Download the software for free
Click on the Download button on your right and download the software for free.
Open the “Asset Allocation Master” Excel file
Locate within your PC the Asset Allocation Master file just downloaded and open it.
Identify the operational characteristics of the investor.
Login to eToro with your real or demo account and enter the statistics section of the trader you wish to analyze. The third module contains the statistics relating to the trading activity and the profitability of the trader.
You’ll find a whole section devoted to the data relating to the operation of the investor, such as the percentage of underlyings on which the trader has invested, the total amount of trades made, and how many of these have gone into profit, and what was the profit and loss on average.
The data you are looking for
Identify, inside the trader’s modules, the Profitable data and those relative to the Average Profit and the Average Loss realized. All these values are expressed in percentage.
At this point you have two pages open
The concerned files are:
- The Excel “Asset Allocation Master”;
- The statistics section on the trader’s module, with the values of Profitable, Average Profit and Average Loss ready to use.
Enter the data manually within the Excel Asset Allocation Master
You’ll have to manually enter the three values in the “Output Data” spreadsheet.
You’ll have to fill in the column “Enter the values without percentages” by inserting them in order:
- Average Profit;
- Average Loss;
All these values should be inserted, as the annotation says, without the percentage sign.
If you find a Profitable value of 70%, in the relative cell you’ll have to insert just “70”. The same thing with the other two values.
Run the KELLY Criterion calculation
As you can see from the image to your right, click on the “calculate the Kelly Criterion”, which is in the “OUTPUT DATA” worksheet.
The program will perform the calculation and report the result in the “KELLY %” field. Note it down, it will serve you for the next step.
Follow the steps from 3 to 7 for each investor you intend to follow.
The portfolio composition
As you can see from the image to your left, enter the value of the capital share you want to use to replicate the operation of the investors.
Then, for each Popular Investor you want to follow, insert:
- The Popular Investor’s name;
- The Kelly Criterion percentage calculate in the step 7;
Filled out the fields, click on the green button “CALCULATE”.
The system will automatically calculate the capital to assign to each trader based on the individual operating characteristics and their coexistence within the account.
For this reason you will see a K coefficient which will vary according to the amount of traders you want to copy and their trading strategies.
At the operational level, what you care about is only the capital value to be assigned to each individual trader, which will be what you will set when you will activate the copy trading function for each trader.
To keep memory of the values you can print the results by clicking on “PRINT”.
To have the “Asset Allocation Master” Excel file always ready to make analysis, never save the changes, that way you’ll always start from the beginning. Otherwise, simply create a copy of the file and work on that.
Should you have saved some changes, and you could not make the calculations as I have described, then download the file again from our site, you can download it as many times as you want.