eToro Review 2018

Overview

Warning: All trading involves risk. Only risk capital you’re prepared to lose. Past performance is not an indication of future results. This content is for educational purposes only and is not investment advice.

eToro established the first social trading platform, and in doing so disrupted the conservative online brokerage industry. Investors in stocks, indices, precious metals, commodities, ETFs, forex and cryptocurrencies can use eToro’s innovative investment platform WebTrader and its CopyTrader feature to follow other traders, discuss trade ideas and even copy the successful trading strategies of other traders in the community.

eToro’s groundbreaking social platform has earned it praise from industry watchers. In 2010, Money AM Online Finance Awards named it the Best Active Trading Platform. In 2011, the firm received the World Finance foreign exchange award for best mobile trading platform and best software provider. In 2012, the Share Awards honored the company for best use of social media, and in 2013, eToro received Best Trading Platform at the Star Awards. The 2013 FinTech 50 listed the company as one of the game-changing technologies across Europe.

For a new generation of traders who want to incorporate a social community into their online trading platform, eToro is the ideal solution. This eToro review will provide an overview of the company and discuss the major features of the platform.

Quick Compare

Why Choose eToro?

What's Good About eToro?	What Could eToro Do Better?
Trustworthy broker (we scored eToro 90/100 in our broker trust rating)	No live chat support available
Traders who follow Sharia law can open Islamic accounts	Difference in the way eToro displays leverage on the buy screen which may be confusing to some advanced traders
Wide range of cryptocurrencies available	First screen only shows some of the instruments available for trading (CFDs for listed companies aren't included, for example)
Traders can integrate social features into their trading through the CopyTrader tool	Compared to other brokers, the first-time deposit amount ($1,000 to $10,000) is quite high
Free demo account (which you can keep for life)
24/5 customer support via phone, fax or email

	www.eToro.com
Overview	Social Trading Network
Founded	2006
Number of Customers	5m worldwide
Product	CFDs
Markets	Commodities Cryptocurrencies Stocks Indices ETFs
Countries Served	60+ (Full list below).
Minimum Deposit	Initial deposit between $1,000 and $10,000 (depending on country)
Fees	Spread + Overnight fees(Full list below) . $25 withdrawal, inactivity fee after 12 months.
Regulator(s)	UK Financial Conduct Authority and The Cyprus Securities Exchange
Customer Support	24 hour support 5 days a week. No live chat though.
Awards	Best Active Trading Platform in the Money AM Online Finance Awards
Demo Account	Yes

History of eToro

eToro was the brainchild of brothers Ronen and Yoni Assia, who founded the firm in 2006 along with their partner David Ring. The trio’s vision was to create a trading platform that appealed to a wide audience and was user-friendly.

The concept proved very successful and eToro grew quickly. The firm now serves over 5 million users worldwide. eToro adds thousands of users daily and remains the premier social trading platform.

eToro receives regulatory oversight in two jurisdictions – the United Kingdom and Cyprus. The company operates through London entity eToro UK Limited in the United Kingdom. eToro UK Limited is registered with the UK Financial Conduct Authority (FCA) and is compliant with the Markets in Financial Instruments Directive (MiFID). This compliance allows the firm to operate throughout the Eurozone.

In Cyprus, the company operates through its entity eToro Europe Limited, which has headquarters in Limassol, Cyprus. The Cyprus Securities Exchange (CySEC) regulates the firm and requires it to maintain sufficient capital and segregate client accounts.

eToro offers customers 24-hour support 5 days a week. Customers who need assistance can reach the company by local phone, fax or email. The eToro website supports several languages. eToro does not offer live chat support.

Where Does eToro Operate?

eToro operates in over 60 countries. Regulatory conflicts prevent the company from doing business in the following countries: Iran, North Korea, Myanmar, Syria, Cuba, Sudan and the USA.

Can I Trust eToro?

