eToro Review: Multi-Asset Social Trading And CopyTrading Platform.

April 12, 2020
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In this eToro review, we cover this innovative multi-asset social trading and CopyTrading platform for both active and passive investing. eToro enables people to make active and passive investments in commodities, crypto assets, currencies, indices, and ETFs. This is due to the fact that its business model consists of a social investment platform. In addition, the platform has a CopyTrading system. This system allows users to copy the strategies of the operators with the highest returns and even use filters to select the most popular strategies in the investor network. The platform has more than 20 languages, giving access to millions of people worldwide.

You can open a free demo account to familiarize yourself with the system and the available tools. In the case of real operating accounts, the initial opening amount is a minimum $200 USD. There are some commissions related to currency exchange, withdrawals and night and weekend commissions. However, the platform is friendly, easy to use and also has mobile applications. eToro is one of the most popular social investment platforms in its market segment.

#1 Our eToro Review

In a nutshell, eToro is an innovative, regulated and personalized multi-asset social trading platform with registered offices in Cyprus, Israel, China and the United Kingdom. Furthermore, it counts with millions of users in more than 140 countries. Also, eToro offers the possibility of making active and passive investments for each type of investor out there.

Another key feature of eToro, is that it has a large amount of financial assets. It also has functions, tools and analysis instruments, all in a user-friendly platform that allows each type of user to create their preferred investment strategy.

eToro Review: A Multilanguage Platform

The variety of languages in which you can operate on the platform allows access to millions of people worldwide. As a result, new users have the possibility to see the best strategies within eToro.

languages available in eToro

#2 What Can You Invest In eToro?

The platform has hundreds of Contracts for Difference (CFD) on financial assets. For example, commodities, crypto assets, currencies, indices, and ETFs. It is certainly possible to buy (long positions) or sell (short positions) each of these assets. Moreover, it is possible to carry out operations with leverage. In other words, use debt to finance an operation.

Trading in eToro: Review Of The Most Popular Financial Instruments By Category

  • Stocks. Apple, Tesla, Google, Facebook, Amazon.
  • Raw materials. Gold, Oil, Natural Gas, Silver, Platinum.
  • Crypto assets. Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Cardano (ADA), XRP.
  • Currencies. EUR/USD, GBP/USD, AUD/USD, USD/JPY, USD/CAD.
  • Indices. GER30, NSDQ100, DJ30, SPX500, FRA40.
  • ETFs. SPY, VXXB, TLT, HMMJ, QQQ.

What Are CFDs

  • CFD is the acronym for “Contract for Difference”.
  • This instrument consists of buying or selling a contract.
  • The profit or loss is given by the difference between the entry price and the closing price of the position.

CFD transactions are instantaneous and offer high liquidity. Besides, investing through CFDs does not imply owning a real asset, so, it is possible to operate independently of the market. This is why CDFs allow greater flexibility than traditional investment. For example, access to foreign markets, investment with leverage, the buy of fractions of shares and short selling.

#3 Who Can Invest In eToro

Any type of investor can use eToro, even if they are not an expert. Above all, thanks to CopyTrading, one of the most popular features of eToro, even amateurs can make a profit. This is because it allows you to see in real-time what the highest yielding investors are doing and automatically copy their operations.

Nevertheless, eToro is not available for everyone, anywhere in the world. There are countries where the platform is blocked due to changes in regulations that conflict with trade laws.

You can find the complete updated list of countries where eToro is currently not available here.

In addition, the platform has a direct chat where you can get help regarding restrictions for each type of user and country.

#4 Is It Possible To Copy The Best Investors With The Best Strategies?

Definitely yes. As we mentioned previously, thanks to the CopyTrading function, the investor can follow other traders and copy their strategies. Furthermore, traders are classified in a ranking with available filters to visualize the most copied or most profitable strategies.

This means that you can start out by looking at what works, try it out, get a feel for the platform and then try your own strategies. Who knows, you might end up being on that list of most copied traders further down the road.

#5 eToro Account Types

Once you join eToro, you can open two types of accounts.

  • A real account (standard account), or
  • A demo account

This is pretty much an industry standard since, in trading, you could lose a lot of money if you don’t know what you’re doing. The demo account allows you to practice investment strategies exactly as you would in the real market. You’ll have access to the same statistics, indices and other market information as if you were really trading. That way, you’ll know for sure when you’ve hit a home run or when you strikeout. It also lets you get to know the platform to make trading more natural once you start for real.

#6 How To Create An Account In eToro

As you’ll see in this eToro review, the platform allows you to create an account easily and free of charge. However, to comply with security standards and operate with real money, it is necessary to verify the account in different ways. It’s not that different from opening an account in your local bank branch:

  • Identity verification: eToro will request an image of both sides of your identity document, Passport or driving license
  • Address verification: you will need a recent invoice containing your full name and address.
  • Telephone verification: this is simply a free SMS code you will receive in your mobile phone.

Although the verification process is relatively quick, it may take more than a day to complete, so be patient.

#7 Deposit Limits

Minimum Deposits

For residents of Australia and the United States, the initial deposit is $50 USD. However, the smallest amount of the first deposit for residents of Israel is $10,000 USD.

