eToro Review

Jun 1, 2020 05:09 PM ET
eToro Review

Review Summary

eToro is considered as one of the leading social trading platforms which offer flexible methods to its users for investing in a wide range of assets as well as copy trading services. The eToro platform is a highly sophisticated and intuitive tool, packed with a rich collection of analytical tools to assist traders. 

eToro

RATING

8

YEAR FOUNDED

2006

LOCATION

Australia, Cyprus, United Kingdom

REGULATION

ASIC(Australia),  FCA( UK), CySec (Cyprus)

US AVAILABLE

Yes(Only Cryptocurrencies)

TRADING INSTRUMENTS

Forex, commodities, stocks, cryptocurrencies, Shares, indices, Metals, Bonds, ETFs, Energies, CFDs

TRADING PLATFORMS

eToro Web, eToro Mobile

MINIMUM DEPOSIT

$200

DEPOSIT METHODS

Wire Transfer, Credit Cards/Debit Cards, Skrill, PayPal, Neteller, UnionPay, Yandex Moner, WebMoney, Giropay, Wirecard

Base currencies

1

Inactivity fee

Yes

Withdrawal fee amount

$0

Max. Leverage

Up to 1:400

Min. Spread

0.1 pips

Currency pairs

47

Demo account

Yes

Social / Copy trading

Yes

eToro Pros and Cons

Pros

Cons

  • Commission Free Trading
  • Limited Leverage for non-professional clients
  • CopyTrader Platform Available
  • No Fixed Spread Accounts
  • CopyPortfolio
  • Not compatible with MT4 or MT5
  • Commission Free Trading
  • US Clients can only Trade Cryptocurrency 
  • Client Funds are Segregated 
 

 

In-Depth e-Toro Review

Founded in 2007, eToro is a reliable Israel based fintech start-up which offers a multi-asset trading platform for trading both CFD and non CFD products. Originally founded by the Assia siblings along with friend David Ring in Telaviv, it has grown to become one of the primary online brokerages offering social trading functions. eToro is known for changing the way novice traders trade in financial markets, by providing their open-book social trading platform. 

eToro also has a vast community behind it which helps users to connect with other traders and view, compare and discuss trading strategies. Through its patented CopyTrader technology, users can automatically copy trades from another trader’s portfolio. With this, they can create their own bespoke portfolio according to their personal preferences and requirements. In addition to this, traders can also place and manage their own trades which in turn can be offered to other traders on the network for copying. 

Additionally, eToro has a “popular Investment Program” which is available for all talented, tech savvy and responsible traders with unique investment strategies. Top-tier popular investors can thus earn a second income which is roughly up to 2% annually on their assets under management. 

  • Regulations: Since it operates across multiple jurisdictions, eToro is fully regulated by the strict guidelines of multiple international regulatory bodies. These include, CySec, FCA and the ASIC, all of which ensure that eToro’s services are authorised, regulated and transparent. 

    • In the UK, eToro Ltd is authorised and regulated by the Financial Conduct Authority of FCA with licence number FRN 583263. 

    • In Australia, eToro AUS Capital Pty Ltd, is authorised by ASIC or the Australian Securities and Investments Commission. It also has an Australian Financial Services Licence. 

    • In the rest of Europe, eToro is regulated by CySec or the Cyprus Securities Exchange Commission.  It is registered as a Cypriot Investment Firm. 

Account Types and Opening

eToro offers two main types of accounts, namely, retail and professional accounts. The required minimum deposit amount for opening an account at eToro is $200. However, this figure tends to change depending on the trader’s country of operation, as listed below. 

  • Minimum Deposit for Residents of Russia, China, Hong Kong, Macau and Taiwan is $500

  • Minimum Deposit for Residents of Australia and United States is $50

  • Minimum Deposit for Residents of Israel is $10000

  1. Professional Account: Professional Accounts can only be opened by users who qualify as professional clients. This account gives them access to increased leverage rates of up to 1:400 on certain instruments, along with a reduction on current margin rates. This allows a trader to not be bound by existing ESMA restrictions which are imposed on retail clients, allowing them to trade with more leverage. Professional traders are also not charged with a $25 withdrawal fee as applicable on all other traders. 

