Social Investing for Dummies

Finding the Real G's

This chapter is all about making real money. Before you do this, I sincerely hope that you have been through the last two chapters thoroughly. If you haven’t yet, go on! I will wait for you. If you are a beginner, I would highly recommend starting off with the demo account on your path to finding the real gems in investing. Here, I am talking about copy trading and nothing else. If you are thinking of investing in stocks directly, you can join the waitlist for my next guide.

The Popular Investor Program

eToro has its well-maintained popular investor program on the platform for us to explore, identify and invest. It is like a marketplace where each investor is advertised alongside his/her stats. The algorithm picks up the best performing investors/traders and present them to you. While it is common to fall to the glitz of an investor looking at his/her growth figures, I would highly recommend following the steps below for a calmer mind after you invest.

Deciphering the Stats

It is an easy way to quickly understand where a trader stands compared to the rest. In this section, we do not look at the investment market, instead we look at the numbers. One of the traders I have invested in since November 2020 has shown great results as you can see. The first thing I looked at was the investor’s track record. It is important to see losses being limited during the bear run (when the stocks are falling).

Step 2 is to look at the risk score. I personally prefer investors/traders with a risk score of 3 or below. A risk score of 4 means that there is a possibility of your investment fluctuating over 2.5% in a day. As a relaxed investor, I don’t like seeing my investment lose that much in a day. Below the risk assessment, you can see drawdown values. I pay special attention to this as you can see how much their investments have fallen over a day, a week or a year. Personally I pick traders who don’t go beyond 10% annual drawdowns as it gives me the comfort of knowing that the worst case scenario will be me risking 10% of my investment in return for a growth of 20-40%. 

Spend some fake money to save the real ones

It is very important to use your simulator money on an investor to understand how your money works under his management. To make the most of some investors, you have to copy with amounts of $500 or higher. While some investors mention this on their profile, it is definitely better for you to check out the simulator and see it for yourself!

To find a few good investors, you can check out my profile on eToro. I would highly recommend using the simulator on my investment choices to see if they align with yours.