What is eToro?
Founded in 2006 eToro is a CFD trading platform that bills itself as the world’s ‘leading social trading platform’. It provides users with the chance to trade stocks, ETFs, currency pairs, via their contract for different online trading platform. At the time of writing, there have been more than 300,000,000 trades opened on eToro and more than 20 million users. They offer various products and services including an online trading platform, CFD trading, and crypto investing, as well as a copy trader platform that allows you to emulate the trades of more experienced investors.
There is no doubt in my mind that eToro has developed an innovative online trading platform with a wide market range. eToro is often the first online trading platform to offer access to new markets. For instance, they were first to market with cannabis stocks, and offer cryptocurrency “investing”, despite the FCA banning cryptocurrency derivatives.
But what eToro represents is the gamification of a very high-risk investment product that is absolutely not suitable for the majority of investors. The Copyportfolio feature is a nice gimmick, where you can follow successful traders. But the traders you follow are basically just unregulated money managers. Looking at the most copied traders, they hold similar positions to regulated global growth funds, why not buy one of those instead if you don’t want to manage your money? I know who I’d trust more. Although it is probably quite a temptation when as of November 2021 over 68% of their retail clients lose money.
But why if you are a professional trader would you trade with eToro? I remember sat in The Angel on City Road, across the street from my old office when I was a stockbroker at Walker Crips Weddle Beck chatting with a mate about the forex market about ten years ago.
He was talking a lot of sense, but when he mentioned he was trading with eToro, I just couldn’t take him seriously anymore.
Other than dressing up leveraged trading and crypto investing as something that is appropriate for the mass market by advertising on Football shirts, TV spots with footballers (don’t get me started on José Mourinho as the face of XTB or Ronaldo tweeting about forex) there are some things that just make it a bad trading platform.
Mainly that you can only trade in USD. So if you buy Lloyds shares, or trade the FTSE or the DAX your position is in USD, so there is a currency conversion. That’s probably not a big deal if you are trading FAANG stocks (because they are America) or if you are just playing with some fun money because you don’t really understand what you are doing. But if you are a serious trader putting on big positions, you suffer from needless currency exposure and additional currency conversion costs on everything you do. It’s actually quite annoying that eToro makes a big deal about how you don’t have to pay stamp duty on fractional shares but don’t in the same sentence mention that that saving is offset by the USD conversion.
There are good things about eToro though. It’s very easy to open an account. They have the majority of assets that people may want to trade. It feels, quite social, with all the chat on the dealing screen. The copytrading is actually quite innovative and the dealing platform is very simple to use. It’s quite a funky name too, not scary at all, no mention of “Capital Markets” just a fun, take the bull by the horns and off you go…
You can also choose your leverage too – so for example, if you want to trade FTSE CFDs the default leverage setting is 20x, which you can reduce if you want 1x so you have no leverage – but why would you do that? It’s like buying a Ferrari and driving at the speed limit. You know you’re probably going to lose some money, but you’ll have a little fun doing it.
eToro Mobile App
The eToro trading app can be downloaded onto your smartphone or any other mobile device. It gives its 20 million registered users the ability to browse stocks, make trades and use all the features you’ll get from the desktop on the go.
The interface is quite innovative and offers a clean, smooth user experience from one end to the other. eToro has delivered a comprehensive, yet accessible and easy-to-use mobile app.
Overall the mobile apps have a lower rating in the Apple App store and the Google Play store with an average review of 3.75 from 95,00 reviews.
eToro App Pros
- Social trading: The ability to copy the trades of some of the best investors on eToro gives you the chance to leverage the skills and experience of profitable traders.
- Accessibility: The low minimum funds make it more accessible for smaller traders.
- Cryptocurrencies: With 15 leading cryptocurrencies it offers a chance to get involved with the rising crypto scene.
- Leverage: Allows you to choose your own leverage.
- Ease of use: It seems to be designed for beginners so simple to use
eToro App Cons
- Slow withdrawals: Withdrawals can be slow, especially for people used to instant financial transactions.
- FX fees: Funds must be held in USD which can leave you facing fees any time you use any other currency.
