If you start investing $100 at 25 with a 12 per cent annual return, you could retire at 62 with over $1 million. But if you wait 10 years, you’ll only have $300,000 when you turn 62. The point being invest now and thank your future self!
There’s never been a better time to start investing with eToro or any other platform. But if you want to make the most of your eToro investments, you need to avoid common mistakes.
Keep reading to learn about some popular issues and what you should do instead.
1. Fearing Lower Returns
One of the biggest mistakes that new investors make is that they focus too much on potential losses. If you fear losing money when investing with eToro, you may be tempted to pull your investments early.
In some cases, this may be a good decision. However, selling your investments when they’re high isn’t always the right choice.
You should plan for your investments to sit for at least a little while. There’s no single answer for how long to sit on your investments, but the longer you hold it, the more it will have a chance to grow.
At a minimum, you should leave your investments for about two months. If a stock moves quickly, you can then cash in on your investment.
2. Diversifying Too Much or Too Little
When investing with eToro, you should consider how much you diversify your investments. On the one hand, you don’t want to place all of your money into one investment.
If that cryptocurrency has a significant dip, you’ll lose more money. But if you separate your money into a few cryptocurrencies, you will have more security when it comes to dealing with a loss.
For example, if you invest $100 into one currency that loses 10 per cent of its value, you would lose $10. But if you invest $100 evenly between 2 options, you would only lose $5 in the same scenario.
However, you don’t want to invest in too many different cryptocurrencies at first. You should learn a bit about the ones you want to invest in. Consider investing in larger coins, and make sure you research before you invest.
3. Copying the Wrong Investor
One of the most significant benefits of eToro is that you can copy other investors. As a beginner, you probably don’t know where to start when it comes to picking currencies.
Luckily, you can search for popular eToro investors to see how they’re doing. You can also set your account to copy those users.
However, if you aren’t careful, you could wind up copying an unsuccessful investor. When looking to copy someone, consider a few things:
- Have low drawdowns (percentage down at the end of a week)
- Have had losses
- Can help you with investing
You can find investors to copy by looking at popular people. But not all of the popular investors are there for good reasons.
Be sure to research an investor’s history to see if they’re worth copying. Then, you might make a bigger profit than if you copied the most popular person.
4. Trading Too Often
Overtrading is an easy mistake to make when investing with eToro as a beginner. As soon as you make a profit, it can be tempting to cash in on your win.
And if you see another currency that’s relatively cheap, you may want to get in on it before the price goes up.
You also want to avoid trading currencies as soon as you experience a small loss. While the loss may get bigger, it may come back in the next few weeks.
Trading your cryptocurrency too often can make you overthink your investing strategy. Because of this, you should also avoid checking your investments each day.
Check on them each week or so, but try not to worry in the meantime. If you understand how investing with eToro works, you can be confident that your investments will pay off.
5. Focusing on the Short Term
You should also consider when to use eToro and when to let your investments work for you. Whether you trade to often or not, you may want to focus more on the short term.
Doing so can make you narrow in on any profit or loss that your investments experience. While this may be okay for some currencies, it’s not a viable investing method.
Trading for beginners can seem hectic, but it doesn’t have to be. If you know how to manage money and invest it well, you can let it sit for months or years.
When that happens, you give your investments more time to grow. You may end up with a better return on your investment.
6. Investing Too Much
Another mistake that new eToro users make is that they don’t plan for investments, so they end up investing too much. You need to invest some money so that you can watch it grow.
But as a beginner, you don’t want to sink your entire savings into investing with eToro. Consider how much money you have and how much you can afford to lose.
No one wants to lose money from investing, but it can happen. Experienced investors know how much they’re comfortable risking, so they don’t put in more than that.
If you can only afford to lose $100, that’s perfectly fine. Start investing with that amount, then increase your investments as you earn more.
7. Not Using a Stop-Loss Order
Whether you invest a little or a lot, you need to use a stop-loss order when investing with eToro. A stop-loss order is a tool that you can use to prevent significant losses.
If you invest $100 and don’t want to lose more than $10, you would need to place a stop-loss at 10 per cent.
Using such an order can keep you from losing a ton of money, and it can help you make smart financial decisions. That way, you don’t have to take on as much risk.
Investing With eToro Successfully
Whether you’re new to investing or have done so in other ways, investing with eToro can be a great option. You can learn about the right cryptocurrencies to invest in, and you can diversify your investments.
But make sure that you avoid these mistakes so that you can grow your investments.
Want to improve your return on investments? Learn more about the Passive Trading System and how it can help.
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Hi, my name’s Joseph Moricca. I’m the Founder of Velox Investments! At 16 I learnt to count cards, at 17 I started day trading on various crypto exchanges and for the last 5 plus years I have been learning about Social Trading on eToro! I found that there wasn’t a good source for people looking to get into “Copy Trading” so I made one! On this website I share my best tips and tricks.