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eToro Review: Online Broker for CFDs With Social Copy Trading

eToro is an online broker that allows you to buy, sell and trade thousands of financial instruments. Read our indepth review to find out more
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With hundreds, if not thousands of online brokers now allowing you to trade a full range of assets at a click of a button, knowing which platform to go with can be a difficult task. While some traders will seek to find the most user-friendly platform on the market, others prefer brokers with super-low fees.

With that being said, the likes of eToro have grown exponentially over the past few years. With the online broker now claiming to service over 10 million users from all over the world, we sought to explore just what all the fuss is all about.

As such, if you’re thinking about using eToro for your online trading needs, be sure to read our comprehensive guide.

We’ve covered everything that you need to know – such as how the platform works, what assets it allows you trade, fees, regulation, and more.

Let’s start by finding out what eToro actually is.

Visit eToro

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

What is eToro?

eToro is an online broker that allows you to buy, sell and trade thousands of financial instruments. Launched in 2017 and now headquartered in Cyprus, the platform initially focused exclusively on CFDs (contracts for difference).

However, the platform has since expanded into other areas of the online brokerage space – subsequently allowing users to actually own the assets they invest in.

At the time of writing, this includes traditional stock market equities and cryptocurrencies. In terms of its CFD offering, this includes everything from forex, stock market indices, ETFs, commodities, and more.

One of the overarching benefits of using a platform like eToro is that the broker is suitable for newbie traders. As such – irrespective of your experience, buying and selling assets via the eToro website is as simple as it gets. Furthermore – and perhaps most importantly, eToro was one of the first pioneers of the social trading phenomenon.

eToro Website

Not only does this allow everyday investors to share, discuss and debate portfolio strategies – but via the Copy Trading feature, inexperienced traders can copy the trades of other investors like-for-like. It is this, alongside the vast number of financial instruments available at the platform, that has made eToro one of the fastest-growing online stock brokers in recent years.

In terms of its regulatory status – eToro is authorized by three key financial bodies. In its home jurisdiction of Cyprus, this includes the Cyprus Securities and Exchange Commission (CySEC). However, the more stringent authorization of the UK’s Financial Conduct Authority and the Australian Securities and Investments Commission (ASIC) are potentially more notable.

Finally, it is also important to mention that – fully in-line with the platform’s target market of newbie traders, eToro supports a huge number of everyday payment methods. While this includes traditional debit/credit cards and bank account transfers, the platform also hosts e-wallets such as PayPal and Skrill.

So now that you have an idea as to what eToro is, in the next part of our review we are going to further explore the types of financial instruments that you can invest in.

What Assets can you buy and Sell at Etoro?

First and foremost – and as we briefly discussed earlier, eToro was originally focused on CFDs, and CFDs only. As a result, there is still a misconception in the public domain that irrespective of the financial instrument you are investing in, you do not actually own the asset. This couldn’t be further from the truth, at least with respect to stocks and cryptocurrencies.

Let’s break this down in more detail.

Stocks and Shares

In a nutshell, when you purchase traditional stocks and shares via eToro, you maintain full ownership of the assets – much in the same way as you would with any other conventional stock broker operating in the space. As such, by purchasing stocks and shares at eToro, you will be accustomed to dividend payments, if applicable.

This is a very important differentiator, not least because previously, you could only invest in stocks and shares that were represented by CFDs. Although we will discuss the CFD department at eToro in more detail further down, this meant that you could only speculate on the movement of equities, as opposed to actually owning them.

Stocks

However, it is important to mention a couple of fundamental conditions for the above to remain constant.

  1. To own the underlying stock, you must ‘Go Long’, as opposed to ‘Going Short’. This means that you purchase stocks in the traditional way, rather than speculating that the value of the stock will go down. If you do want to go short, you will be investing in a CFD.
  2. To own the underlying stock, you must not apply leverage. If you do want to utilize leverage within your stock trades, then you will be investing in CFDs.