- Minimum deposit: The minimum deposit is slightly higher than some of its competitors which could be seen by some as a barrier to investment.
- Educational material: Considering many of its users will be first timers, the platform can be a little confusing and education material is not as good as it could be.
- Withdrawal fees: You’ll sometimes have to pay to withdraw funds.
- Trader statistics: Statistics in the copy trader feature about traders are not as clear as they could be which makes it slightly more difficult to pick a trader.
eToro Trading Account
The eToro trading account is relatively fast to open. This is one of the reasons they have onboarded so many customers, by making the process as simple as possible. The eToro trading platform offers around 3,000 the ability to trade in stocks, commodities, currencies, ETFs, Indices and invest in cryptoassets. The market access is not huge, when compared to IG’s 17,000, CMC Markets’ 9,300 or Saxo Markets’ 19,000.
The trading platform also gives you the chance to use a copy trader feature which allows you to copy the trades and portoflio of another trader. It’s a low-effort solution that theoretically allows you to build a portfolio of positions quickly. However, these trade leaders are unregulated and you can lose money quickly if the trader becomes unprofitable.
The main problem with the eToro trading platform and why it probably won’t ever be taken seriously by professional traders is that you can only hold funds in USDs, an FX fee will be charged any time you buy a stock in GBP.
eToro Investing Account
eToro’s investing account provides a fairly comprehensive service with the benefit of 0% commission on stocks. This means eToro does not charge a commission when opening or closing a position. However, a conversion fee will be incurred for converting funds to USD. This can be a problem because even when you buy stocks in GBP you’ll end up incurring an FX conversion fee.
There is also a spread on the bid-offer price in some cases.
eToro only offers access to some of the most valuable stocks in the world such as Facebook and Apple. You cannot buy smaller cap stocks or obscure ETFs. You can view the live prices of available stocks and quickly open or close positions.
If the company you invest in or trade pays dividends, these will be paid into your eToro account as long as you hold it over the ex-dividend date (they same as any other account). CFD positions get the divided on the ex-div date. Investments get the dividend payment on the payment date.
Although again it will be paid in USD so you lose money on the currency conversion.
eToro Pricing, Charges & Fees
The big headline for eToro is that it does not charge any commission or management fees. But obviously, they make money, so there is a cost to trading with eToro.
eToro does have a number of other charges depending on the product and service. There is a conversion fee for non-US stocks and a flat withdrawal fee. Conversions fees can be a pain as you can only hold funds in USD which means any time you buy a stock in any currency other than USD, you end up paying a fee.
Trades also incur overnight financing fees and spreads. If you leave your account unattended for 12 months, they will also start charging a monthly charge of $10 on any remaining balance although they will not close any remaining positions to cover the fee or put your acocunt into negative equity.
eToro CFD Trading
eToro allows you to apply leverage to increase your exposure without extra capital and offers the advantage of a multi regulated platform in several territories. A demo account allows you to start off by trading CFDs without any real risk. However, if you decide to trade with real money keep in mind thatCFDs are notoriously risky and around 75% of investors lose money. Before you start, you should understand and accept the risks of CFD trading.
With the eToro CFD trading account you can trade 2,976 assets which include 49 forex pairs, 32 commodities, 13 indices, 313 UK stocks and 1,104 US stocks. The eToro universe of traded assets is considerably smaller than other CFD brokers like IG, CMC Markets, and Saxo Markets.
The eToro CFD trading platform will charge spreads and overnight fees. Plus as the eToro CFD platform only allows you to hold funds in USD which means you can end up paying FX charges even when you buy GBP stocks.
eToro Forex Trading
eToro offers a simple, streamlined platform that lets you trade in popular currency pairs such as EUR/USD, GBP/USD, AUD/USD, USD/JPY and USD/CAD. However, eToro only offer, 49 currency pairs comapred to IG,s 51, CMC Markets 71 and City Index’s 84.
Spreads are actually very competative for forex trading. eToro EURUSD spreads are 0.3 compared to IG’s 0.6 and CMC Markets 0.7. For EURGBP spreads are 0.4 compared to IG’s & CMC Markets 0.9.
