Rearranging my CopyTrading portfolio cw50/16

After 14 weeks of copying other traders the overall performance of my CopyTrading portfolio is rather low (+0,94%). I think it was time to rearrange my portfolio and choose some new traders. In this post I describe how I decided.

General consideration

Before checking out how to rearrange my portfolio I checked how well my CopyTrades are synchronized with the traders. I recently posted about how bad it matches (click here to learn more). One reason for the bad synchronization was the minimum copying amount recommended by the traders. In order to better match those requirements and also to reduce the complexity of my portfolio, I decided to increase my investment per trader. Thus I had to reduce the number of traders from 11 to 7, to keep my total investment (nearly) constant.

Traders to keep in my portfolio

When you have a closer look at the performance of my traders, you some are performing quite well, others don't (see graph below). The profits of the good performing traders are equalized by the losses of the others. So in a first step I decided to continue copying the five best performing traders Those are

@TradeBetter
@moosgruber
@Cookie79
@Jarodd76
@berrau

Another aspect I learned from analyzing the synchronization of the trades was, that adding funds to an existing CopyTrade might downgrade the quality of the copying. Therefore I decided to stop all copying activities and start copying the above mentioned traders again.




If you check the graph below carefully you might realized, that I excluded @Running-Chris from my list. Although he is performing quite well, I was simply sick of those dozen popups every week on the eToro app, when he welcomes new traders and recommends checking out his wife's profile. Might not be professional to make this part of an investment decision, but it was too annoying.

The remove funds experiment

I made two exceptions to the procedure described above: I continued to copy @smartandsocial and @Kirex15 but remove all funds above the eToro minimum. Why? Well that was a recommendation of another trader (I think it was @tinatrade). She wrote that's what she does when a trader is not performing as expected. The advantage: New trades are not copied any more but the existing ones get a chance to recover. I really liked copying the two traders for simple reasons: @smartandsocial has a clear strategy that he tested on historical data and that he now strictly adheres to. I have a strong feeling that he will be profitable again soon. @Kirex15 does a lot for the community by posting her analysis results and previews on the market walls. Plus she replies quickly to questions and adds some fun to the sometimes boring news feed posts (Thanks Teja)!

Finding new traders to copy

In addition to the five "old" traders that I keep in my portfolio and the two I use for my experiment, I choose two new traders for my portfolio. Last time I picked traders to copy, I simply searched for the most copied traders and picked the once that performed best (click here to read more details). I still consider this a good way to get started quickly, but the performance chart above shows, that it is not necessarily very profitable. So I decided to put some more effort into choosing new traders and totally neglect the number of copiers as a criterion. I thought about considering the communication habits of the traders, since it is quite important for my whether a trader answers my questions or simply ignores me. This is a "soft" criterion that I cannot evaluate for most traders. Also, I was looking for something based on pure data, so I dismissed this idea.

Instead I made a list of traders I found in the last weeks with interesting profiles, a good performance or within other trader's CopyTrading portfolios. I then checked their performance in the last 3, 6 and 12 months and ranked them for each time period. After that I calculated the mean value of the three ranks to get a "mean ranking". The idea is to pick traders that have a "constant" performance over the last 12 months.

One drawback of this approach is, that traders that were good until 4 months ago still get a good overall rating. Therefore I added another type of ranking, that is calculated by the following formula:

per = (rank_3M * 3 + rank_6M * 2 + rank_12M) / 6

This ranking prefers traders with a good performance in the last 3 and 6 months, without completely neglecting the long term performance. Fortunately I didn't have to decide wich approach to apply, since both "recommend" the same traders:

@chocolate007
@Tsord2011

Both traders have a minimum copy amount of <= $300, so I expect no problems when copying them. You can find all data I gathered in the table below (the values in the "performance" columns are taken out of the traders charts). For some traders I didn't collect all data, especially when the chart appeared too volatile or weak performing to me.

You don't agree with my procedure or have a different (maybe better) approach for picking other traders? Let me know, leave a comment here or on eToro! I am looking forward to discussing our ideas!



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Related posts:
Getting out of sync @CopyTrading
Finding Traders to copy pt.1 

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Important remark: The results presented above and throughout my blog are no recommendation for your trading! I only share my personal findings and opinions to give ideas and let my followers and copiers know what I am currently working on. I can not guarantee the correctness of my calculations and my presented results. Furthermore past performance is not an indication for future results. Only trade with money you are prepared to lose!