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eToro vs. Zulutrade: 3 Reasons Why I Think eToro is Safer For Copiers

eToro or Zulutrade? 2 largest social investment networks. Which one is better?

Honestly I do not know. I do not want to make any big debates regarding which social trading platform is better eToro or Zulutrade. But IMHO, eToro is little bit safer option than Zulutrade for majority of copiers.

Why eToro is safer option for copiers than Zulutrade?

Here are 3 main reasons:
Why I think that eToro is safer than Zulutrade:

1) Proportionality
2) No demo traders
3) 40% rule

You can learn in details about those 3 reasons by either watching video or reading article with transcribed text both below.

Proportionality: Reason number one why eToro is safer vs Zulutrade.

In Zulutrade copiers can set their lot sizes as they wish no matter of their trading balance.

Basically, it means when your trading balance is let’s say 1000 US dollars, you can set your lot size to either; 1 micro lot, 1 mini lot, 1 standard lot or even 5 standard lots if you wish.

However this freedom in choosing lot sizes regardless of the size of trading balance could cause big trouble mainly for unexperienced followers, who do not know how to set the lot sizes correctly.

To further understand, let’s look at following example:

Imagine that your trading balance on forex social trading network Zulutrade is exactly 1000 USD. Then you decided to copy a trader on Zulutrade by setting your lot size to 1 micro lot, when the copied trader loses 100 pips, your loss would be equal to 10 USD. However if your lot size was set to 1 mini lot, your loss would be 100 US Dollars, and if your lot size was set to 1 standard lot your loss would be 1000 USD on just one trade. So basically in case when lot size was set to 1 standard lot your Zulutrade trading balance would be wiped out in one single trade!

To put it other way, your losses on forex social trading platform Zulutrade expressed in percentages would vary depending what is the lot size set to copy a trader.

It is additional risk factor for many unexperienced followers on Zulutrade, who do not know how to set their lot sizes correctly in proportion to their trading capital.

If you wish to learn more about setting your lot sizes correctly on forex social trading network Zulutrade you can visit “Zulutrade Followers Academy” on our blog, which is a series of articles for Zulutrade followers, where one article is about setting lot sizes correctly on Zulutrade forex social trading network.

On the other hand social trading network eToro does not allow setting lot sizes. Instead eToro simply uses proportionality when copying traders.

That means if you have the same balance as the trader you copy, you will always copy this trader with exactly the same lot size as he sets. For example if copied eToro trader decided to trade 1 standard lot your copy trade would have standard lot size, as well.

But if copied eToro trader has 10.000 USD trading balance and decided to trade 1 standard lot, while your eToro trading balance is 1.000 USD you would be copying that eToro trader by trading just one mini lot.

This is proportionality on eToro, you do not need to set any lot sizes, because you always take the same level of risk as copied eToro trader. Your risk is proportional to copied eToro trader and it depends on the size of your eToro trading balance in relation to trading balance of copied eToro trader.

That was the first reason why eToro is safer vs Zulutrade.

No Demo Traders: Reason number two why it is safer option to use eToro vs Zulutrade.

If you are familiar with forex social investing network Zulutrade, you might have noticed that there are 3 kinds of signal providers.

First type of Zulutrade signal providers are “Demo traders” those signal providers send their signals from Demo Forex Trading Accounts. (Also called paper trading accounts because they use virtual money not real money)

Second type of Zulutrade signal providers are real money signal providers, which are using real money trading accounts, risking their own real cash on their live accounts.

Third kind of Zulutrade forex traders are those who are sending their signals from demo accounts, but copying themselves on live trading accounts. They can copy all trades or just copy some of the trades.

On the other hand side eToro social investment network does not allow copying traders who trade with demo accounts. Of course you can use virtual money trading accounts to test your trading skills and experiencing with copying other real money investors on eToro. But as a trader with demo account you are not visible to other members of eToro, so they are not able to copy you.