But it so irksome that everything is settled in USD. So there is a conversion charge on everything. I know that even professional brokers like Saxo Markest convert P&L into the accounts base currency. But you can choose different base currencies for when you are trading products denominated in different currencies with SAxo, with eToro you are stuck with USD.
eToro Copy Trading
We interviewed Yoni Assai about why eToro offer Copy trading and if it could be an alternative to traditional asset management a while ago, but it works in much the same way as someone copying the smartest kid in the class for a test. They recruit experienced traders who will let people copy their trades. They get paid every time you copy a trade they make. Once you reach a certain level and demonstrate a successful track record, you could eventually apply to become one of these traders.
The app makes it possible to choose from top-performing trader and copy everything they do. When they make a trade, you make a trade. If they succeed so will you. In theory, it allows you to mirror the stellar performances of top forex traders without having to get a degree in finance. It’s a much more comprehensive approach than others which might simply mirror the wider market. This picks out individual traders who have been selected for their performance.
But! Just because someone has been good in the past doesn’t mean they will be in the future. It is very difficult to make money trading Forex and even the best in the business never really get it right more than half the time. It simply means they have a better chance of being successful than someone who is entirely new to the game.
Fees are low, but you’ll find yourself having to pay FX fees any time you buy in a currency other than US dollars.
eToro Cryptocurrency Investing
Cryptocurrencies represent one of the fastest growing markets out there but are they all a massive ponzie scheme or huge scam? The thing is no one really knows at the moment. As they move towards the mainstream, interest is growing and some are experiencing dramatic growth.
This means there are real gains to be had if you make the right choice. Conversely, of course, the market is highly volatile and you will see sharp losses within a short space of time. This is not for the faint hearted, you may lose all your money and then some.
To eToro’s credit, they do offer access to cryptocurrencies in a “relatively” safe environment. If I was going to take a punt on an established cryptocurrency, I’d probably do it with eToro over anyone else. But I personally think cryptocurrency is not an investable or tradable instrument -as there is no underlying asset worth anything. Essentially, I think all cryptocurrencies are worth zero. But that doesn’t stop other people from thinking they are worth a lot of money. And if there are more buyers than sellers the price of cryptocurrency will go up. That’s how the financial market works. Companies listed on the stock exchange are capitalised at far more than what they are actually worth, they share price is based on buyers and sellers and what they maybe worth in the future.
But if you are thinking of investing in cryptocurrency – always keep this in mind. There is a very real chance you will lose all your money straight away.
The platform offers one of the widest selection of leading cryptocurrencies such as Bitcoin, Ethereum, Ripple and many others.
The only fees charged by eToro come in the form of spreads which vary from one currency to another. For example, spreads are 0.75% on Bitcoin rising to 2.9% on ADA.
eToro Bitcoin (BTC) Investing
Bitcoin was the first cryptocurrency and is by far the largest. It accounts for almost two thirds of the entire market and has been showing some dramatic moves in recent times. Interest from mainstream investors has given the cryptocurrency renewed momentum with many analysts predicting great things for the future. On the downside it is volatile and risky. Investors are used to coping with rapid rises and steep drops.
You can use eToro to buy and sell Bitcoin. You can either trade between other cryptocurrencies such as Ethereum or move between traditional (fiat) currencies. You’ll be charged spreads of 0.75% but will have an additional withdrawal fee of $5 if you take out your funds.
eToro Ripple (XRP) Investing
Ripple (XRP) is one of the other more established cryptocurrencies and generally vies with Ethereum for second place in the market. It works slightly differently from bitcoin and has been adopted by some major financial institutions to make faster international payments and insurtech networks. The fact that it has some real-world applications for big banks is one reason why some traders are excited by the future.
You can view the latest price for Ripple and trade between other cryptocurrencies and fiat currencies with spreads of 2.45% making it significantly more expensive than Bitcoin or Ethereum. However, this is considerably more transparent than many other cryptocurrency exchanges.
eToro Trading Platform
In summary the eToro trading platform and trading app offers a wide range of products to trade in. It’s free to download and you can use it via your desktop or mobile device. It gives you access to 3,000 assets and gives you access to the supposed wisdom of the crowd (which is quite often wrong -read our piece on sentiment trading) via social trading. This lets you see how other investors have traded and copy them accordingly. The platform is free to download and there are no management fees. However, it does have fees for making deposits or withdrawals.
