Independent Review EToro
https://www.etoro.com Founded in 2007 Headquarters in United Kingdom Open Live Account BEGIN item ContentsIntroQuick LookRegulationAccount TypesFeesTrading PlatformsAssetsCopy TradingRisk ManagementSupportEducationConclusion
Introduction to eToro
Website: https://www.etoro.com
eToro rose quickly to one of the best known and most popular brokers in the world by focusing on social and copy trading. That’s allowed them to grow to over 10 million clients worldwide. Most recently they’ve expanded into the cryptocurrency space, and into the U.S. markets.
The key to their success has been their proprietary trading platform and the ease with which they allow clients to participate in social trading. With a large group of traders looking to be copied, and an even larger group willing to copy them, eToro has found great success. The ease of copy trading at this broker means any retail trader can copy the successful strategy of more successful clients. It’s true other brokers provide this capability too, but none have done it as well as eToro. Their integration with social media is unparalleled. Unfortunately copy trading does not provide guaranteed profits.
It is true the broker compares unfavorably with others in terms of costs, research, and customer service. However it also provides an excellent way for new traders to get started, especially in the realm of cryptocurrencies. You have to try the platform. Many love it, some hate it. You have to try it to make your own decision.
We found it to be innovative and very easy to use. It does not give traders the level of technical analysis found at other brokers, but then that isn’t the specialty here. The specialty is social trading systems.
Most clients can open an account for just $200, but in the U.S. and Australia the minimum deposit is an ultra-low $50. Clients will find the fees here to be much higher than usual, including wide spreads and a $25 withdrawal fee.
One other issue that will be most troubling to more advanced traders is the lack of connectivity for third-party software and robots. Traders cannot use MetaTrader 4 Expert Advisors or anything similar since the broker does not offer VPS hosting or any API interface.
Quick Look
As part of the research process to write this review, we set up a demo account with eToro and accessed their trading platform. The process of opening a demo account was quick and straight-forward, taking no more than 60 seconds.
Once our account was registered we had immediate access to the platform, which we found to be clean, well-organized, and intuitive. It was immediately clear how to switch between real and virtual accounts, how to place orders, where to get additional information, and how to set up a copy trade.
Overall we have to say they’ve done an excellent job in creating a platform that’s ideal for the beginning trader.
Regulations& Licenses
Countries/Regulators
eToro has clients in over 140 countries and is licensed by regulators in the U.K., Australia, and Cyprus. It is the two tier-1 licensing which conveys trust upon the broker.
eToro (UK) Ltd, a Financial Services Company, is authorized and regulated by the Financial Conduct Authority (FCA) under the license FRN 583263.eToro (UK) Ltd, a Financial Services Company, is authorized and regulated by the Australian Securities and Investment Commission (ASIC) under the license 491139.eToro (UK) Ltd, a Financial Services Company, is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) under the license #109/10.
While eToro is not regulated in the U.S., it is licensed in 11 states as a Money Transmitter. This enables the broker to offer cryptocurrency trading services in the U.S.
Languages
The broker offers its website and trading platform in 21 different languages.
Account types
Retail Trader Accounts
eToro has just two account types, the real-money account and the demo account. Nice and simple. No levels or tiers or VIP accounts. Opening an account takes just 60 seconds and as soon as you’re done it takes you right to the platform where you can begin trading on the demo account with $100,000 in virtual funds. If you’d like to go further and trade with real money you’ll need to verify your identity. That can usually be accomplished in under 24 hours and requires you to submit two types of documents:
Proof of identity: a copy of your passport or personal ID.Proof of residency: a copy of a utility bill or bank statement.
That’s it. This may very well be the easiest setup for accounts and allowing traders to get started.
Fees, Costs & Spreads
eToro offers European traders very low CFD fees and no fees for stock and ETF trading. That’s the good news. The bad news is the $25 withdrawal fee and the high forex spreads. As an example, the spread on the EUR/USD pair is 3 pips on average. That’s compared with many brokers who offer spreads on that pair of 1 pip or less. Of course if you’re a European trader looking to trade stocks then eToro offers great value, since they charge no commissions on stock trades. You can trade stocks simply by setting your leverage to 1:1. Any leverage greater than that and you’re trading CFDs with all the related fees, commissions, and spreads.
In general these CFD fees are comparable with other CFD brokers. Many stock and index CFDs have fees that are roughly 0.1% of the position size.
There is also a $10 annual inactivity fee for accounts that have been inactive for a year or longer.
Deposits & Withdrawals
There are no deposit fees and a large number of deposit methods are supported, including bank transfers, credit/debit cards, Paypal, Skrill, Neteller, and WebMoney. Bank transfers take 4-7 business days, but all other deposit methods are credited instantly. There are no deposit limits on bank transfers, but credit/debit cards have a $40,000 maximum, and the electronic wallets have maximums of $10,000 to $20,000. All deposits must come from an account that’s in the client’s name.
Withdrawals incur a $25 fee, and there is a minimum withdrawal limit of $50. Clients are able to withdraw using the same methods as for deposits, and the account must be in the client’s name. Withdrawal requests take up to 1 business day to process, providing we have all necessary information. The estimated amount of time to receive your payment will vary depending on your payment provider. The typical time frame per payment method can be seen in the table below:
Trading Platform
eToro offers traders its own proprietary trading platform in mobile and web-based versions. There is no desktop platform available. The web and mobile platforms are modern, attractive, easy to read, and intuitive. As we’ve mentioned earlier there aren’t many features like you’d find with well-known platforms such as MetaTrader. The platform is easy to navigate and use though, and beginning traders will find it easy to learn.
