eToro Review 2020
eToro is a brokerage firm founded in Israel in 2007. This trading platform specializes in offering CFD products, cryptocurrencies, stocks, and ETFs for a large customer base of around 11 million investors.
eToro operates in more than 140 countries and even though its headquarters are in Israel, the company also has legal entities registered in various tier-1 financial jurisdictions including the US, Australia, and the United Kingdom. eToro is a well-known fintech company and a safe broker, regulated by UK and Australian top-tier authorities.
Disclaimer: 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.
One of eToro’s main appeals is a feature known as ‘social trading’ which allows users to interact with each other in a social-media like fashion. The platform allows for this sort of engagement between peers by providing a messaging feature, a social feed, and other similar add-ons that we will explain in further detail later on in this review.
According to the company’s own stats, eToro has facilitated more than 300 million trades during its history and the company is expanding its operations progressively, now focusing on entering the Asian markets to provide brokerage services to China and possibly Hong Kong as well.
The following is a list of eToro’s subsidiaries registered in some of the countries where this broker operates:
- United Kingdom: eToro (UK) Ltd. regulated by Financial Conduct Authority (FCA)
- Australia: eToro AUS Capital Pty Ltd. regulated by Australian Securities and Investments Commission (ASIC)
- Cyprus: eToro (Europe) Ltd. regulated by Cyprus Securities and Exchange Commission (CySEC)
- United States: eToro USA LLC regulated by US FinCEN
Why should you read this eToro review?
Since there are so many online brokerage firms and trading apps out there, it may be difficult for you to get enough time out of your busy schedule to review all of them to make an informed decision.
There are so many details to go through that the task of picking the best brokerage may seem overwhelming as you have to figure out which one provides the most competitive fees, the best customer service, the most user-friendly trading interface, and, of course, you want to make sure your money is safe.
For that reason, we came up with this comprehensive eToro review, to help you save time in reviewing what eToro has to offer before you make a decision on which brokerage firm you go with.
You can ultimately use this, and other similar reviews, to compare certain key features and characteristics of the best trading platforms out there, so you can short-list them and give them a try through their demo accounts – if available – to finally choose the one you will use to conduct your trades.
The following topics will be covered by this eToro review:
- Main advantages of trading with eToro.
- How safe it is to trade with eToro.
- Opening an account with eToro.
- Depositing and withdrawing money with eToro.
- Financial products offered by eToro.
- User experience and features of eToro’s platform.
- Trading fees charged by eToro.
- Research tools available for eToro.
- Educational materials available.
- eToro’s customer service review.
- Risks associated with trading eToro.
Is eToro Safe?
eToro is safe and regulated by the top financial authorities.
eToro and its subsidiaries are overseen by tier-1 financial regulators including the Financial Conduct Authority of the United Kingdom, the Cyprus Securities and Exchange Commission (CySEC), the US FinCEN, and the Australian Securities and Investments Commission (ASIC).
Additionally, UK investors are protected by the Financial Services Compensation Scheme (FSCS), while European investors are protected by the Investor Compensation Fund designed for Customers of Cypriots Investment Firms.
eToro is not a publicly-traded company.
What's best about eToro?
There are many good things to say about eToro and, in my view, those positive elements put this broker at the top of the list of the best brokers you can consider if you starting out as a trader.
First of all, eToro offers zero-fee stock and ETF trading for US-listed securities. That alone is a great advantage and puts the platform on top of many of its rivals.
On the other hand, eToro’s fees for CFDs are below the market average, even though its forex broker fees are higher compared to other brokers.
Additionally, eToro’s social platform has an incredible design and it is a captivating alternative for those who are starting out their journey, as traders can connect with more experienced peers or seek potential trading ideas to start off by using the social feed.
However, you should be aware 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 t. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
How to Open an Account with eToro?
The process of opening an account with eToro is simple and fast and it can be done 100% online. It will probably take only a few minutes to go through the registration and you can even take a look at the web platform even if you have not yet registered.
Meanwhile, even though eToro’s trading services are available for most countries, there’s a sizable list of countries that are banned from opening an account with eToro including Albania, Canada, Cuba, Iran, Iraq, Jamaica, Japan, Nicaragua, Pakistan, Syria, and Serbia. Also, US citizens outside the US territory cannot open an account with eToro either.