However, its real point of difference comes in social trading and the ability to invest in crypto. Without these two features, it is very basic and one could argue that UK-regulated trading platforms should not actually have those two features to begin with. The big downside is the restriction to holding funds in any other currency that USD which can leave you facing FX fees when buying stocks in GBP.
With eToro you cannot invest in IPOs. If you want to invest in new issues and IPOs you need an account with a stock broker like Hargreaves Lansdown or Interactive Investor. One of the best places to get access to new IPOs is PrimaryBid. but you will still need a stock brokerage account to hold the shares in as PrimaryBid only acts as a allocator.
An initial public offering happens when a company decides to go public and lists on a stock exchange. It is used by companies to raise capital which can put them on the next level and offers a chance for investors to get in on the ground floor of an exciting business with plenty of room to grow.
eToro International Investing
No, as discussed earlier.
You can buy and sell shares on eToro, and dispite the advertised benefits like zero commission and no stamp duty, you still have to hold them in USD, which is daft. So if you want to buy shares for investing you are better off with a traditional share dealing account.
There are conversion fees for international stocks other than USD. This is because all funds have to be held in dollars. They also charge spreads for cryptos when you close a position which is the difference between the buy and sell price.
Overall, its offering is basic, as there is alimited universe of stocks to buy and sell.
An exchange-traded fund groups together a basket of assets as one tradeable fund. Each one follows a specific strategy and is created by financial institution using a team of experts to meet its goals.
You can trade 256 ETFs with eToro, which to be fair would cover the majority of markets. But, ETFs are really a long term investment product, so if you want to invest in Gold, but don’t want to trade Gold derivatives, you buy a Gold ETF, which is a listed on the stock market and sits in your portfolio with your other shares. If you wanted to speculate in the short term on the price of Gold why not just do it on a Gold CFD with eToro? They offer the after all. So yes, eToro do offer 256 ETFs, but IG offer 2,000 Saxo, 5,000 and CMC Markets 1,000, so…
eToro Copy Portfolios
Imagine having thousands of the best traders working just for you? Did you know that all the best traders in the world are not trading directly on exchange products in a professional and regulated environment with direct compliance oversight, they are all on eToro after seeing Alec baldwin advertise them on the tele – apparently… however, i shouldn’t bee too rude because whatever you think of copytrading it is actualy pretty innovative and transparent. Many providers have tried and failed to produce a good copytrading platforms, covestor, currensea (before it changed into something else) Pelican Exchagne , Seeking Alpha, but eTor has actually made copy trading product work. It allows you to copy in two types of portfolios:
- Top portfolios comprise the best and most sustainable investors on eToro.
- Market portfolios bundle together CFD stocks, commodities and ETFs under a single market strategy.
They help to maximise growth opportunities while minimising risk by creating what they say is the next generation of diversified portfolios. The strategy has been developed specifically for eToro so there isn’t anything else exactly like it. As usualy, those cursed FX fees apply when buying any stock in a currency other than USD.
eToro Education & Analysis
The social trading feed on eToro and the education and analysis section is really for novice traders. It includes market news, analysis, market guides, a trading school, video tutorials and podcasts. There is also a dedicated section describing the concept of social trading. Much of this content can be accessed instantly for free although you can register for access to webinars designed to build your knowledge. The platform does have some useful information and will help newcomers get started. However, it is less comprehensive and offers less real-time market information than many of its competitors.
But, if you really want to understand the markets, here is why you should avoid trading courses and where to get actual trading education.
eToro Professional Account
Unfortunately, the professional account with eToro is counterproductive. eToro is trading gamified, it’s a gateway platform that is easy to use, bright, social (lots of chat on the trading platform) with basic execution tools. It’s really for people who want to dip their toe into high-risk investing. If you are a professional trader you may want DMA and an extended universe of traded assets, which you simply don’t get. All you get is less protection and higher margin rates.
eToro Investment Insurance
Apart from the standard FSCS cover, clients to get free investment insurance purchased from Lloyds of London, this covers you for up to one million GBP, EUR or AUD, depending on the region in the event of eToro’s insolvency. The policy covers cash, CFD positions and securities. However, crypto asset trading (non CFD) are not covered.