In terms of the types of stocks and shares that you can invest in, eToro lists thousands of individual equities listed on multiple stock market exchanges. This includes popular markets such as the NASDAQ and NYSE in the US, the London Stock Exchange, and the Tokyo Stock Exchange. The platform also has a presence in less popular stock markets, such as those based in Spain and Sweden.

Cryptocurrencies

The reason that we have decided to discuss cryptocurrencies before other, more traditional asset classes, is that digital currencies are the only other financial instrument that you can own outright at eToro.

Take note, although you technically own the underlying cryptocurrency – as opposed to simply holding a CFD, you won’t be able to withdraw your coins to an external wallet.

If you wish to withdraw cryptos to your own wallet you will need to use a full exchange such as :

However, we would argue that the regulatory safeguards that come with an eToro account are potentially more secure than utilizing a private wallet – especially if you are a beginner.

Cryptocurrency

Nevertheless, much like in the case of stocks and shares, you will only own the underlying digital currency if you [A] go long, as opposed to short and [B] do not apply any leverage. Once again, if you don’t meet the above requirements, you will instead be investing in CFDs.

In terms of what cryptocurrencies you can buy and sell at eToro, this covers 16 crypto-to-dollar pairs such as BTC/USD, ETH/USD and BTC/USD. You can also trade cryptocurrencies against a number of other base fiat currencies, such as EUR, GBP, and JPY.

For those of you that want to trade crypto-cross pairs, eToro also has you covered. This includes the likes of ETH/EOS, BTC/EOS, and BTC/ETH.

Forex

One of the most widely used segments of the eToro platform is that of its forex department. In fact, the platform hosts dozens of tradable currency pairs across the major, minor, and exotic threshold.

While all major and minor pairs are covered, eToro offers a comprehensive number of less popular cross-pairs. This includes the likes of CFD/HUF, EUR/PLN, USD/MXN, and ZAR/JPY.

Indices

If you’re looking to mitigate your risk by investing in the wider stock markets, then you’ll be pleased to know that eToro lists 13 individual indices. The most popular markets listed include the NASDAQ 100, S&P 500, FTSE 100, and China 50.

eToro also covers stock market indices from Hong Kong, Japan, Spain, France, and Germany.

ETFs

At the time of writing, eToro lists 145 ETFs from a range of different sectors. This includes ETFs facilitated by well-known institutions such as iShares and Vanguard.

Commodities

Finally, if you’re looking for exposure to the highly volatile world of commodities, you have six assets to choose from. This includes oil, gold, silver, copper, natural gas, and platinum.

eToro Fees

So now that we’ve discussed the ins and outs of what you can trade at eToro, we now need to explore how much it costs to trade. First and foremost, it is important to note that eToro does not charge any commissions or trading fees. However, this doesn’t mean that you will be trading for free. On the contrary, you will pay your fees in the form of the spread.

For those unaware, the spread is the difference between the;

Bid Price: the highest price that buyers are willing to pay for a financial instrument

And the;

Sell Price: the lowest price that sellers are willing to sell a financial instrument.

Without intending to digress, it is super important for you to understand how the spread works, not least because this will have a major impact on the fees you pay at eToro.

To assist, we’ve listed a quick example below.

  1. Let’s say that you are looking to invest in Apple stocks.
  2. Upon accessing the market on eToro, you see that the bid price is $200, and the ask price is $210.
  3. As such, we then need to divide the bid price into the ask price, which gives us just over 0.95.
  4. We then subtract the above calculation from 1, which leaves us 0.05.
  5. In percentage terms, this means that the spread is 5%.

As noted above, this is how your eToro fees will work. If, for example, the spread was in fact 5%, this means that the market would need to go in your favor by 5% just to break even. The key problem with this is that eToro does not make the spread fees clear. Instead, you would need to repeat the above calculation to assess how much you are paying.

Nevertheless, to give you a rough idea, major crypto-to-dollar pairs come with an average spread of approximately 1.5%, while crypto-crosses can be as high as 5%. Stocks and ETFs are much lower, rarely surpassing 0.5%. However, less common marketplaces such as those in Spain and France will come with a much higher spread.

