How Not To Invest: Six Lessons From eToro’s Top Traders

How Not To Invest: Six Lessons From eToro’s Top Traders

over 3 years ago2 mins

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Four of the best-performing individual investors on one top stock-trading platform this week shared six lessons they’ve learned about what not to do – and even seasoned Finimizers may want to pay attention ⚠️

What does this mean?

The UK’s eToro is an online investment platform with a difference: users can see how others’ portfolios are performing. And four of its most successful amateur investors this year – sitting on returns from 20% to 60% in 2020 so far – also shared their secrets to failure this week.

One, an Oxford data researcher, recommends testing out trading strategies first – perhaps by using a demo account with dummy money. Similarly, a successful entrepreneur who got her fingers burned in tech stocks’ last big drop advises starting small before building things up over time. A former pro gamer and crypto trader who lost more than half his money in 2018, meanwhile, unsurprisingly advocates doing your homework on prospective investments rather than following the hype.

Bitcoin, intriguingly, is currently near its highest price since early 2018...
Bitcoin, intriguingly, is currently near its highest price since early 2018...

Then there’s the expatriate early retiree whose golden rule is never invest money you’ll need in five years to pay for a degree or a home. Investing is a long game, which is why you shouldavoid obsessively tweaking your portfolio**** panicked short-term trades can be a mental as well as a financial drain. And on a related note, it’s important youdon’t jump into complex trades before you’re ready, if at all. (Finimize's Packs on Options and Leverage** can help there 😉)

Why should I care?

Investing most of your stock portfolio in index-tracking funds rather than individual company shares remains probably the best approach for the majority of Finimizers. Still, the buying opportunity represented by markets’ precipitate dip in March – and subsequent recovery to fresh all-time highs – has led to an understandable focus on backing particular winners among small-scale retail investors.

The US S&P 500 is likely to close at a new record this week, having made up all its fall
The US S&P 500 is likely to close at a new record this week, having made up all its fall

Even so, these top traders unanimously recommend also approaching any stockpicking through a long-term lens – as well as agreeing on the need to populate portfolios with at least 30 or so diverse companies whose businesses you understand.

One of eToro’s key attractions is that it allows users to copy others’ trades – meaning you could ape these investors’ successes by checking out top-performing handles like Onegirl orJaynemesis. Just remember the rules outlined above, though – and note that several of these well-heeled amateurs predict big stock market falls to come and are positioning themselves accordingly… 😳

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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