eToro CopyTrader Part II
Copy Trader Part II Fund Management
What happens when I add or remove funds?
What happens when the person I copy adds or removes funds?
What benefit does the pause feature have?
I want to copy someone with their open trades, but worried about trades closing in the red, is there anyway to minimise the risk?
I will be looking for more questions that you might have about the copy trader system for Part III, any suggestions are welcome.
What happens when I add or remove funds?
When you add funds the total equity increases. That means that new trades (and only new trades) will increase in $ value.
Eg. The copy is currently $1000 and you add $500 to the copy.
The person you are copying opens a new trade to the value of 1% of their available funds.
Before you added funds the copied trade would be $10 (1% of $1000)
After you’ve added the funds the copied trade will be to the value of $15 (1% of the new total of $1500)
Over time all the extra funds will be used up as the trades are naturally cycled.
*NOTE, As I recommend my copiers open the copy with 50%-70% of the intended funds with the ‘Open Current Trades’ and then the remainder added to the copy afterwards. This reduces the impact of any trades that are closed in the red while at the same time opens the long standing stock trades. So gets a bit of benefit in the vast majority of circumstances (barring major corrections)
What happens when I remove funds?
Most traders that like to keep their options open don’t invest all the funds that are in their account at any one time. There are always corrections and good BUYs out there.
This from the copiers point of view is money that they can remove, this can have a detrimental effect on the copy as during corrections when the Copied person capitalises on the corrections and can make a great deal of profit, the trades will not be opened with in the copy as there are not enough funds to open them.
**This can have major impacts of the copy! I along with a couple of other traders I know have a split long and short term strategy. The short term trades can be a main source of profit on a day to day basis. Removing these fund can clip the wings of the person who you are copying as there is a snowball effect of the extra profit not being there for new trades and the copy can continue to become more and more distorted!
What happens when the person I copy adds or removes funds?
When they add funds, you get a very brief on screen notification that “willscuba has added xx% of funds, please add $xxx to maintain the copy” this is very brief notification, please pay close attention to every time that you log in for these.
When the person you have copied removed funds from their account, it is then credited to your account in the form of a dividend and you don’t have to do anything for this to happen.
What benefit does the pause feature have?
Everyone has buyers remorse every once in a while, the pause feature is a perfect way to slowly close a copy while waiting for all the trades to click back into the green, or the majority.
When you pause the copy no new trades are opened from that moment onwards, you can then close the green trades and remove more of the funds with-in the copy, however you cant always remove all the funds that are in the copy that aren’t being used.
I want to copy some one with their open trades, but worried about trades closing in the red, is there any way to minimise risk?
Yes there is, as mentioned earlier I prefer my copiers to open the copy with 50%-70% of the intended amount to be copied with and then add the remaining funds just after for new trades.
Eg. You want to copy with $2000.
You open the copy with $1000 selecting to copy open trades.
Then add the remaining $1000 to the copy afterward.
Benefits
Any trades that are closed on the copied account in the red the minus value is effectively divided in two.
Negatives
Any profits from existing trades is also halved.
It will take time to have all the extra funds to be fully cycled through the copy to get them fully used.
It makes comparing different copied accounts more difficult to compare.
Overall, It is purely a damage limitation to play it safe.
As always this is NOT trading advise, merely giving my point of view of what I would like to know before copying someone.
The reason why I write these posts is to give you all an informed decision to the best of my knowledge of the Copy Trader system.
Please leave comments in the section below of any other questions you have or at the various social media profiles of willscuba that can be found on www.willscubatrader.com