The service gives you three layers of protection.
- If eToro is insolvent the liquidator will manage assets and distribute them to the clients.
- If you’re under FCA or CySEC regulations you’ll have certain compensation schemes such as the FSCS or ICF, which cover a certain amount of your cash in the event of an insolvency.
- The insurance policy described above. This is much more generous than the FSCS which only covers capital up to £85,000.
When it was set up eToro was providing an alternative to traditional brokers. It planned to open up investment products which might previously have felt off limits to retail investors. Their offering of a simple online account with zero commission was immensely attractive. Now, though, they also face challenges from a host of other online trading platforms such as Freetrade, Plus500 and Trading 212. Each offers the same heady mix of a simple online trading app with zero commission, but they differ in terms of the products they offer, the stocks you can invest in and their fees. With one you choose will very much depend on your experience, appetite for risk and personal taste.
eToro Versus Trading 212
These are two of the biggest names in online trading. However, they differ significantly in their approach. While eToro focuses on social investing, Trading 212 goes for zero commission and robo trading. Trading 212 is aimed much more at beginners and provides a simple solution. however, you still feela s though the investment product on offer from Trading212 is to entice and upsell users to trade derivatives products. Its interface is simpler, and it has a much larger library of educational resources than eToro.
On the other hand, eToro is for people with a bit more experience. While they do give a nod to newcommers it allows people to get involved in more complex and risky products.
Both are commission free but eToro charges spreads for cryptos and overnight fees on cryptos and also charges a flat fee of $5 for withdrawals.
eToro Customer Reviews
Submit your review
My only problem is that they don’t respond to queries
Trading Platform 5/5
Customer Service 1/5: They don’t respond to queries
Mobile Apps 5/5
Spreads & Pricing 5/5
Market Range 5/5
Trade Execution Speed 5/5
Added Value 5/5
(Trading forex with eToro for under 1 year on a weekly basis)
eToro Trading Platform Video Review
Is eToro safe?
As with any online trader your capital is at risk. However, eToro does operate in a multi regulatory environment under the FCA in the UK, CySEC in the EU, ASIC in Australia.
How does eToro make money?
eToro make money through charges such as spreads, conversion fees and overnight fees for positions that are held overnight.
Is eToro a good app?
Overall, the eToro app scores towards the bottom end of the review spectrum. It is not as good as other trading apps, but it is not the worst.
Is eToro legit?
eToro is regulated by the FCA and approved to offer all its products. However, these products do come with a risk.
How do you sell short stocks on eToro?
Yes ,you can short sell using contracts for differences with eToro. If the market goes down, you’ll make a profit But if it goes up you will lose money.
Does eToro pay dividends?
Yes. If you buy an asset from a company which pays dividends, you’ll receive them in your account.
Do you pay stamp duty with eToro?
No. The platform absorbs stamp duty costs.
Is eToro available in the US?
Yes, in some states. It opened its doors in the US in 2018 and has been gradually rolling out ever since. In those states where it is not yet supported you can sign up to use the virtual portfolio.
Latest eToro News
- eToro reduce Forex spreads – still only offer USD settlement though
- Yoni Assia, eToro’s CEO tells us about bringing copy trading to the masses and becoming a potential challenger to traditional fund managers.
- How and where to buy cannabis stocks, ETFs and copyfunds
- What is eToro’s CannabisCare CopyPortfolio and can it really weed out decent cannabis stocks?
- High Returns? eToro launch the CannabisCare CopyPortfolio
- eToro smashing it all over the place by raising another $100m
- eToro launches innovative CopyFunds investment
- eToro nominated for Good Web Guide “Website of the Year”
eToro Facts & Figures
68% of retail investor accounts lose money when trading spread bets and CFDs with this provider.
eToro Total Markets
eToro Key Info
|Number Active Clients||1,500,000|
|Inactivity Fee||$10 per year|
eToro Account Types
|DMA (Direct Market Access)||❌|
eToro Average Fees