Traders who want to qualify as professional clients have to meet any two of the following three criteria. 

    • Has worked in the capacity of a professional position when it comes to speculation, derivatives or trading. 

    • Possesses a Portfolio valued over $500k. This should not include property values or cash

    • Has a verified history of placing positions with significant sizes. 

  1. Retail Accounts: Clients with a retail account can get access to both copy trading as well as trading assets manually. In other words, the retail accounts are suited for those traders who do not qualify as professional traders. The leverage is fixed for retail clients and there are restrictions for margin closeout as well as negative balance protection. Additionally, this account is protected by the Investor Compensation Fund and the Financial Ombudsman Service. 

It should be noted that a Trader loses the provisions of negative balance protection, recourse to the Financial Ombudsman Service and Investor Compensation Fund, if they qualify for a professional account. 

How to Open an Account at eToro?

eToro has a pretty simple and straightforward process for registering and signing up. Users can simply click on the “Join Now” or “Trade Now” button as found on the official homepage of the broker. They are then redirected to a page containing an electronic form where they have to enter personal data to open a new account. 

eToro Account

The form requests relevant information from the user which is required to be filled in. Users can also use their personal Gmail or Facebook accounts to login. Users are then requested to take a proper look at the terms and conditions of the brokerage service before they proceed to click on the box which indicates their agreement. To submit the information, users can click on the “signup” button when they’re ready. 

Deposits and Withdrawals

To cater to a wide variety of users with different backgrounds and trading preferences, eToro have provided several methods for deposits and withdrawals. This includes credit cards, online payment processors such as PayPal, Skrill and Neteller. However, the availability of these methods is subject to the user’s country of operation. 

eToro does not charge any additional fees for deposits or trading other than the spreads. However, there is a $25 fee applicable for withdrawals by a non-professional client and the maximum withdrawal amount is fixed at $50. The time taken for withdrawals can vary depending on the method or payment provider chosen. Bank transfers usually take a few working days to complete. 

Some additional conditions

  • All subsequent deposits made after the first time deposit are required to be at least $50. However, the minimum deposit amount for deposits made via wire-transfers is $500. The total deposit amount for unverified accounts is limited to $2250. To verify accounts, the eToro customer services should be contacted. 

  • The transaction limits, restrictions and requirements for some payment systems are indicated in their respective official websites. Particular countries require some users to verify their account before removing transaction limits on payment processors. 

  • eToro accepts deposits in USD, EUR, AUD, JPY, GBP, RUB, CAD and CNH. However, apart from the USD, all other currencies are charged with a fee for conversion.

  • To ensure security, eToro uses Secure Socket Layer technology. This ensures that personal information is kept safe when any transactions are made. 

Commissions and Fees

The fees and commissions charged for the different classes of Trading instruments available on the platform are as follows. 

  • Fees for Forex: The fees for forex trading on the platform can be considered high as compared to other brokers. For instance, the fees for the different forex pairs are given below. All of them are for a $20000 long position with an applied leverage of 30:1, held for a week.

    • EUR/USD fee: $19.6

    • AUD/USD fee: $12.4

    • GBP/USD fee: $16.2

    • EUR/CHF fee: $19.9

    • EUR/CHF fee: $11.8

  • Fees for stocks and ETFs: eToro does not charge any commission for stock or ETF trading for clients in the EU. For non-EU clients, the only fees eToro charges is through the spread. 

  • Fees for CFD Trading: eToro’s trading fees for CFDs can be considered low as compared to other brokers. For a $2000 long position held for one week, the fees for some of the CFD products are listed below. 

    • Apple CFD fee: $ 6.3

    • S&P 500 Index CFD fee:  $ 2.4

    • Europe 50 Index CFD fee: $2.7 

  • Other non-Trading Fees: eToro charges an inactivity fee of $10 per month after an initial one year of inactivity. The fee for withdrawals is $5.

Trade Instruments and Markets

eToro caters to a wide audience consisting of both novice as well as expert level traders with different trading strategies and practices. Thus it offers several classes of financial assets across its trading platform such as Forex. Commodities, cryptocurrencies, ETFs and indices. 

