Many eToro traders and investors want to become Popular Investors and keep that status. A main criterion of being included in the Program is responsible trading. To learn more about what it takes to be considered a responsible trader, continue reading.
What is responsible trading?
The risk requirement for a candidate to be accepted into the Popular Investor program is that they have to maintain a maximum risk score of below 7 for two full months. A risk score is based on each trader’s standard deviation of the portfolio. To read more about what a risk score is and how it is calculated, read this.
Popular Investors must also adhere to leverage restrictions. Using leverage amplifies risk, which is why those who wish to become Popular Investors and maintain that status have different, tighter restrictions than other eToro users.
Responsible trading should be maintained during their time in the Program. The first time a Popular Investor exceeds a risk score of 7, they are blocked from being copied for two full months, and will not receive a payment. A second “offense” will result in a longer blocking period and potential removal from the Program.
However, this is not arbitrary. If we believe a Popular Investor is still trading responsibly, even though they hit a risk score of 7 due to extreme market conditions, they may remain unblocked. Below is a checklist of criteria they must meet in order to remain unblocked:
- 95%+ of their portfolio is comprised of unleveraged stocks (or stock ETFs)
- There is no single instrument in which they invest 20% or more of their capital (one direction)
- They have not changed their strategy
- Their risk score was 7 (not 8)
- Historically, they did not reach a risk score of 7 in the past 12 months
The above also applies to new applications. If a user applies for the Program with a risk score of 7, but meets the above requirements, they will be accepted into the Program.
Popular Investors who do not meet the above criteria and have reached a risk score of 7, will be blocked without exception.
In addition, eToro does not encourage Popular Investors to invest in one instrument (in one direction) with more than 20% of their equity.
Please keep in mind that eToro reserves the right to reject or remove a Popular Investor if we feel they are taking unnecessary risks. If you have any other questions regarding the Popular Investor Program, please contact Customer Service.