For the rest of the countries, the minimum deposit to open a real account on the platform is $200 USD. Additionally, after making the first deposit, all subsequent deposits must be at least $50 USD.

There are several methods of depositing on the platform. It is possible to use credit cards such as Visa, Mastercard, Diners Club and Maestro. In the case of a bank transfer deposit, the initial deposit is $500 USD. In addition, platforms such as PayPal, Neteller and Skrill can be used.

Maximum Deposits

Unverified accounts are limited to a total deposit amount of $2,250 USD. In the table below, you’ll find the maximum deposit amounts once the account has been verified.

Payment Service Providers Country Time it takes for funds to appear in my trading account Maximum deposit per transaction Regulatory body
China Union Pay Hong Kong   $50,000 USD Government of Hong Kong
Credit/Debit card (Visa, Mastercard, Diner’s Club)* UK Instantly $20,000 USD FCA
Giropay (Sofortuberweisung) Germany Up to 1 business day $30,000 USD BaFin
Neteller UK Instantly $10,000 USD FCA
PayPal Luxembourg Instantly/e-cheque payment will take 5-7 business days $10,000 USD CSSF, Luxembourg
Skrill UK Instantly $10,000 USD FCA
Wire Transfer All 3-5 business days depending on value date $100,000,000 USD Dependent on remitting Bank
Wirecard-Wire and Credit Card Germany 2-3 business days Wire $100,000,000 USD
Credit Card $20,000 USD
BaFin

*Only debit cards that can receive funds and have a 3 digit CVV code at the back of the card apply.

Transactions are limited to 5 per day. Also, eToro reserves the right to change any of the deposit amount limitations indicated at any time.

#8 Is There A Fee For Adding Funds To The Account?

eToro does not charge any kind of commission for deposits or compensations. However, in some specific cases, there are commissions. Read on to find out when you are charged a commission and how much will it amount to:

Overnight Fee

Commissions apply to all currencies, indices and commodity positions held overnight or on the weekend. In either case, you will be charged the nightly commission for each financial asset.

Indices

For BUY (long) positions: (Units * Price) * (Overnight Fee + LIBOR)/365

For SELL (short) positions: (Units * Price) * (Overnight Fee – LIBOR)/365

Spot Metals And Currencies

For BUY (long) positions: (Units * Price) * (MU /365) + (Units * Tom-Next Rate)

For SELL (short) positions: (Units * Price) * (MU /365) – (Units * Tom-Next Rate)

Spot Energy

For BUY (long) positions: -{[(Markup % * Price) / 365] + [1/NumDays * (Next – Front)]} * Units

For SELL (short) positions: -{[(Markup % * Price) / 365] – [1/NumDays * (Next – Front)]} * Units

Overnight Fee: General Example

Below we will show you a general example so that you can see the fee calculations in action. Take into account that although the data we will use are true to reality in this example, they are fictitious:

Open BUY (Long) position

Initial Investment: 1,000 USD

APPLE STOCK (AAPL) Ask rate: $250 USD

Position: Buying 8 Apple shares

Total Investment worth = 8 units * $250 USD = $2,000 USD

Amount invested = (8 units * $250 USD) / 2 = $1,000 USD (the platform allows leverage)

eToro Typical Spread for AAPL: 0.18%

Value of a minimum AAPL spread move = Price USD * Spread % = $250 USD * 0.18% = $0.45 USD

Overnight fees formula = (Units * Price in USD)* (eToro fee + Libor rate) / 365

eToro BUY Overnight fee: 6.4%

Libor rate: 1.99%

  SPREAD COSTS in USD OVERNIGHT FEES in USD TOTAL COST ON INITIAL INVESTMENT in %
Close position same day ($250 USD * 0.0018) * 8 units = $-3.60 USD $0 USD $-3.60 USD / 1,000 USD = -0.36%
Close position next day        (250 USD * 0.0018) * 8 units =$-3.60 USD ((0.064 + 0.0199) / 365) * 8 units * $250 USD = $-0.46 USD ($-3.60 USD + $-0.46 USD) / $1,000 USD = -0.41%

Inactivity Fee

eToro charges a $10 USD monthly inactivity fee. This happens when you don’t log into your account for 12 months straight. But, the inactivity fee is only applicable if there are still funds in the available balance.

eToro won’t close any open positions to cover the fee. As you would expect, the fee will be suspended the moment the account is activated. For example, after an account owner logs in.

#9 How To Withdraw Funds From Your eToro Account?

This is an important question for anyone interested in investing. How do I get my profits or my money out of eToro if I want to spend it?

As a user, you can withdraw funds from your eToro account at any time. When you do, the funds are withdrawn using the same payment method as when you made the deposit, and to the same account. For example, if you used PayPal to load funds, then the withdrawn amount will go to your PayPal account. If you deposited via bank transfer, then the withdrawal will go to your bank account. Simple!

Is There A Commission To Withdraw Money From The Account?

