EToro introduces Copy Dividends – How do they work?
The February 15, 2016 eToro has announced the launch of a new feature within its Social Trading platform.
We are talking about the eToro Copy Dividends function.
Those who already invested with eToro (maybe just with an eToro demo account) know that, to replicate the signals of a Popular Investor, they have to invest a certain amount on that trader, amount that is “moved” from the Available Capital and locked in the Total Allocated Capital.
In case of profits, the investor could not freely move them back or withdraw them (as you can do with other companies such as Zulu Trade or Ayondo) since they were bounded to the Total Allocated Capital invested on the trader with the copy trading function.
In order to withdraw them, or even just to have them available, the investor had to end the copy trading function with that trader. At that point, Profits and Allocated capital would return entirely in the Available capital.
EToro Copy Dividends, what is all about
The eToro Copy Dividends function partially automates this operation.
Essentially, every time a Popular Investor will withdraw some money from his account, a proportional amount will be subtracted from the amount the user has invested on him (in which there were also the new profits), to be brought back in the Available capital.
To quote an example done directly by eToro, “…if you’re copying with a 1,000 USD a trader that has 10,000 USD in their account, and after a while the trader you’re copying gets his account to reach 12,000 USD and decides to withdraw 2,000, your copy balance (which started at 1,000 and has now reached 1,200) will be deducted of 200 USD that will be allocated back to your account balance.”
As you can understand, you still don’t have the possibility to withdraw your profits independently, provided that you terminate the copy relation (and start it again immediately if you want to continue with that Popular Investor), but in return eToro has made sure to make you receive some profits whenever the Popular Investor does it for himself.
Beyond this, eToro is keen to point out that “As in any relationship, we came to realize that when two sides benefit at the same time, it helps the relationship flourish.”