I'm looking at eToro and other similar sites (Zulutrade, Tradeo, Ayondo etc) with a view to being a signal provider. As far as I can see, ayondo is the only site serious about attracting good traders. The rest encourage a gambling mentality because gamblers overtrade, resulting in higher revenue.
You will notice that most of the top ranking traders hold up to 30 losing trades in the hope that market will turn their way. In reality they are disasters waiting to happen.
If you are going to play this game, create some guidelines, and only put down real money when the trader ticks all the boxes.
Some suggestions, - Traders should have been profitable for at LEAST 6 months, preferably longer, but 6 months will clear out most poor forex traders, particularly those that don't respect money management. - Avoid high percentage win rates. Gamblers typically will claim 80 to 100% win rate. Anything above 70% is suspicious. - Decide the maximum number of open trades that your account will tolerate. - Max drawdown should be no more than 15%. By the way, if you want a laugh, look at how Zulutrade defines a drawdown. - The average winning trade should be greater than the average losing trade. If not, it indicates the trader holds losing positions hoping for a recovery. - Carefully define your money management guidelines based on your available capital and how much drawdown you can handle. Then check the traders trading history. Most of these cowboys will wipe out a modest account quite quickly. - Consider "paper trading" these traders before putting down real money. - It is important to recognise that you are still trading, even though you are using someone elses signals. So you still need to do all the usual stuff like selecting traders, money management etc. - You can expect to have at least the same psychological challenges that results from "normal" trading. In fact, it may worse, particularly when drawdown occurs.