Web-Based Platform
The web-based platform has a clean, easy to use interface that will appeal to traders who prefer simplicity in their trading. eToro did a very good job in combining an appealing design with functionality when they created the platform. Menus are easy to see, and actions are where you expect them to be. Plus everything is clearly labeled and easy to read.
The watchlist is handy and easy to use, but we liked the “Trade Markets” feature for identifying new opportunities. There is also a section to find traders to copy, and it is both well-laid out and easy to search. You can focus on traders who specialize in certain assets, filter by total return, filter by the location of the trader you wish to copy, or filter based on when the returns were generated.
The only downside is the lack of customization available in the layout of the platform. Those who prefer to trade using technical indicators will also be disappointed with the platform as it has no capabilities for technical analysis.
Mobile App
The mobile app is available for both Android and iOS devices. It has the same clean look and feel as the web-based version, and the same great functionality. The interactivity of the app is good, and it is responsive and easy to use.
Assets Available
Clients can get access to six different asset classes at eToro. There are over 1,900 stock CFDs available, 47 forex pairs, 13 stock indices (CFDs), 145 ETFs (CFDs), 6 commodity CFDs, and 17 cryptocurrencies.
Order Types
Traders can choose from the four basic types of orders: limit orders, market orders, stop loss orders, and trailing stop orders. Placing each type of order is clear and self-explanatory on the platform.
Copy Trading
The strength of eToro, and the feature that helped it grow so large so quickly, is its social trading platforms. This is where the broker really excels, and is why you might consider using them over other brokers. There are two types of social trading offered: CopyTrader and CopyPortfolio.
CopyTrader
CopyTrader is the innovative social trading feature created by eToro. It’s what’s made the broker famous and attracted so many traders to the platform.
CopyTrader allows users to copy the trades of other traders that are on the platform. Not only is it useful, but it’s also a way to trade without doing the research. Let someone else do the hard lifting and reap the rewards.
Users are able to browse through the profiles of other traders, checking their returns and comparing them against each other. There is also a risk score applied to each trader based on their trading profile. It’s possible to see an array of statistics on each trader, including their overall performance, average holding period, and trades per week. It’s even possible to see all of their news feed comments.
There is a minimum of $200 per trade when using the CopyTrader feature, and a maximum of $500,000. Additionally clients are limited to copying no more than 100 traders at the same time.
One of the drawbacks to the CopyTrader feature is the inability to close a partial trade.
CopyPortfolio
CopyPortfolio was designed to be an investment fund for eToro clients. Like CopyTrader it follows the trades of other traders, but in this case it allows users to invest in a theme or in a portfolio of curated top eToro traders.
The proportion of each CopyPortfolio comprised of CFDs is clearly shown. Users are able to read the investment strategy of the portfolio, and then check the historical performance and asset distribution of the portfolio. Each portfolio is built either by eToro’s algorithms or by a third-party partner.
CopyPortfolio’s have a minimum investment of $5,000 and trader’s financial knowledge is checked to determine if CopyPortfolio is suitable for them.
Notification and Alerts
The platform has an alert function that makes it simple to set price alerts on assets to notify you when they reach a certain price. You can also be notified whenever a pending order is filled. On the web-based version this is a browser notification of icon update, and on the mobile platform it is a push notification.
Risk Management Tools
Aside from the ranking of risk scores among traders there are no risk management tools available. Of course if the broker is being used for its CopyTrader feature those risk scores can be very useful in limiting the amount of risk taken on.
Trading Tools and Analysis
As mentioned earlier in this review there are no technical analysis tools included in the platform. There is fundamental data and news that can help in analyzing the assets offered on the platform. There’s a blog too, with daily updates that cover market highlights such as economic releases, earning releases, major geopolitical activity and other market moving events. There’s also some general articles about individual stocks or other assets.
Education and Training
The Education tab consists of links to the blog and daily market report, a guide to Fintech and an explanation of social trading. It’s really very sparse. There’s also a Market Research link in the footer of the website, and that leads to a page of free “research papers” covering several cryptocurrencies. Nearly all these research papers are from 2018, so expect them to be outdated.
Customer Support
The customer support team is available via live chat, but it isn’t easy to find the link to the live chat. Rather than making it large, or a chat icon in the usual lower right corner of the website, it is buried at the bottom of the Help Center webpage. Other than that live chat option eToro maintains a Knowledgebase and a web-based ticketing system that is responded to via email. When we tested the customer service team with some simple questions we found them to respond rapidly, and to be professional. Support is not available on the weekends.
Finance Magnates Independent Opinion & Rating
eToro pioneered the social trading revolution, and while many brokers offer some form of social trading, for most it is nothing more than an afterthought. Social trading is clearly the primary focus of the platform, and is taken to its best form. Traders looking to invest through copy trading need to look no further than eToro.
We also found the platform to be modern, clean, easy to navigate, and intuitive. In general we thought it was perfect for beginning traders, although more experienced traders might miss the technical analysis tools found at most brokers these days.
There were a few things that were offputting, such as the large forex spreads, and the $25 withdrawal fee. In general though the fees, commissions and spreads are fair. We did like the simplicity of the broker, with only one type of account offered, and with most features and functions explained clearly and transparently.
Those looking for an easy way to trade the markets without doing the bulk of the research themselves can definitely benefit from the social trading platform that created the market for social trading platforms – eToro.
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