older than a week. This can mean that the trader opened a position hoping for a particular outcome, however the markets decided to go a different direction. The trader keeps the position open with the hopes that eventually he will be in profit. This sounds like gambling to me.

5. Recent results

Over and above the trading history of the trader, do make a point of studying a trader's recent trades, as well as the frequency of his trades. When you copy a trader, you allocate a certain amount to him/her. If the trader is not active, your allocated amount will be sitting dormant. A trader must do no less than 3 trades a week.

6. Openbook wall

I also study a trader's wall because I want to see how/if he does interact with his copiers and followers, whether he has any concern for them and whether they do explain their strategies and decision making process as well as advise their followers

It is not difficult at all to find traders who fit the above criteria. Etoro provides tools for analysing the traders and their activities. Copy trading is not a get rich quick scheme. You must review the traders at least once a week, hire and fire as you see fit and you must always lookout for new traders to copy. Never make the mistake of allocating all your balance to one trader.

MOST IMPORTANTLY... you do not need to use your own money to test out the traders you have chosen. You can choose to copy a trader using virtual money allocated to your DEMO trading account.

1. Join Etoro for free
2. Contact me should you need assistance with selecting traders to copy as well as setting up your Etoro account.

Copy Trading...the journey begins

Forex trading is something I've always wanted to do ever since I knew about its existence.  Economics has always been my favorite subject both at school and at varsity.  I cannot think of any discipline or career where your favorite school subject comes out alive!

Before I write much on this blog, I'll give you a brief background on my experience with FOREX...

I've been DEMO trading with ETORO for the last two and a half years.  It may sound like a long time for some, but immersing myself on this platfrom means I know it in and out and have become quite comfortable with it.

The last thing one needs is to be eluded by the platform, over and above having to understand FOREX itself.

There are two things that I've been trying to master on ETORO:

1.  Trading by myself
2.  Copying the master traders

I got relative success in trading by myself but decided to copy the "gurus" instead.

This is due to my personality.  The anxiety that comes with an open trade is  too much for me.  I also realised that I'd take profits too early in the trade (anxiety). I'd successfully close a position at 5% profit, and most of the times the charts would prove that I'd taken it too early (could have made as high as 25% in some cases).

Copying the master traders means that I do not need to worry about my open positions as they are almost literally at the hands of the master traders. When they open a trade, my Etoro account does the same, when they close, my account does the same.

Copy trading is not a magic pill or portion though and involves work.  You need to investigate and analyse traders before you copy them.  You may have seen some horror stories online of newbie traders who've blown their accounts because they followed a high-risk trader with a shady trading record.

The good news is that Etoro has all the tools needed to help you in your decision making process. On top of that, you get a DEMO account that you can use to copy these traders.  This way, you get to know whether they are worth copying before you commit to your own money.

My next post will talk more about the Etoro platform, as well as how to choose the best traders for copying!

In between, I'll share my own progress on my copied trades. So far, all is still going well!!