In a nutshell
eToro, an online broker, was founded in 2007 in Israel. They are focused on trading over Contracts for difference (CFDs) and cryptocurrencies.
eToro is also well known for its detailed attention to social and copy trading, a strategy that has earned them rapid growth and over 12 million trading customers globally.
The trading platform is especially well catered for traders with an average understanding of the crypto market and forex trading.
The forex trading fees are relatively high in comparison to similar brokers. They also charge inactivity and withdrawal fees. You’ll need $200 to open an account with the broker.
The educational database is exhaustive and up-to-date which especially helpful for novice traders.
Experienced traders, on the other hand, might want to consider other brokers. One reason is that eToro does not provide connectivity to third party software or algorithms like Metatrader 4.
Pros & cons of eToro
Opening a trading account with eToro is fast and easy. It usually takes only a couple of minutes. The basic registration, however, will only let you use the demo account. You’ll get $100,000 of virtual money to test the platform or experiment with your trading strategies.
You’ll need to verify your account if you wish to trade with real money. The verification process also works great; as a standard procedure, you’ll need to verify your phone number and submit ID and proof of residency.
Fees and commission
Trading fees, i.e. spreads, at eToro are above average in comparison with many other brokers. A popular currency pair EUR/USD spreads, for instance, stand at 3 pips and S&P 500 at 75 pips. These spread prices can also change as market conditions change.
eToro is rather an exception as they don’t charge any spreads if you buy assets that are not leveraged. Trading with these instruments will only incur conversion and withdrawal fees.
They still have a weekday overnight fee which is 24 cents per $1,000. Over weekends this fee triples.
In terms of non-trading fees, eToro charges a relatively high $5 withdrawal fee. This is something that most other brokers do not charge.
You will also pay in case of inactivity. The broker will charge $10 per month after an account has not been active for 12 months.
Deposit and withdrawal
Deposits on eToro are free of charge. Like most other companies, they have a minimum initial deposit which is set at $200.
All other deposits have to be at least $50. Traders can deposit money using a credit card, PayPal, Skrill, and Netteler.
They also offer a bank deposit but the minimum amount there is $500.
As mentioned, eToro has a $5 withdrawal fee and a minimum withdrawal amount of $30.
The account has to be verified in order to withdraw funds.
There are also different ways of receiving the money. They include a bank transfer, credit/debit card or an electronic card. It takes up to seven days to receive the funds.
eToro is full regulated and complient with the legislation of the countries where it operates.
eToro is compliant with the ESMA (European Securities and Markets Authority) rules.
They are also authorized through CySEC (Cyprus Securities & Exchange Commission) and regulated under the UK’s FCA (Financial Conduct Authority) and Australian AISC authority.
Note that eToro can hold funds belonging to clients outside the EEA (European Economic Area). However, they do provide UK and EU brokers default protection in the range of €20,000 or £50,000. Clients also enjoy negative balance protection as they cannot lose more than 100% of the value of their account.
Web trading platform
The eToro trading platform is entirely web-based and offers an interface that is easy to use. This is especially welcoming for less-experienced traders; they can easily scroll through the platform and use the features. The platform also includes an economic calendar, reports, charting tools, and alerts. It is currently available in 21 languages, including English, French, German and Russian.
eToro offers extensive CopyTrading and CopyPortfolio services. They allow traders to copy either trading strategies or portfolios of other traders. Their social platform, where clients post about markets and trading, is especially useful. Users exchange information and tips or discuss trading strategies. Both CopyTrader and CopyPortfolio features can be automated.
eToro’s mobile version allows users to sync data between both Android and iOS devices. The mobile platform is well-designed and easy to use, especially considering the smaller smartphone screens.
There are some drawbacks, however. In comparison to the web platform, eToro app features fewer charting tools and even fewer options for customization. The indicators are reduced to five basic types.
Research Tools and Insight
eToro’s educational resources are average. The learning library consists of blogs, videos, tutorials, webinars and, as of recently, also a podcast.
They created, for instance, a guide to fintech, a podcast about investment strategies, and a series of FAQ on how to use eToro platform.
They have an Advanced Technical Analysis course and a couple of basic educational videos and webinars about investing and the market.
eToro has a decent offering of financial products. Its forex product catalog consists of 47 currency pairs which on par with competitive brokers.
The provider is the strongest in its stock offering. You can trade with real stock if you don’t use any leverage; trading with leverage means that you trade over the contract for difference (CFDs).
Here is a breakdown of eToro’s products:
Stock CFDs – 1300
Currency pairs – 47
Cryptocurrencies – 14
Commodities CFDs – 14
Indices CFDs – 13
ETF CFDs – 145
Please note for U.S. customers eToro offers only access to cryptocurrencies. Trading with forex, stocks, CFDs are only available to those outside the U.S.
Although the eToro contact page mentions 24/7 support, they do not list a phone number, except for one in Australia.
Their help center with the FAQ is so-so which means that direct communication with the company is often needed.
Their email ticketing system is also relatively clumsy and it often takes a couple of hours or even days to receive a relevant answer.
A big advantage is their online chat. They can also answer some of your questions through Twitter and Facebook.
eToro is a great fit for beginner traders who’d rather ride on the performance of well-skilled traders and copy their trades.
Note that copying portfolios is in itself risky as good performance alone does not guarantee a winning trade.
However, those who are more advanced may understand better the risks involved and may have in place a defensive strategy to counter any losses.
For those seeking a broader scope of services, better and prompter customer interaction, or competitive costs, another broker might be a better alternative.
There are a couple of things eToro could improve on, such as:
- guaranteed stop loss and order management protection, especially with cryptocurrency trades that have limited stop-loss control.
- Another improvement they could introduce is an API interface coupled with VPS hosting.