Furthermore, there are two types of accounts available for eToro traders which are the retail account and the professional account.
Additionally, there’s a demo account available in case you want to test eToro’s platform before depositing your money. This account comes with an available balance of $100,000.
Before you deposit money into the account you will have to go through an ID verification process that will require proof of identity and proof of residency.
The process typically takes less than a day to be completed if all the required documents are sent promptly.
You’ll also have to take a quick survey intended to assess your trading knowledge and experience.
Funding your eToro Account
Depositing money into an eToro account is very easy and the best is that there are no deposit fees.
Money can be deposited by using a credit or debit card or an electronic wallet such as PayPal or Skrill and it will be credited instantly. Bank transfers also permitted but they take up to 7 days to be cleared.
The minimum deposit to open a retail account is $200 for most countries, except for the following:
- Minimum deposit for clients in Israel is $10,000.
- Minimum deposit for clients in the US and Australia is $50.
- Minimum deposit for clients in Russia, China, Hong Kong, Taiwan, and Macau is $500.
- For bank transfers, the minimum deposit is $500.
Meanwhile, the professional account requires the same minimum deposit but allows the user to take on more leverage for transactions, as long as the trader meets certain criteria that qualifies him as a professional client.
In some cases, eToro may require that the first deposit is made via a credit or debit card, but subsequent ones can always be made by using any of the other methods accepted by the platform.
One downside of this broker though is that eToro offers one single currency base for its accounts, the US dollar, in contrast to many other online brokers that offer five or more different currencies for their accounts.
As a result, traders must pay a conversion fee if they deposit funds on their eToro account by using a payment method that features a currency different than the US dollar.
Conversion costs start at 50 pips, which is approximately 0.46% of the amount deposited into the account.
Finally, you can only deposit money from accounts in your name.
eToro Trade Markets & Products
eToro offers hundreds of different financial assets to trade. These include: currencies, indicies, ETFs and cryptocurrency trading. Each asset class can be traded with a different investment strategies.
eToro’s portfolio of available financial products is not the biggest but it is definitely diverse enough to be considered decent and satisfying for most traders.
One upside of eToro compared to CFD-only brokers is that you can also trade real stocks, ETFs, and cryptos, which means that you can actually hold these assets directly and not via CFDs.
On the other hand, eToro is one of the best brokers for cryptocurrency trading, offering a large portfolio of available cryptos for traders who want to focus on this particular market.
Meanwhile, eToro also offers CFDs for other financial assets including commodities and stock indexes along with certain asset management solutions that come with its social trading approach, such as eToro’s Copy Portfolios™ and Copy Traders™ solution.
The Copy Portfolio™ alternative allows traders to copy a pre-designed portfolio offered within the platform, either by eToro’s team or by other traders, to mimic their performance by taking the exact same holdings. The platform takes charge of the account and modifies the user’s portfolio based on the changes that the copied portfolio makes over time.
Meanwhile, the Copy Trader™ solution allows traders to browse through a list of traders within the platform to pick the best performing traders to copy their portfolios.
Both of these features are very attractive for passive traders and for inexperienced traders who are just starting out and could benefit from gaining insights about how others invest their money before they start making their own trades.
Trading Platform Overview
eToro is a multi-asset social trading platform that offers a wide variety of financial products including stocks, forex pairs, commodities, exchange-traded funds, and cryptocurrencies, among others, some traded via CFDs while others are traded directly.
eToro was also one of the first brokers to offer a social trading feature and it could be said that they pioneered the whole trend, as now many rivals are offering similar alternatives, even though eToro continues to lead the way in this particular field.
Social trading is basically a combination of a social-media-like environment within a platform. Traders can connect and chat via eToro and they can also have an entourage, meaning that other traders can follow them and check out what they are trading and how their performance has been in the past.
They have introduced two innovative products in this field: CopyTrader™ and CopyPortfolios™, both of which I’ll explain in more detail later on.
Additionally, eToro platform has gained its reputation as a safe and attractive online broker for both experienced and amateur day traders, especially due to its low trading fees and user-friendly platform.
eToro offers a web-based and a mobile proprietary platform for trading, no desktop platform is available.
