eToro stands out for its easy-to-use copy-trading platform, an impressive number of Cryptocurrencies, and is set to launch its own debit card in 2020, but will its lack of research and higher spreads hold it back?
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eToro - Reviews & Ratings
• Account Minimum: $50 for U.S Traders
• Regulation: eToro USA is operated by eToro USA LLC, which is registered with FinCEN as a Money Services Business
• Demo account: Yes
• Asset coverage: Cryptocurrency Only for US traders. Stock, Forex, and CFDs available to traders outside of the US
• Best for: Highly experienced traders who want to share their ideas
Risk Warning: You should not trade money that you cannot afford to lose. Before deciding to trade, you should become aware of all the risks associated with trading, and seek advice from an independent and suitably licensed financial advisor. Past performance of an eToro Community Member is not a reliable indicator of his future performance. Content on eToro’s trading platform is generated by members of its community and does not contain advice or recommendations by or on behalf of eToro.
eToro is a social trading platform that offers users access to assets, including cryptocurrencies, stocks and commodities. Launched in 2007, eToro has since proven to be a disruption to the world of trading; by offering accessible trading for all, and reduced reliance on traditional financial institutions.
The platform is a multi-asset trading platform that manages a network for copy-trading, which allows traders to see and copy other traders’ strategies, whether these are shares, indices, or digital currencies.
Overview and Summary
- eToro was born in 2007 to disrupt the world of trading by offering accessible trading for all, and reduced reliance on traditional financial institutions.
- In November 2019, the firm acquired Delta, a crypto portfolio tracker app, which aims to help traders make smarter decisions about their crypto assets by giving traders access to tools like pricing data and portfolio tracking.
- 2019 was the year that saw eToro reach and exceed 12 million registered users in over 140 countries, including the U.S where it is now taking on other industry influencers including Robinhood.
- eToro launched a digital wallet in 2018, allowing customers to transfer and hold cryptocurrencies, and in late 2019, CEO Assia confirmed rumours that it would launch its own debit card in 2020.
- eToro is considered safe and is regulated by the Cyprus Securities and Exchange Commission CySEC, and complies with the European Securities and Markets Authority (ESMA) rules that ensure thorough risk disclosures.
- eToro’s spreads are higher than competitors.
- eToro research offering is standard and could be improved. The platform offers an economic calendar, news headlines but not much else in terms of analysis.
- Apart from a Help Center that offers a list of FAQs and articles on certain topics, anyone that is not a client cannot easily contact a customer support agent.
- Opening an eToro account will require a minimum deposit of $50 for U.S and Australian traders, and $200 for traders in other countries.
- eToro is a great option for highly experienced, successful retail traders who would be interested in sharing their ideas in lieu of rewards.
What is eToro?
eToro’s describes itself as ” a social trading network in which every trader can see in which assets other traders are trading, whether these are shares, indices, or digital currencies.”
This is eToro’s core business, according to its co-founder. “Most of our customers’ trade now is in shares, not cryptocurrencies, and the global stock market went on setting new records in the past year.”
2019 saw an influx of acquisitions, with eToro proving to be no exception to this with their acquisition of Firmo in March. Firmo, a Copenhagen based blockchain business offers a platform that allows traders to execute financial contracts across several assets like cryptocurrency derivatives or create a peer-to-peer lending service.
CEO Assia described this acquisition as a “game-changer… that will help boost growth in the future tokenized economy.”
In November 2019, the firm acquired Delta, a crypto portfolio tracker app, which aims to help traders make smarter decisions about their crypto assets by giving them access to tools, like pricing data and portfolio tracking.
12 Million Users & A Disrupted Financial Space
2019 was the year that saw eToro reach and exceed 12 million registered users in over 140 countries, including the U.S where it is now taking on other industry influencers such as Robinhood.
Although the brokerage’s platform has its downsides, it is well-designed for traders with a basic understanding of forex and cryptocurrency trading.
eToro to Launch its Own Debit Card & Expand U.S Activity in 2020
eToro launched a digital wallet in 2018, allowing customers to transfer and hold cryptocurrencies, and in late 2019, CEO Assia confirmed rumours that it would soon launch its own debit card, which would be offered to customers, in addition to expanding activities in the U.S.
- Social trading platform
- Great mobile experience
- Impressive amount of cryptocurrencies
- Withdrawals don’t work for all cryptocurrencies
- Only crypto trading in the U.S.
Is eToro Safe?
eToro is considered safe and is regulated by the Cyprus Securities and Exchange Commission (CySEC), and complies with the European Securities and Markets Authority (ESMA) rules that ensure thorough risk disclosures.
The broker does state that it may hold client funds in banks outside of the EU economic area, which increases the risk in the case of a bank default, but EU and U.K broker default protection is provided up to $20,000 (£50,000).
A guaranteed stop-loss protection is not provided, nor is additional coverage through private insurers. The order entry interface does not have any risk management features apart from stops and trailing stops.
The platform requires that stop-losses for cryptocurrencies exceed 25% of exposure, which limits customization options and further increases potential risk for traders.
That said, the ESMA enforced new rules in 2018 that state negative balance protection must be in place that ensures clients cannot lose more than 100% of their account value.
The company offers transparent pricing so you don’t need to worry about getting caught out with any hidden fees. There is also no daily limit on withdrawals.
Fees, Spreads & The eToro Club
Even with its commission cuts in 2019, eToro’s fees remain higher than competitors when you take into account its spreads on forex, commodity and indexes that start at around 3.0 pips and S&P 500 at 75.00 pips for the EUR/USD pair.
