Invest with confidence: Harnessing successful trader strategies
13 September 2017
Research by investment analysts Morningstar shows that only a minority of asset managers are willing to put their own money into the portfolio strategies they run, which begs the question: Would you trust a professional who didn’t back their own ‘expert’ opinion with hard cash? Thankfully, these days you can access millions of real-life investor strategies online, find the best-performing portfolios and copy those you like the look of.
Iqbal V. Gandham, eToro UK MD
Through the barricades
It’s not easy navigating the labyrinth of investment analysis available to you these days. There are plenty of people with speculative forecasts on how the financial markets may shift. And there are numerous different ways of measuring performance and risk across investment funds. Finding a single truth can be hard.
Meanwhile, the big investment firms hire teams of analysts to track economic data and trend reports in an attempt to enhance the portfolio strategies they manage. But does it pay off? Do they add value and improve your chances of getting higher investment returns from the resulting investment decisions they make?
"You can speak to customers who have invested in that product and also the individual who is managing your money for you"
In many instances, the data being crunched is now widely available to anyone with an internet connection. The investment world is changing and changing fast. The barriers have come down and with the advent of social media and the rapid evolution of digital communications, there are now vast swathes of individual investors acquiring specialist knowledge, developing their own trading strategies and becoming experienced, successful investors in all manner of instruments, from developed equities to cryptocurrencies.
These individual investors are not hired by big banks and they’re not all hiding behind a brand – they put their money where their mouth is, show where they’re investing and how their portfolio is performing in real time, and allow others to piggyback their strategies.
When investing met social media
The phenomenon has been labelled ‘social trading’ as it harnesses the power of social network communications – sharing ideas, discussing events online and following like-minded people – with the buying and selling of investment assets. eToro has been at the forefront of this investment revolution for over 10 years.
With social trading, you can interact with other traders and investors online. You can see the trading decisions they are making and how their portfolio has been doing over time. You can see overall sentiment towards a particular asset within the community. You can copy the best-performing traders in a sector, like foreign exchange, or invest in themed managed funds, such as a collection of the big technology firms, global banking blue-chips, or gaming companies.
"All our fund managers have invested in their own funds. Are you going to back someone who has skin in the game or someone who doesn't?"
For those looking for more active investment opportunities, perhaps in dynamic markets with high volatility and the potential for short-term trader profits, you no longer need to seek out a broker. If you’re comfortable doing so, you can trade directly yourself and manage your positions in the markets. Or you can find successful other traders so you can absorb their strategies and insights - or simply copy their every move!
And if you’re looking to tap into exciting new markets like cryptocurrencies – where the likes of Bitcoin, Ethereum and Ripple have made a lot of people a lot of money - you may find the more traditional investment services quite slow and ponderous to embrace such investment vehicles, while online social trading platforms like eToro are much more likely to offer you exposure to these assets.