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eToro Raises Minimum CopyTrader Amount to $50

With eToro registering 50 million completed transactions at the start of last week, one would think that the broker's blog writers couldn't possibly surprise us with anything bigger. But one would think wrong. As copy trading becomes more and more of a preferred mode of financial investment, eToro embarks on a quest for ways to use the strengths of the community to make OpenBook even more resilient, and its users – even more profitable.

 
One approach the broker will apply in hopes to achieve this is provided by MIT researchers – Dr. Alshuler and Professor Pentland – and is called the sustainable trading mechanism. The mechanism employs the use of copy recommendations or daily tips which facilitate the decision making process and provide Openbook users with the information they need on whose trades it's currently best to mimic. Given that eToro follows through with its original promise, we should see this feature launched sometime in the next few months.
 
Until then, though, here are a few considerable changes in the Copy Trading process that go into effect today, 4 June 2013. First, the minimum CopyTrader amount is now increased from $10 to $50 with a minimum Copied Trade Size of $1, instead of the previous lower 20-cent limit. Any Copy position with an allocated sum below $1 will not be opened at all. What this aims to do, as stated by eToro, is give copiers more investment power and allow them to stake their money on trades that have the potential to bring higher returns.
 
And while many might share this view and would perhaps pat eToro on the back for this move, others are outraged, saying that the 50 dollar minimum per copied trader is a lot and is in fact holding them back rather than making their trading experience easier. Not to mention that a change of this caliber takes some time to sink in and should be announced at least a few weeks before implementation so that users are able to prepare themselves accordingly. eToro, however, did all this very last minute without prior notice.
 
Another major modification is the removal of the 20% restriction for all accounts below $250. This means that if you have $200 dollars, you can now freely allocate it to only two Gurus as long as you wish to. Previously, eToro would have required you to spread out the money between at least five traders.
 
Quite frankly, this last decision hardly makes any sense. The 20-percent ceiling was largely meant to protect the interests of inexperienced copiers with poor money management skills. With it, eToro made sure that users weren't likely to deplete their accounts all too quickly and abandon the network for good. Also, these same forex rookies are the ones who invest the smallest sums, at least initially until they gain some knowledge. So waiving the restrictions for them is pretty much the equivalent of feeding them to the wolves. Further, it's a self-defeating move on part of eToro. If these people blow their money away and give up altogether, the broker's also losing clients that might have otherwise stuck around for much longer.
 
In any case, the changes are here but we'll see whether they'll remain in their current configuration. eToro has always paid great attention to users' feedback and the surge of negative comments that followed might be just about enough for the broker to rectify some of the decisions it's made lately. The good news, though, is that copiers who have positions running from some time back have no reason to worry because the new rules will not affect them. These will apply to trades opened from today onwards.
 
TAGS: etoro  copytrader amount  $50  20% restriction  accounts below $250  forex  broker  trader 

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