Leverage and Overnight Fees

If you are looking to apply leverage to your eToro trades, the amount that you are able to get will depend on the type of financial asset you are trading, as well as your specific location. For example, traders based within the European Union will often be capped to just 1:2 on cryptocurrencies, and 1:5 on traditional blue-chip stocks.

Nevertheless, if you do apply leverage, you will, of course, need to pay an overnight financing fee. Although this varies quite considerably based on the specific financial instrument you want to trade, what we do like is that eToro is very transparent on its overnight financing charges.

When you set-up your trading parametres to include leverage, eToro will give you a breakdown of how much you will pay per day. This includes one rate for Monday-to-Friday, and another rate for holding open trades over the weekend.

So now that we’ve covered the main trading fee structure, in the next section we are going to cover deposits and withdrawals.

Deposits and Withdrawals at eToro

If you’re looking for a broad range of deposit and withdrawal options, eToro has you covered. In terms of funding your account, eToro accepts traditional debit/credit cards, bank wires, PayPal, Skrill, WebMoney, and more. All deposits and free, which is great. Moreover, unless you are performing a conventional bank transfer, most other deposit types are credited instantly.

When it comes to withdrawals, eToro will only consider withdrawals of $50 or more. Regardless of the type of payment method that you opt for, withdrawals come with a $25 fee. In the vast majority of cases, the payments team at eToro will process withdrawal requests within 3 working days. Once they do, the amount of time it will take for you to receive your funds will depend on your chosen payment method.

Social and Copy Trading

We really like the social trading feature that is available at eToro. In a nutshell, the platform has a somewhat ‘Social Media’ feel to it, insofar that investors can communicate with one another in a public setting. For example, if the price of Gold suddenly dropped by 2%, users can share their insights as to why this happened, and where the market is destined to head next.

Moreover, social trading also allows you to view the results of other traders. Not only does this display each and every trade that the investor in question has made, but you can also view the investor’s portfolio. Take note, if you don’t feel comfortable allowing other users to view your statistics or portfolio, you can switch this off at any time.

Copy Trading

On top of social trading, eToro is also well-known for its copy trading feature. As we noted earlier, this allows you to copy the exact portfolio of your chosen investor(s), like-for-like. The copy feature places trades for you automatically, proportionate to how much you want to stake.

For example, if the trader you are copying has a $30,000 portfolio, but you only want to invest $3,000 – then the size of each asset within the portfolio will be split accordingly.

Opening an Account at eToro

A further benefit to choosing eToro over traditional, more established online brokers, is that the account registration process is super easy. If you have all of the required information to hand, you could get the account opened within less than 15 minutes.

In order to get started, you will need to head over to the official eToro homepage and click on the ‘JOIN NOW’ button. This will require you to enter some personal information, such as your full name, home address, telephone number, date of birth, and email address.

eToro Account Signup

As is industry standard in the online brokerage space, you will also need to provide some information on your current financial standing, your experience of trading, and your attitude to risk. These questions are designed to ensure that eToro remains fully compliant with its licensing bodies, and that you understand the risks associated with trading – especially if you’re looking to invest in CFDs.

Here’s a breakdown of some of the main questions that you will need to answer in order to satisfy eToro.

  • How much experience you have in trading
  • Your knowledge in trading
  • What investments you plan to make
  • Your overall purpose of using eToro to trade
  • What your tolerance to risk is
  • What your current financial standing is like
  • Details about your net worth

Once again, although the above questions might appear intrusive, this is standard in the online broker arena.

KYC

Once you have completed the main account registration process, you will then need to go through a somewhat basic KYC (know your customer) program. This is to ensure that the platform meets its anti-money laundering and terrorist financing obligations.

Firstly, you will need to upload a copy of your government-issued ID. This will either need to be a passport, driver’s license, or national ID card. You will also need to upload a recent proof of address, such as a utility bill or bank statement.

Once you complete the speedy KYC process, you’re good to start trading.

