If you’re constantly looking for new places to invest your money, then you’ve probably come across the eToro platform and might be curious about what they have to offer. How does their service differentiate from the other places where you can buy and sell assets? This article will provide a quick but detailed look at the popular investing platform eToro and give you a full breakdown of their service.
Let’s take a look!
EToro general overview
eToro was founded in 2007 when three entrepreneurs set out to make trading more accessible for everyone and reduce the dependency on financial institutions. Since then, eToro has amassed 18 million traders and boasts that they have helped their users close 333 million total trades.
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EToro was also one of the first companies to normalize zero-commissions trading which is a big reason why they are so popular. This means that as an investor you can buy and sell assets without paying EToro for each trade that you place. Despite offering free trading, there is still no limit on the number of trades that you are able to place.
When it comes to security, eToro partners with Lloyd’s of London to provide up to $1 million Euro/GBP/AUD in investment insurance for their clients.
The company was founded by Yoni Assia, a Fintech 40 member and Fintech Top 100 influencer, who still acts as CEO of the company. EToro is currently valued at $800 million.
Products and Services
Etoro offers plenty of assets for their traders to choose from:
- Stocks – ETFs, fractional shares, indices, CFDs, and stocks from major exchanges across the globe.
- Commodities – 46 in total including gold, silver, oil, copper, natural gas, platinum, palladium, and sugar.
- Currency – 52 in total
- Cryptocurrency – At least 18 different coins to choose from
Pros of eToro
There are pros and cons to using almost any platform and sometimes something that one investor considers a positive thing another might consider a negative. For example, one investor might consider a clean interface as a positive thing whereas another investor is frustrated that the interface lacks data. Mainly, it just depends on what the investor is looking for. That being said, let’s take a look at some of the pros of using EToro.
- Practice portfolio – For new investors, EToro will allow you to use a virtual portfolio with $100,000 to practice your strategy. This essentially allows you to play for free and spend some time seeing how your strategies perform before actually putting any of your money at stake. For beginner investors, this can be incredibly beneficial and can allow you to learn tough lessons about trading cryptocurrency without actually losing any money.
- CopyTrader – By far one of the biggest selling points of EToro’s platform is its CopyTrader functionality. This allows you to simply imitate the moves of some of the most popular and successful traders. There is no management fee to do this as EToro is not managing your money. They simply copy and execute trades that your chosen investor does. This is similar to setting up a portfolio that just buys and sells the same stocks that Warren Buffet does. You can view some of their popular traders here.
- Earn money with CopyTrader – If you have had success as a cryptocurrency trader then it is definitely worth it to consider signing up as a registered investor with eToro and letting people copy your traders. You will receive a fixed payment per copier you have that is paid to you in real, immediately withdrawable funds. However, they do not mention exactly how much each copier you get is worth. You can read a more in-depth review of their CopyTrader here.
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- CopyPortfolios – If you do not want to mimic another trader and are still hesitant to execute your own trades then you can use a CopyPortfolio. These are ready-made crypto funds that track a slew of different coins in a way that’s similar to an ETF or index fund. These have no annual fees.
- Security – There is plenty of security present on their platforms such as an intensive sign-up process that requires uploading proof of identity and address. There is also a secure link to hookup your bank account and deposits are insured by the FCA and the FSCS as well as the FDIC (US).
- Potential returns – Although this is far from guaranteed, some of the top traders on the EToro platform earn returns that are in the 500+% range. Through their CopyTrader functionality, you could be able to mirror these returns.
- Asset options – There are very few platforms that offer the number of tradable assets that EToro does.
Cons of EToro
Now let’s take a look at some of the cons of using the EToro platform:
- Unable to trade options – Despite having plenty of assets to choose from, traders are unable to buy/sell stock options.
- Platform designed for traders – EToro does a great job of offering plenty of tradeable assets. However, if your focus is not on day trading then you might be disappointed with the services that they offer. For example, they have little in the way of retirement accounts, savings accounts, cash accounts, or similar products.
- Inconsistent terminology – The trading terminology on the EToro platform is confusing and, if you’re not careful, could result in you accidentally losing money. On their platform, selling a stock is the same thing as shorting a stock. When you click “sell” they will think that you are trying to short a stock. However, if you want to actually sell your holding then you will need to select “close a trade”. Since they are a trading platform, they technically consider every trade “open” until you “close” it (by selling). We’d recommend brushing up on this topic before you get started.
Reviews and scores
eToro currently has:
- 3.5/5 on the Google Play store with 67,000+ reviews.
- 5/5 stars on the Apple Store with 3 reviews.
Fees and prices
eToro does not charge commissions or fees on their trades and instead uses something called spreads. If you’re not familiar, a spread is a fee that they collect based on the difference between the bid and the offer price, which fluctuates in times of high volatility. In simpler terms, they add a small percentage to your transaction that can vary a little based on current market conditions.
Most other brokers will charge a spread on both the buy and the sell of an asset, but EToro only charges one spread when you first buy the asset and adjusted when you sell it.
See below for the spread percentages on each coin:
Withdrawal and inactivity fees – It costs $5 to make a withdrawal and they will charge you $10 per month if you go an entire year without logging into your account.
Conversion fees – The eToro platform operates in dollars only and charges a fee to convert different currencies. You can read more about how that works here.
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Deposit Fee – There is no fee to deposit money although there is a deposit minimum of $50 and a maximum of $10,000 per day.
Overall takeaway
By far, the best part of the EToro platform is their CopyTrader Functionality (the ability to build a portfolio that copies trades placed by their most successful investors). This is a great way to get great returns on your portfolio without the pressure of placing trades yourself. However, it’s also worth noting that you are also putting your money in the hands of someone else’s decisions. Even though they have a track record of success no investor is perfect, especially when it comes to trading cryptocurrency trading. Just because you copy a successful investor it does not mean that you are immune to taking losses.
Due to the CopyTrader functionality and their overall layout EToro is a very good place for day traders, especially those who have an international focus or are interested in trading all different kinds of assets.
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However, if you do not plan on consistently making trades in the market and are more interested in a long-term strategy then there are probably better platforms that you can explore.
We hope that you’ve found this review of EToro to be valuable in understanding what some of the pros and cons are to using their service. If you’re interested in reading more, please subscribe below to get alerted of new reviews as we write them.
Please see below for the following statements regarding risks associated with trading cryptocurrency using the eToro platform.
67% of retail CFD accounts lose money
Compliance
Please be aware that all trading involves risk. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. This content is for educational purposes only and is not investment advice.
Virtual currencies are highly volatile and put your capital at risk.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that 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.
Past performance is not an indication of future results.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