Any discussion of online brokerage safety inevitably centers on three topics: regulation, quality of service and security technology. In all of these areas, eToro performs very well.

eToro receives regulatory oversight both from the Financial Conduct Authority (FCA) and The Cyprus Securities Exchange (CySEC). These agencies require the firms they regulate to meet stringent guidelines. This table helps you to understand which countries fall under the jurisdiction of which regulator so you can better understand the protections offered:

Financial Conduct Authority (FCA)

The UK’s Financial Conduct Agency regulates eToro’s activities in the UK, but through the FCA’s “passport out” system (which enables an authorised firm to provide financial products or services, set up a base, or run its permitted activities in another country in the European Economic Area (EEA)) the FCA also covers their activities in Ireland and Germany. The fact that eToro is regulated by the FCA is a huge positive. The FCA and the UK is widely respected as a leader in financial regulation and in fact the UK scores highly in Transparency International‘s rankings of countries based on their corruption perceptions index meaning the UK is a pillar of anti-corruption.

eToro customers in the countries listed above are protected by the UK based scheme Financial Services Compensation Scheme (FSCS) which was established to protect consumers when authorised financial services firms fail. In short, it steps in and pays compensation up to certain levels if a regulated firm is unable to pay. Up to £50k of funds deposited into eToro are protected by the FSCS if you are in one of countries that fall under the FCA jurisdiction.

For more information, EToro’s Financial Services Register reference number is FRN 583263.

Cyprus Securities Exchange (CySEC)

The Cyprus Securities and Exchange Commission is the financial regulatory agency of Cyprus. Cyprus is a European Union member and is a financial services industry hub. The country ranks well in the Transparency International league table of countries based on their corruption perception index. This is reassuring if you’re in a country where your eToro activities are regulated by CySEC, although obviously it is worth remembering that the level of compensation available (up to €20,000 if eToro fails) is less than if you are in a country that falls under the jurisdiction of the FCA. The company’s CySEC license number is 109/10.

For more information, you can inspect eToro’s CySEC membership details here.

eToro uses SSL encryption technology to protect its users from cybersecurity attacks. In addition, the firm never shares its clients’ information with outside parties without first obtaining their permission.

The eToro Team

Some of the eToro team. eToro Careers

Who Runs eToro?

The eToro board currently consists of 4 directors. We have listed the main management team and their responsibilities below:

Name	Position	Information
Yoni Assia Yoni Assia via Wikimedia	CEO	Yoni holds a B. Sc. in Computer Science and Management and an MSC in Computer Sciences.
Ronen Assia Ronen Assia via eToro	Board Member	Ronen heads up product direction for eToro and holds a B. Des. in industrial design and an M.A. in design.
Santo Politi Santo Politi via Forbes	Board Member	Santo is a founder and General Partner of venture capital firm Sparks Capital. He holds an MBA in finance from the Wharton School at the University of Pennsylvania, an MS in electrical engineering from NJIT, A BS in electrical engineering and a BS in physics from Bogazici University in Istanbul.
Avner Stepak Avner Stepak via Forbes	Board Member	Avner is the former CEO of Meitav Dash Investments Ltd., which is the 2 nd largest investment house in Israel. He holds an MBA from Tel Aviv University and the Northwestern University Kellogg-Recanati International Executive Program.

eToro Trading Products

eToro offers customers access to trading six different categories of products:

1) Cryptocurrencies

Investors can purchase CFDs in six different cryptocurrencies on the eToro platform:

1. 1. Bitcoin
   2. Ethereum
   3. Bitcoin Cash
   4. XRP
   5. Dash
   6. Litecoin
   7. Ethereum Classic
   8. Lumen (XLM)
   9. NEO

Cryptocurrencies trade as contracts for difference (CFDs) on the eToro platform. Rather than holding the cryptocurrency in a wallet, traders receive the difference between the price of the cryptocurrency at the time of purchase and its current price. Therefore, traders can speculate on the price of cryptocurrencies without the cybersecurity and regulatory risks.