  • Stocks: Traders who purchase a stock on eToro by opening a buy, non-leveraged position, they invest in the underlying asset and the stock is held under the trader’s name. This is not allowed in Australia. Apart from normal stocks, eToro also offers stocks through CFD trading where traders can open sell positions, use leverage and purchase fractional shares. The thousands of stocks provided by eToro include US, UK and EU based companies such as Tesla, Amazon, Apple, Facebook, Google etc. 

  • Forex: eToro provides forex instruments to its traders via CFD trading, meaning that they don’t have to hold the underlying asset themselves. Forex CFD trading enables sell positions and leveraged trades. eToro provides a mix of 40 major, minor and exotic currency pairs including EUR/USD, GBP/USD, USD/JPY, EUR/JPY, USD/CAD and AUD/USD. 

  • Commodities: eToro provides CFD trading for commodities that allow for fractional ownership. The platform provides CFDs on gold, platinum, oil, gas and precious metals. 

  • Cryptocurrencies: Traders can trade cryptocurrencies on the eToro platform where cryptocurrencies are purchased and held by eToro on the trader’s behalf. These trades are under leveraged and are unregulated. The platform allows traders to trade with some of the biggest cryptocurrencies by volume including Bitcoin, Ethereum, Bitcoin Cash, XRP and Cardano. 

  • ETFs: eToro’s 145 ETFs include TLT, HMMJ, QQQ, SPY and VXXB. 

  • Indices: eToro provides 13 indices as CFDs such as GER30, DJ30, NSDQ100, SPX500, FRA40 etc. 

Trading Platforms and Tools

eToro provides its users with its own proprietary social trading platform which offers a user-friendly and intuitive platform for trading. It is made up of several components which will be discussed below. 

eToro Trading and Investing Platform

As mentioned before, the eToro Trading and Investing platform aims to provide an intuitive and personalised trading experience to all its users. It makes use of innovative technologies and tools such as the eToro CopyTrader System, the Popular Investor Program and CopyPortfolio to name a few. The different components of this platform are discussed in brief below

  • eToro Instrument Feed: In this section each trading instrument is provided with its own feed from where users can see latest updates from the community. It also allows users to make their own posts to relevant feeds which also gives an explanation of the instrument in question. Users can view sentiments allowing them to see what percentage of investors are buying or selling.
    eToro Instrument Feed

 

  •  eToro Trade Markets: The Trade markets section provides an overview of all the instruments available in the platform. Users can filter instruments to find the specific markets they’re looking for. When any instrument is selected, a user is taken to an individual page overview with specific information.
    eToro Trade Markets

 

  • eToro Instruments Statistics: This section offers an overview of any instrument for the past 3 years. This includes detailed financial summaries and profiles. 

  • eToro Instrument Chart: The eToro platform provides a detailed eToro Instrument Chart which can be enlarged for better visibility. Once enlarged, a vast range of features and tools are available to users to assist them with chart analysis. There are multiple chart styles and timeframes including technical indicators and graphical objects that can be used to analyse the market. To place trades, users can use the buy and sell buttons. An additional research tab is available for accounts which have mad depositors. It provides information such as price targets of the selected instrument.
    eToro Instrument Chart

  • eToro Watch list: The platform lets users add instruments to their watch list for easily accessing them later. It shows the sentiment, percentage change and bid/ask prices and facilitates one-click trading directly from the interface. 

  • eToro News Feed: The news feed section displays the latest news from the community of eToro users. Users can filter through saved posts, posts from popular traders or posts in English. Users can also customise the feed to display only relevant news. Notifications appear on both the web platform as well as sent directly to the user’s mobile device via push notifications.
    eToro News Feed

 

  • eToro Portfolio: This section shows all of the user’s trading activity. Users can also view all of the markets, traders and CopyPortfolios that he/she has invested in. They are presented with separate lines which can be clicked to reveal the breakdown of individual trades. Clicking on the clock icon lets users see a history of all of their closed trades, CopyPortfolios and Copied traders.

eToro Portfolio

User Experience

  • Mobile Trading: eToro provides an additional Mobile app for conveniently accessing all of eToro’s platform functions. It is available for both iOS and Android devices on their respective app stores. Users can directly manage their portfolio, copy traders, follow markets and other actions through the mobile app. It is thus ideal for traders who prefer trading on the go.
    eToro Mobile Trading

  • eToro Copy People: This function is a part of eToro’s proprietary trading platform and offers copy trading services to its users. Users can view millions of traders on the platform from where they can copy trades. Users can use the search tool for locating traders, using filters such as gain, risk score, location etc. Each trader provides his/her own portfolio and statistics for the user to compare and make a final decision. 