This broker’s trading interface features 26 different languages and it looks very polished and modern, possibly appealing to a young audience in opposition to the more classical trading offered by other brokers.
One downside of eToro’s platforms is that the workspace is not customizable, which means that traders have to feel comfortable with the interface as is.
Both platforms – web and mobile – offer a two-step login, which increases their level of security for users. Additionally, their search functions are predictive and allow the trader to easily browse through eToro’s large number of available securities.
Both versions include price alerts and notifications, which are particularly useful, and they can be sent via push notifications.
Reports are available under the ‘Portfolio’ option and traders can easily find a summary of their trades, their market value, and the fees paid. Additionally, an account statement is also available periodically, summarizing the operations made during a certain period.
There are four types of orders that can be placed on eToro:
- Market: a market order is executed at the price quoted at the moment the order is placed.
- Limit: this order sets a maximum or minimum price at which the financial asset should be bought or sold.
- Stop-loss: this order is executed once the price of the security reaches a certain level.
- Trailing stop-loss: an order that allows the trader to lock in gains as it executes the sale of the asset only if the price goes down (or up for a short-position) to a certain point, while it remains inactive while the price keeps moving in favor of the trade.
Trading fees charged by eToro are on the low-end of the industry, while the platform doesn’t charge any fees for trading US-listed stocks and ETFs, a great feature that sets it apart from a wide range of platforms out there.
For CFD trading, eToro’s fees are relatively low and they are built into the spread.
For example, for stock indexes, the S&P 500 CFD trading fee is commonly 0.75 while the Europe 50 CFD trading fee is 3.
Meanwhile, forex pairs are fairly expensive to trade by using the eToro platform, as the cost of trading EURUSD is 3 pips while many other platforms charge between 0.6 and 1 pip per trade.
As for other types of fees, eToro charges a $10 monthly inactivity fee if the user fails to log into the account for 12 months. For overnight rollover fees it depends based on current market conditions.
eToro offers technical analysis tools along with some recommendations by analysts, but lacks a bit on the fundemental data.
Each financial asset has its own market sentiment tracker, which indicates the percentage of traders inclined to buy or sell the security along with comments from analysts for certain popular assets.
Charting tools are alright, as the platform features more than 70 technical indicators and charts are automatically saved. However, the longest time horizon permitted by the charting tool is 6 months, which is definitely disappointing.
On the other hand, the news feed is limited to tweets and comments from traders within the platform but no major media outlet such as Reuters or Bloomberg is included.
Furthermore, the fundamental data provided for individual stocks consists of basic financial ratios but no historical record of balance sheets, income statements, price targets, or earnings estimates are included.
To some extent, it can be said that eToro’s main strength is its social trading feature which allows the eToro community to share trading ideas between them while no relevant third-party analyses are offered within the platform’s interface.
Education is definitely not the strongest suit of eToro as the educational material offered by this broker is limited to platform tutorials and frequently asked questions that intend to address certain matters regarding the platform’s functionalities, the financial assets available, trading fees, and other similar topics.
However, the demo account helps beginners in their process of learning without having to commit any money to their operations at first.
The customer service provided by eToro is decent, even though it lacks in a few areas.
There’s a live chat feature but it is a bit hidden within the FAQ section and traders have reported that representatives are busy and no attention is available during the weekends.
Meanwhile, there’s no e-mail or phone support, as this broker relies on support tickets sent through the trading interface. The responses to these tickets are sent to the e-mail inbox of each user and the response time is typically fast – 24 hours or less.
Overall, eToro’s customer service is not the best out there but it should be sufficient to deal with basic issues.
Withdrawing money from eToro is easy but it has a cost as eToro charges a $5 withdrawal fee and requires a minimum amount of $30 per withdrawal.
Money can be withdrawn to a debit or credit card, electronic wallet, or bank account, even though the user must be aware that withdrawing money to a method that has a base currency different than the US dollar will result in an extra conversion fee.
For cyptocurrencies, the eToro wallet is available (eToroX), which is a multi-currency crypto wallet.
Credit, debit card, and electronic wallet withdrawals are sent instantly while bank transfers typically take 2 business days to be received.