Regulation and Security

One of the most important factors to consider when joining a new brokerage platform is its regulatory status. As we mentioned above, eToro is currently regulated on three main fronts. This includes;

  • Australian Securities and Investments Commission (ASIC)
  • UK Financial Conduct Authority (FCA)
  • Cyprus Securities and Exchange Commission (CySEC)

eToro complies with all respect jurisdictional laws, especially with regards to anti-money laundering and data protection. Furthermore, all client funds are held in segregated bank accounts with tier-one financial institutions.

In terms of account security, this is a bit thin on the ground from the perspective of the account holder. Although two-factor authentication is an option, nothing else really stands out. However, eToro does employ a fully-fledged, in-house security team to ensure that your account remains safe at all times.

What Languages Does eToro Support?

As a platform that operates in more than 140 jurisdictions, eToro is now available in 14 different languages. This includes;

  • Arabic
  • Chinese
  • Dutch
  • English
  • French
  • German
  • Italian
  • Polish
  • Portuguese
  • Russian
  • Spanish
  • Swedish
  • Norwegian
  • Malay

Customer Service and Public Reviews

If you need to contact somebody from the eToro customer support team, your best bet is to use the live chat facility. This is operational on a 24/5 basis – meaning if you need help over the weekend hours, you’re out of luck.

This is quite a poor offering from a platform that claims to serve more than 10 million customers. Although it is true that the traditional financial markets only operate during the week, the likes of forex and cryptocurrencies trade 24/7.

Customer Support

Moreover, unless you are based in Australia, you won’t have access to a dedicated telephone support line.

In terms of its reputation in the public domain, this is largely positive. However, the platform does have a rather lousy TurstPilot rating of just 2.5/5. When we explored the negative TrustPilot rating in more detail, this mainly centred on the overly basic nature of the trading arena, alongside above-average fees.

eToro Mobile Application

If you’re somebody that likes the option of trading on the move, you’ll be pleased to know that a native eToro mobile application is available on both iOS and Android devices. Anything outside of these two operating systems will require you to use the standard mobile web browser version of the platform.

Nevertheless, the mobile application is just as user-friendly as the main desktop site, and you can perform the vast majority of account functions. This, of course, includes trading, as well as deposits and withdrawals.

The eToro app on Google Play has a very impressive user rating of 4.2/5, which is across almost 24,000 individual reviews. Over at the Apple Store, this is a more impressive 4.7/5, although this only covers 35 reviews.

eToro Review: The Bottom Line?

In summary, it’s clear to see why eToro is now only of the fastest growing brokers in the online trading space. Not only is the platform super easy to use, but it hosts thousands of tradable instruments. While much of the assets hosted are in the form of CFDs, you can own both blue-chip stocks and cryptocurrencies outright.

In terms of supported payment methods, this is also a plus-point, as eToro allows you to deposit funds with a debit/credit card, bank account, e-wallet, and more. The fact that the platform also holds licenses with three regulatory bodies adds further weight to the broker’s dedication to protecting customer funds.

On the other hand, it must also be noted that trading at eToro is not cheap. While it is true that you will not pay any commissions or fees per-say, the platform more than makes up for this with its above-average spreads. However, this is the price that you will have to pay if you want to benefit from the many benefits that eToro offers.

Visit eToro

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

eToro

8

Ease of Use

8.0/10

Fees

8.0/10

Reputation

8.0/10

Customer Support

7.0/10

Design

9.0/10

Pros

  • Easy to Use Platform
  • Social Trading / Copy Trading
  • Lots of Instruments to Trade
  • Trustworthy & Secure
  • Good Mobile App

Cons

  • No Weekend Support
  • Poor Online Reviews
Kane Pepi

Kane holds a Bachelor's Degree in Accounting and Finance, a Master's Degree in Financial Investigation and he is currently engaged in a Doctorate - researching financial crime in the virtual economy. With a keen passion for research, he currently writes for a variety of publications within the Financial and Cryptocurrency industries. kane@moneycheck.com

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