There is a section containing investors which are filtered and chosen by editors and popular investors as well as those which are trending. Clicking on any investor tab gives the user a detailed overview of their account which includes their portfolios, statistics and news feed.
eToro Copy People

  • eToro CopyPortfolio: eToro provides CopyPortfolios as a portfolio management product. Users who choose to invest in CopyPortfolios can automatically copy multiple traders or markets. Once invested, the user’s capital is professionally managed by the brokerage’s own investment committee. Each CopyPortfolio performance is analysed and rebalanced automatically, in order to maximise its gain potential. They provide two types of Copy Portfolios, as indicated below. 

    • Market Portfolios: This portfolio combines CFDs on stocks, ETFS or commodities under a single chosen market strategy.

    • Top Trader Portfolios: This portfolio is made of the best performing and most suitable traders which are available on the eToro network. 

Users can choose any one of the CopyPortfolio which suits their strategy and enter their desired investment amount. They receive a fully allocated portfolio once they confirm by clicking on the “invest” button. 

Apart from the above tools and platforms, eToro does not provide any other standalone trading tools. Tools for conducting technical and market chart analysis, graphical objects, annotations etc. are all inclusive under eToro’s proprietary trading tool. The platform allows for smooth navigation between the relevant tools and functions by using the side menu. They also provide additional guides and video instructions on how to properly operate the platform. 

Research

  • Recommendations: This is a part of the eToro trading platform which is displayed for certain stocks. The information includes average price target, hedge fund sentiment, insider trading sentiment and analyst consensus on the stock chosen. However, these recommendations are only available for a handful of stocks on the platform. 

  • Fundamental Data: eToro provides fundamental data on stocks, which includes the profile of the company as well as basic indicators and ratios such as dividend yield, beta, P/E and EPS. Interested users can also signup for a daily market newsletter for analysis which provides a useful set of market highlights. However, fundamental data is only available for stocks and not any other assets. 

  • Charting tools: The Charting tools provided by eToro allows users to use up to 70 technical indicators. They are automatically saved which helps in saving time from manually setting up the indicators every time a user trades. However, the charting is limited by its time horizon which can see the data for the past 6 months only. 

  • Newsfeed: The Newsfeed as mentioned above is a market themed twitter feed. It shows messages posted by other eToro users and analysts which can be a useful asset for many traders.

Education

  • Educational Resources: eToro provides a dedicated trading academy that provides a series of educational resources. These include videos, webinars, guides etc., all of which cover important trading topics such as social trading as well as normal trading. 

  • Demo Account: eToro provides a practice(demo) account with virtual money worth $100000. Demo accounts like these give beginners and novice traders the opportunity to test the platform and experience a real-time trading environment without risking real money. Users can open a demo account by clicking on “Join Now” after which they are required to enter their username, email, password and phone number to get started.

Customer Service

eToro’s customer support team works on a 24/5 basis. They have the required knowledge and capabilities of answering a wide range of general questions and customer queries. Apart from operating a ticketing system, they can also be reached via phone or email. 

Safety and Security

Apart from being regulated by multiple international regulatory bodies in several jurisdictions, eToro also ensures that their client’s funds remain safe and secured by using industry leading security protocols. Data is never shared by the platform without the user’s permission. In order to provide transparency and security, eToro keeps its client’s funds in segregated bank accounts among Europe’s most reputed banks. 

Conclusion

There no doubt that eToro is among the most popular social trading platforms available on the market. With multiple asset classes, an intuitive trading platform and reasonable fees, eToro is definitely made for the copy traders worldwide. 


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