Indentifying Winning Traders using OpenBook |
One of the greatest features at eToro is the OpenBook platform. With this innovative tracking system, you have the ability to follow the best traders in the community. The idea is to be able to learn how to trade by not only the traditional means, but by watching successful traders trade as well. This allows you to build profits while tackling the usual learning curve when starting to trade Forex.
However, in order to find the most successful in winning as traders you need to understand a few things about OpenBook. While we can break down winning ratios, gains in percentage terms, the amount of traders following a particular person, their profile, and various other information such as risk, it may help to understand how to find a winning trader you may wish to emulate.
On the front page of the OpenBook section, you will see some of the most recent trades either opened or closed by traders in the community. To the right, you will see a top performers column which allows you to spot some of the winning as traders over the course of the last week, the last month, or the previous three months. By clicking the three buttons on the top, you can see who has performed at the top of the rankings for each of these three time periods. By clicking the button on the bottom, you can view all traders.
One of the most important features on the listing of traders rankings is the “search by risk level” on the far left hand side of the page. If you are a trader that feels that you can handle higher amount risked for example, then you can purposely search for that kind of trader to emulate. Conversely, if you tend to be alone more risk adverse – you can search for low risk level traders.
The next step in order to find a trader to emulate is to decide how much historical data you want to look at. On the upper right-hand corner of the page, you can choose from one week, one month, three months, six months, or one year worth of trading results. Needless to say, the longer the trading results the more reliable the data will be.
A list of traders will appear, and the following information will be available at this point: the trader’s name, the amount of traders he or she is following, the amount of traders following either he or her, the type of risk profile they have, the win ratio in both wins than losses and percentage terms, and the total percentage gain for the time period that you are looking at. By clicking on the trader’s name, you will be taken to their profile which shows a more detailed breakdown of their trading as it shows the last 20 trades and the results.
Now that you have the ability to see how much risk the trader normally takes, and what their results are over a given period of time, there are a few other things you should look at as well in order to make your decision. One such metric is the win ratio. It displays both the win loss record and the percentage of wins over time. It should be noted that some traders feel the need to be right most of the time, and therefore tend to take profits little quicker. Because of this, some traders will actually have an 85% or above win ratio. While this sounds impressive, you need to pay attention to the gain percentage as well.
Mathematically it is possible to have an 80% win ratio, and a losing record overall. This is because the higher percentage wins typically will take profits in a much quicker fashion than they take losses. This means that normally one loss can wipe out several wins.
However, this is actually a psychological question. Are you capable of losing 4 or 5 trades in a row, but coming out ahead overall? While it sounds logical to say yes, many traders find that they cannot psychologically handle that many losses in a row. If that’s the case, you may need to follow a trader that has the higher win ratio, as this is an issue that you won’t have to face very often.
By paying attention to both the win ratio and again percentage, you begin to see the possibility of having a few large gains versus having several small gains. Either way can make you money in the Forex market, but it is your comfort that will decide whether or not you can make money over the long run. If you find that you are not comfortable, you simply cannot make money over time. Finding a trader to emulate is much like trying to find a business partner, you need to be comfortable with that person. By paying attention to the above mentioned metrics, you should be able to find the right person.
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