Yes. There is a flat fee of $5 USD to process any withdrawal. Also, you can only withdraw a minimum of $30 USD. It’s also good to know that there won’t any hidden fees, and you’ll see the fixed commission when executing the order:

Withdrawal amount (USD) Fixed commission (USD) Total you will receive (USD)
$30.00 $5 $25.00

It is important to note that the withdrawal of funds in currencies other than USD is subject to conversion fees. Probably, the intermediary bank, the receiving bank or the supplier of your credit card may make an additional charge.

#10 Is eToro Regulated? Does This Have A License?

A common concern when it comes to investment platforms is whether or not it is a legitimate business.

eToro brokerage services are provided by eToro (Europe) Ltd. (“eToro Europe”), a registered Cypriot investment firm (CIF). Furthermore, the company registration number is HE20058.

eToro Europe is regulated by the Cyprus Securities and Exchange Commission (CySEC) under license number 109/10. Similarly, in the United Kingdom, eToro (UK) Ltd. (“eToro UK”), company registration no. 7973792 is licensed and regulated by the Financial Conduct Authority (FCA) under company reference number 583263.

eToro Europe and eToro UK operate and comply with the Markets in Financial Instruments Directive (MiFID). Likewise, in Australia, services and products are provided by eToro AUS Capital Pty Ltd. (“eToro Australia”). eToro Australia ensures that its clients receive services from eToro Europe.

#11 Is It Possible To Trade From The Cell Phone?

In addition to having an accessible and easy-to-use platform, eToro has apps for both Android and Apple devices. From these apps, it is possible to follow the markets, follow strategies and have access to relevant information.

#12 Etoro As An Information Website

After reading this eToro review, you probably know by now that the eToro platform is built to help both experienced and amateur traders succeed. But the phrase “knowledge is power” is more relevant in investing than anywhere else, so eToro provides resources for its users to learn more and more every day.

The eToro Blog

eToro’s blog is a great place to find articles and news of the world of investing. In addition, you’ll also find conversations between investors and information about the markets. Moreover, if you want to delve deeper into the theoretical foundations of the financial world, you’ll find ample resources there as well.

The Economic Calendar

Markets are like living beings that are susceptible to both foreseen and unforeseen events. eToro’s economic calendar includes all relevant events that could affect the market. This information is important because many financial instruments could present volatility to specific events. For example, the monthly nonfarm payroll report often affects the US dollar.

To take advantage of opportunities, it is important to keep abreast of recent events. This is because there are events with relevant effects in markets around the world.

To be up to date on the platform, you must:

  • Select the time zone and dates that correspond to the operations.
  • See what events affect the assets you invested in.
  • Analyze the impact of each event.
  • Plan the best strategy.

eToro Results Reporting Calendar

On the platform it is possible to have access to a list of the next results reports of the listed companies. Also, the reports are ordered by market capitalization. On the portal, you’ll find details of the financial instruments, sectors and the expected publication date.

#13 Comparison Of eToro With Other Platforms

There’s no doubt that eToro is a great choice when it comes to investing in many different assets. However, there are other options out there like Interactive Brokers and Ava Trade that could entice you just as much. Let’s compare them side by side so you can make up your mind about which is the one for you:

Characteristics eToro Interactive Brokers Ava Trade
Social Trading Yes No Yes
IOS Yes Yes Yes
Android Yes No Yes
Demo Account Yes Yes Yes
Micro Account Yes No Yes
Inactivity Fee Yes Yes No
Deposit Fee No No No
Withdrawal Fee Yes No No
Minimum Deposit $200 USD $10,000 USD $100 USD
Trading Scalping No Yes Yes
Direct Market Access No No Yes
Zero Spread Account No No No
Electronic Communication Network Broker No No No

#14 eToro Review: Pros And Cons

Pros Cons
Easy to use web interface. High rates for currencies.
Competitive rate structure. Withdrawing money is slow and expensive.
ETFs possible to acquire. No live news broadcast.
Platform with the possibility of copy-trading. It only uses the dollar as an account base.
Excellent graphics. There are not many offers.
Great diversity of financial assets. There are fees to withdraw funds.
Easy and fast account opening. Country restriction to operate.
Possibility of using leverage. Opening amount higher than other social trading platforms.
More than 20 languages. No electronic communication with brokers.
There is no commission to add funds. No direct access to the stock market.

Summary Of Our eToro Review

Overall, eToro is an innovative platform that contains a wide variety of financial instruments. It also allows access to different tools and relevant information that makes it a comfortable and easily accessible platform. In addition, it contains research articles, comments, news, tools and reports. In general, it offers services that complement the investor’s activity when creating strategies.

However, on the one hand, there are barriers to creating real accounts, because it is a platform with some restrictions for some countries. On the other hand, there are barriers for small-scale investors, since the minimum amount to make deposits is $200 USD.

In general terms, it’s safe to say that this is a great platform if you want to learn the ropes of trading. With a very familiar app, great UX and the ability to see the best performers in action, this platform could become your stepping stone across the dangerous shark-infested river of the financial world.

If you are considering complementing your trading strategy with long-term positions to obtain a higher level of diversification in your portfolio, we suggest our post “Capitalist Exploits: Investment Opportunities”. In it we cover the type of content and services they offer, how it works and in which markets they recommend investing.