2) ETFs

Investors can choose from 58 different ETFs in a variety of categories including the following:

1. Commodities
2. Indices
3. Countries
4. Geographic regions
5. Fixed Income
6. Volatility products

3) Stocks

Investors can choose equities from the following industry categories:

1. Basic materials
2. Conglomerates
3. Consumer goods
4. Financial
5. Healthcare
6. Industrial goods
7. Services
8. Technology
9. Utilities

They also can choose to trade by exchange. The eToro platform supports trading on the following exchanges:

1. NASDAQ
2. NYSE
3. Frankfurt
4. London
5. Paris
6. Madrid
7. Milan
8. Zurich

4) Indices

Traders on the eToro platform can place trades on 12 indices:

1. The S&P / ASX 200–blue chip Australian stocks
2. China50–50 largest A shares in China
3. DJ30–30 Dow Jones Industrial stocks
4. ESP35–Spanish stock exchange
5. EUSTX50–stocks of the Eurozone
6. FRA40–mostly French-based companies
7. GER30–performance of the German DAX index
8. JPN225–main Japanese stock exchange
9. NSDQ100–largest US non-financial companies
10. SPX500–500 leading publicly traded US companies
11. UK100– London’s blue-chip FTSE100 index
12. USDOLLAR– leading benchmark for the value of the dollar against a basket of popular currencies

5) Commodities

Traders on the eToro platform can place trades on the following commodities:

1. Copper
2. Gold
3. Natural Gas
4. Oil
5. Platinum
6. Silver

6) Currencies

The eToro platform offers trading on 47 different currency pairs.

eToro Account Types

Traders can use one of two different eToro account types – a standard trading account for trading with real money and a demo account, which uses virtual funds to place practice trades.

Traders can open a standard trading account with anywhere between $50 and $10,000. The eToro standard trading account offers traders maximum leverage of 1:400. For example, a trader with a $50 investment can control a portfolio of 50 times 400 or $20,000. eToro offers its maximum leverage for currencies. Commodities and indices can be leveraged at 100 times, while equities can use 5 times leverage.

eToro reserves the right to limit the amount of leverage a trader can use to reduce its overall market exposure. eToro strictly enforces its margin requirements to ensure that the firm remains solvent. When a trader’s cash equity approaches the eToro margin requirements for the account, eToro will alert the customer that they are approaching a margin call. If the cash equity falls below the eToro margin requirement, eToro will initiate a margin call and close the trader’s open positions.

Traders who sign up for an eToro demo account receive $100,000 in virtual currency to trade. Traders can test their strategies by executing practice trades in real time. The eToro demo account also allows traders to test the functions of the platform before committing real money to trades.

In addition, traders who follow Sharia law can open Islamic accounts. These accounts don’t utilize swaps in accordance with Sharia law.

eToro Spreads and Fees

eToro receives its compensation through the market bid/ask spreads, which vary by product. These spreads are charged only when a trader closes a position. In addition to these spreads detailed in charts below, customers may, however, incur the following eToro fees:

Premium

This overnight eToro fee (or credit) is either added to or subtracted from a trader’s account when a position remains open past a certain period of time. The eToro overnight fees charged are multiplied by three if a trader holds a position over Wednesday night. Overnight fees are charged to customer accounts and credits are applied at 17:00 New York time. eToro does not charge overnight fees for non-leveraged buy positions.

Inactivity Fee

eToro charges traders a $5 inactivity fee if traders don’t use the platform for a period of 12 months. This eToro fee only applies only if the trader has sufficient funds in the account. Traders simply need to log in to their accounts periodically to avoid these fees.

Withdrawal Fees

eToro charges a $25 fee for all withdrawals. The minimum withdrawal amount is $50. eToro also charges fees if customers want to convert the funds they withdraw into other currencies.

Stocks and ETFs– Most stocks and all ETFs have a minimum spread of 0.24%, although some higher-priced stocks have a minimum dollar amount as a spread. Overnight eToro fees vary by security.

Account Requirements

eToro serves more than 60 countries worldwide. The process of opening an account is largely the same in each jurisdiction. First, traders fill out a form with some basic information and create a username.