Spreads are subject to drastic change depending on market conditions. Overnight and weekend holding costs are higher than competitors which can really hit profits hard. Weekday overnight holds cost 24 cents per $1,000 of leveraged exposure that is tripled for weekend overnight holds, but you won’t be charged an overnight fee for non-leveraged exposure.
Withdrawal fees at eToro were recently reduced, and customers are now able to withdrawal as little as $5, excluding bank and credit card fees. There is also a minimum withdrawal of $50.
The broker charges an inactivity fee of $10 per month after 1 year of no trading, which is pretty average.
The eToro Club
The eToro Club offers a customized trading experience where some clients can receive benefits such as discounts and a dedicated account manager. The account has five tiers which are dependent on clients maintaining a balance between $5k-250k.
But fees and spreads aren’t a key factor for traders choosing eToro, typically it’s more for their trading platform and social trading capabilities.
What eToro Does Best
Popular Trader Program
Traders can earn some extra income with eToro’s Popular Trader Program. This program rewards successful traders for sharing their knowledge. By engaging users through the the CopyTrader feature, traders can grow a following and earn special perks that can help increase your earnings.
eToro focuses on how clients can benefit from helping others in the community. By creating interactive news feeds and encouraging clients to communicate with each other, eToro has lead an impactful social media platform for traders.
Built under the premise and understanding that not everyone has the time or expertise to trade actively, CopyTrader enables clients to simply copy other successful trader strategies and portfolios.
You simply allocate whatever amount you decide to another trader of your choice. Their trades are then automatically copied until you decide to stop.
Traders can see other trader’s portfolio, performance history, and risk score, allowing you to make a fully informed decision.
eToro’s web-trading is easy to use and great for those with less experience. However, everyone will appreciate its ease-of-use, including more advanced traders.
The platform offers over 2,000 tradable assets and includes features that will suit both novices and more advanced traders, too. Traders can access full-featured charting, with 66 indicators and multiple drawing tools.
Traders can join the eToro community and feel a part of a group through the platforms social trading, access ready-made portfolios through CopyPortfolios, along with accessing data from CopyTraders. However, there are no third-party alternatives offered, such as MetaTrader which can be a big disappointment for many.
eToro offers traders an excellent trading experience through their mobile app, and brings with it a similar design to the web-trading platform.
The app gives you access to the cryptocurrency market, community, data and 24/7 updates, and all your information will be completely synced with other devices.
Although there are only 5 charts available on mobile, in comparison to 67 on the web platform, they are responsive. The app is missing drawing tools though, which is a disadvantage.
eToro offers another advanced mobile app called Crypto Wallet. This app hopes to meet cryto-currency traders needs by allowing you to easily, and safely store and transfer your cryptocurrencies, held by eToroX, from Bitcoin, Ethereum, Litecoin and more.
It also allows users to exchange cryptos on the go, and buy crypto using your debit card. This app offers a similar design to the eToro mobile app.
The eToro platform is all about accessibility and simplicity. Everything is clear and easy to do, like making watchlists, and placing trades from said watchlists.
Where eToro Could Do Better
eToro’s research offering is standard and could be improved. The platform offers an economic calendar, news headlines but not much else in terms of analysis.
There is research based on the platforms social trading elements, for example the platform extracts data from top traders, which is a unique aspect in its own right.
As the platform is built around a social trading theme, traders are encouraged to get their information from the collective commentary of users in the eToro network, which can offer a limited amount of information, and is a downside if you’re looking for more.
Customer Support: A Clear Divide
There is a clear divide between the customer service that is offered to current clients and visitors. Apart from a Help Center that offers a list of FAQs and articles on certain topics, anyone that is not a client cannot easily contact a customer support agent.
Current clients can use the brokers live chat but anything else is a bit of a mystery. Any customer service links found link back to other pages.
eToro is active on social media including Facebook and Twitter, but they are mainly used for marketing purposes.
In comparison to other brokers, eToro’s list of tradable assets isn’t very varied, and includes 47 currency pairs and 19 commodity/index CFDs. You can access a good amount of over 1,500 shares and 77 cryptocurrency CFDs, which is its prime focus.
Education: An Intentional Downfall?
eToro’s education, like other things, seems to be mainly focused on social trading. Apart a section on social trading, traders can read eToro’s regularly updated blog, a Guide to Fintech, and a daily market review.
The education portal contains a meager 11 programs that are standard enough, and in basic presentation styles. There appears to be no educational material apart from some articles on the FAQs page that describe the platform and its instruments.
This may be an intentional strategy for the broker given that its aim is to encourage successful traders to share their strategies with other traders; a selling-point that is particularly appealing for passive traders who are not interested in learning.
How To Open An Account With eToro
Opening an eToro account will require a minimum deposit of $50 for U.S and Australian traders, and $200 for traders in other countries. There is a maximum deposit of $10,000 per day.
eToro’s demo account, offers unlimited access to users along with a possible $100,000 of virtual money to practice with.
The Bottom Line
eToro is all about social trading and seems to have gained much of its success in a similar way to Robinhood; where Robinhood focuses on offering millennial traders accessible trading through low-costs, eToro focuses on offering accessible trading through copy-trading.
This strategy seems to have earned eToro the right passive audience who want to be apart of share trading ideas, and join the broker in spite of its high-fees or lack of other offerings, such as customer service.
eToro is also a great option for highly experienced, successful retail traders who would be interested in sharing their ideas in lieu of rewards.
Although the platform is easy to use, beginners who would like to be more active, learn more about trading, or have access to a good support team will not suit eToro.
Active or high volume traders will be more suited to Forex .com.
Transacting in virtual currencies is subject to various risks, such as price volatility, and is therefore not suitable for everyone. Your capital is at risk.