CopyTrading is an interesting concept at eToro and they have certainly attracted people into trading with this feature. But there are CopyTrading and then there are CopyFunds. Both might seem similar to one another, and they are, as a concept. However, while they have a similar concept of copyingsuccessful traders, they are not exactly the same.
So, why would anyone want to invest in CopyFunds, when they have the option to copy any trader he or she likes?
First, let us see what eToro has to say about their CopyFunds.
According to eToro, CopyFunds is their next generation investing product.
In case you are wondering, it is not trading that they are promoting in the world with CopyFunds, they are talking about investing. Why is that?
Well, when you go to stocks or crypts at eToro’s site, you’ll see the option of trading as “Trade.” But it is not the case for CopyFunds. It is shown as “Invest” on their website.
So why “Invest”? If you understand the answer to this question, you’ll know why you should invest in CopyFunds.
First of all, CopyFunds is like a container where different assets of the same industry are there for you to invest in. For example, if you are investing in a Gaming Fund, that means, the gaming fund will have assets of gaming related companies like Nvidia, EA, etc. But the companies will not have an equal amount of assetsin the fund. There will be some Fund managers who will decide the ratio of different companies’ involvement. For example, in a fund of Cryptos, Bitcoin may have the larger amount of the shares than Litecoin, Etherium,and others. This is because the Bitcoin’s future is safer than other cryptos.
This is where the answer of “Invest” instead of “Trade” comes in.
When you are investing in a single asset like a stock, Crypto, gold, oil, etc. at eToro, you are accepting the risk of losing your money when the asset falls down. Again, when the asset is gaining, you are also profiting from it. But the states of those assets are temporary and that’s why it’s called trading.
But when you put your money on the CopyFunds, you are doing it for a longer period. The overall state of an industry won’t fluctuate as much as a single company. This is because the assets in a fund are balanced out properly to reduce risk score so that when one company falls, it doesn’t affect your money that harshly. You will have lower chances of losing a big amount. This also means that you won’t make an immense amount of profit either because when one company does well,another might not be in that great of a position. So on average, you are not doing that good or that bad.
This is why CopyFund is like investing in a business, not like trading in the casino. That’s why you see “Invest” instead of “Trade” in eToro’s site. And this is the reason why you should invest in CopyFunds. Because at the end of the day, you will have lower chances of losing a large amount of money with CopyFunds, which means your money will be safeguarded well.
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