Other Important Information About eToro
There are various risks associated with CFD trading that investors should understand before they start buying and selling these financial instruments.
In this sense, eToro outlines the main risks associated with CFD trading to help investors in considering whether they want to be exposed to such risks or no.
Some of these risks are:
- You can lose more money than your deposit if a leveraged trade moves against you. You can also make money.
- Retail investor accounts may be closed if your balance falls below a certain minimum threshold.
- Potential slippage may occur, which means your trades may not be closed at the exact stop price of your stop-loss order, causing you to lose more money than expected.
- With CFDs, you don’t hold the underlying financial asset tied to the contract.
- There are holding costs involved if CFDs are held for longer than one day.
- CFD trading is not a suitable practice for investors seeking a stable source of income as no dividends are paid on the underlying securities.
eToro Review Summary
- eToro is an online broker founded in Israel in 2007.
- This platform offers a wide variety of CFDs and forex pairs along with the possibility of trading US-listed ETFs and stocks for free.
- This broker operates in more than 140 countries and has over 11 million clients based on recent reports.
- The platform offers social trading features such as copy trading.
- eToro is regulated by various tier-1 jurisdictions including the Financial Conduct Authority (UK), ASIC (Australia) and FinCEN (EEUU).
- CFDs are financial instruments that don’t entitle the holder to the ownership of their underlying asset.
- CFDs are risky financial instruments and 75% of eToro accounts lose money when trading CFDs with this provider.
- eToro is not a publicly-traded company and it is also not backed by a reputed financial institution.
- An account with eToro can be opened online and it only takes a few minutes to complete the registration process.
- Even though many countries are allowed to operate through eToro, their services are also banned in a list of more than 30 countries including Canada, Cuba, Iran, Iraq, and Nicaragua.
- The minimum deposit to open an account with eToro is $200, even though the amount varies for residents of Israel, Russia, China, Hong Kong, Taiwan, Macau, Australia, and the United States.
- For bank transfers, the minimum deposit is $500.
- Users can sign up for a demo account before depositing money into eToro and they are entitled to a balance of $100,000 to conduct trades.
- Before depositing money into the account an ID verification process must be conducted.
- eToro doesn’t charge deposit fees.
- This broker only offers a single currency – the US dollar – for its accounts. Conversion fees must be paid for deposits and withdrawals made to methods that feature a different currency.
- eToro is a multi-asset platform that offers a decent selection of US-listed stocks, ETFs, forex pairs, cryptocurrency trading as well as CFD.
- Traders can also enjoy the platform’s social trading features including copy trading and copy portfolios.
- Copy trading is a feature that allows traders to mirror the portfolio of other traders within the platform.
- eToro’s trading platform comes in 26 different languages.
- Charting tools include more than 70 technical indicators.
- Traders can set price alerts and other notifications sent via push.
- Both the web and mobile version of the platform offer a two-step login for an extra layer of security.
- There are four types of orders available including a trailing-stop order.
- Trading fees charged by eToro are below the market average for CFDs, while the spread charged on forex pairs is higher than the average.
- There are no fees involved in trading US-listed stocks and ETFs.
- There’s a $10 inactivity fee for users who fail to log into their accounts for a period of 12 months.
- Research tools within eToro’s platform are limited to market sentiment indicators, analysts’ recommendations, and basic financial information.
- Educational tools are limited to platform tutorials and a FAQ section.
- eToro’s customer service team can be reached via live chat or ticket submission.
- eToro does not offer 24/7 customer support and users have reported that the live chat feature is offline many times.
- Withdrawing money from eToro costs $5 in withdrawal fee and a minimum $30 withdrawal is required.
eToro is a safe, zero-commission stock broker. Account opening is quick and the platform is best for social trading and copy trading.
There are some drawbacks to using eToro. Forex broker fees are quite high, eToro only allows USD deposits and withdrawals and the educational tools are somewhat limited.
To summarize, we can recommend eToro as the best social trading platform and their zero-commission stock trading.
- Best Social Trading Platform
- Zero-Commission stock Trading
- Regulated by top-tier Authorities
- Easy to Use
- Great Variety of Investments