Once an investor gains the status of a Popular Investor, they are subject to several rules of strict conduct as dictated by eToro. One must retain a risk of 6 or less, ensure equity levels do not fall below predetermined levels depending on the PI level attained, trade on a regular basis and communicate frequently with the community. All these things are in the best interest of all investors.
As an Elite popular investor, I am asked on a regular basis, “How come you are not using all of my invested funds?”.
Please understand that monthly returns displayed on our statistics are based on the percentage point returns of the whole account. This means your copy returns are also based on the total amount of your copy. The percentage return has absolutely nothing to do with the amount I use or allocate on trades. Please read this para again!
There are several other reasons why allocation does not matter and they are listed below. If you are not happy with the monetary value of the returns, then you can increase the value of your copy. But allocation will not change. It will vary from 0% to perhaps a Max of 70% only.
There are several reasons:
1) Managing my risk score is essential to sustaining the copier base which I have worked hard to attain.
2) Better opportunities are always waiting to happen. I need funds available to take advantage of them when they do occur.
3) I trade Forex pairs mainly and they can be subject to fast and furious moves in the market. This is becoming more prevalent as algorithmic trading, combined with HFT evolves.
4) Market corrections or ….downturns happen and sometimes they are sustained for months, even years. Retaining an adequate balance to ride out any storm is an essential part of any professional traders plan.
Forget about allocation, it matters not. If I return 5% on my account per month using whatever allocation, you return the same. It is the amount on the copy that produces the return…not my allocation.