If you copy any Forex trader on eToro you can be assured that copied trader is trading his own real money. However, we do not know the exact size of his trading balance. He can trade with as little as only 50 USD or trade with account balance as big as 10.000 USD or even bigger, but this information is not publically available, so we never know the exact amount but for sure traders available to be copied on eToro are risking their own real money.

It is always better to copy a trader with real money account, then to copy a trader with demo trading account. The reason is very simple, demo traders have a tendency to apply any sort of risky trading strategies that you can imagine, because they do not care if they lose or not, they risk absolutely nothing. In the worst case scenario they simply open a new demo trading account and start the trading process all over again.

If you ever tried to trade on demo trading account and later you switched to real money account you know it is true, and it is completely different experience.

Demo trading accounts = careless trading
vs
Real money trading accounts = more responsible trading

Again in favour of eToro vs Zulutrade is reason number 2, namely; No Demo Traders on eToro.

However, please bear in mind that although, every copy trader on eToro has to trade its own real money, which means there are lower chances to blow their trading account. But of course it does not mean automatically that you cannot lose money on eToro by copying other traders. Of course you can lose, but the chances are smaller, because eToro traders have tendency to trade more responsibly.

Also, it does not mean that all demo traders on Zulutrade are reckless. There might be some possibility that some demo traders on Zulutrade are great and talented forex traders, but it is less likely vs real money traders on eToro.

40% Rule: Reason number three why I think eToro is safer for copiers than Zulutrade.

The reason number 3 is what I call the 40% rule.

What does it mean? eToro does not allow you to copy one single trader with your full balance, with all your money you have on your trading account. If you wish to follow and copy any trader on eToro, you are allowed to allocate maximum only 40% of your trading balance. So, for example if you have trading balance of 1000 USD, and you wish to copy an eToro trader you are not able to use full trading balance of 1000 USD to copy one eToro trader. You can only allocate maximum 40% of that trading balance, which in this case is 400 USD for this one single trader.

This 40% rule is very good thing, because your trading balance is much safer. As a result of this 40% rule it is not possible that just one unfortunate copy trader would wipe out all your trading balance on eToro. This 40% rule forces traders on eToro to diversify their copy trader’s portfolio. So, in order to utilize the full trading balance on eToro, traders must copy at least 3 different traders, allocating portion of funds to each of them with maximum cap of 40%.

Imagine if you copy single forex signal provider on Zulutrade and this signal provider would experiences a series of losing trades and finally he boost his account, you would lose all your money too. But if you copy single trader on eToro and this trader blows up his trading account your maximum loss would be 40% of your total trading balance.

Let’s summarize, why eToro is a safer option v.s. Zulutrade:

To conclude: eToro is much safer than Zulutrade for majority of copiers, especially those who have little trading experience; there are 3 main reasons.

Reason number 1, Proportionality:
Copiers on Zulutrade are more likely to lose money especially those unexperienced, since they do not have sufficient experience on how to set up their los sizes correctly. Proportionality rule on eToro eliminates the above issue of knowing how to set correct lot sizes, when copying traders on eToro social trading network.

Reason number 2, No Demo Traders
It is not possible to copy Demo trading accounts on eToro, however Zulutrade allows copying forex signal providers with demo accounts, and this exposes copiers on Zulutrade to many traders who behave recklessly.

Reason number 3, 40% Rule
It is very easy to become greedy trader on forex social trading network Zulutrade, because after big winnings Zulutrade followers have a tendency to set oversized lots, resulting in risking too much money on a single trade and with a single forex signal provider. However, this is not possible on social investment platform eToro, because on eToro the maximum you can lose with one single copy trader is 40%.

Well… those were 3 key reasons why in my humble opinion eToro is for majority of copiers or followers is much safer v.s. zulutrade forex social trading network.

If you liked and found this article informative, just give as a like on Facebook or share it on other social media platforms.

Remember if you wish to copy eToro traders or Zulutrade traders never ever trade any money you cannot afford to lose, like money you need to pay bills, or money you need for food.

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