However, before you can trade with eToro for the first time, you need to verify your account with the following information:

1. Government issued ID
2. Phone number
3. Proof of address

The government-issued ID (e.g., passport) must be a high-resolution copy that shows both sides of the document and contains the following:

1. Full Name
2. Date of Birth
3. Photograph
4. Valid Expiry Date

The proof of address can include items issued by a financial institution, utility company, government agency or judicial authority:

eToro offers several different deposit options for customers. First-time minimum deposits vary from $1,000 to $10,000 depending on the country. Account holders can enter the deposit screen in their profile to determine minimum amounts. Maximum deposits per transaction also vary by payment method and country. The chart below details account requirements:

eToro Withdrawal

Withdrawing your funds from your eToro account is easy. You can withdraw funds at any time up to the value of the balance and minus the amount of margin. There is a processing fee attached to your withdrawal and that is currently $25 (and it is worth bearing in mind any withdrawals sent in currencies other than USD are subject to conversion fees.)

You can only withdraw funds using the same method that you used to deposit them, and to the same account as previously used to deposit.

Withdrawal requirements:

• Minimum withdrawal is $50
• You must have a verified account to submit a withdrawal request
• A verified account in simple terms means you must complete your eToro profile by filling in your personal details; answering some economic questions and submitting documentation that meets eToro’s requirements for anti-money laundering.

eToro WebTrader Platform Review

The eToro platform is the most important feature that sets it apart from its competition. The broker created the eToro WebTrader platform as an entirely web-based trading tool. The platform’s crisp graphics and easy-to-read screens make it a perfect tool for novice traders. However, the platform also incorporates many advanced features for more sophisticated traders.

In 2010, eToro created OpenBooks, which is its social platform. OpenBooks offered CopyTrader, which allowed traders to copy the trades of other traders in its community. Recently, eToro integrated its WebTrader platform with OpenBooks, which makes the new eToro WebTrader product a complete social trading platform.

Signing up for eToro WebTrader is easy. Customers set up a profile with their information. They then choose the “Trade for Real” option and are taken to a deposit screen. The screen informs them of minimum deposit requirements and method of deposit based on the country where they reside.

Once in the real trading application, traders will see a screen with some of the instruments available for trading:

The screen offers robust functionality including live interactive charts, an easy-to-use buy/sell button, and account balances among other features. The sentiment function shows the percentage of traders in the community who are buying or selling the instrument. Clicking on the interactive chart button brings up a chart for the security:

The chart function allows the trader to customize the chart using over 60 popular studies and drawing tools including Bollinger bands, moving averages and oscillators among others.

When a trader clicks on the buy or sell button, the following window pops up:

This screen allows the traders to set the size of the trade, the leverage on the trade, and a stop/loss to mitigate risk and a take profit to lock in profits. In addition, traders can decide if they want to hold a trade over the weekend. The large blue open trade button allows the trader to execute the trade.

Most of the features available in the trading screen are very similar to those available from other online brokers. The exception is the sentiment function, which is unique to eToro’s social platform (more on the social functions below).

Another difference between eToro and other online platforms is the way the broker displays leverage on the buy screen. With most brokers, the trader sets the number of units, lots or shares for purchase and the broker calculates the leverage needed given the trader’s account balance.

With the WebTrader platform, however, the trader sets the amount of capital and leverage and the broker calculates the number of units, lots or shares the trader can purchase. While this is not a disadvantage of eToro, it may be confusing to more experienced traders.

Another shortcoming of WebTrader is that the first screen in the real trading application only shows some of the instruments available for trading. The dropdown menu shows currency pairs, indices, and commodities, but fails to list the CFDs for listed companies. To find these instruments, a trader must either use the menu under the Markets section of OpenBooks or find them using the search function in the menu bar. However, a trader unfamiliar with equity markets may not know what stocks are available for trading. Most other online brokers make it easier to find lists of securities available for trading.

The People Discovery section of eToro is where the platform really stands out from its competitors. This section allows the trader to screen for different traders on the platform using country of origin, markets traded, percentage gains and time frame. Traders can also screen by the risk profile of the trader and whether the results have been verified.

Traders on the platform can also use a social feature called Copy People. They can click on a trader they want to copy, set a copy amount for trading and begin copying the trades made by that individual. With this feature, a trader can copy every feature of a trader including the opening of new trades, managing stop loss orders and closing positions.

Other features of the eToro WebTrader platform include Top Trader Insights, which collects data from the top 100 traders on the platform. eToro also provides an economic calendar and market news.

eToro Demo Account

The eToro demo account looks identical to the eToro standard account. The only difference is that traders start with a $100,000 balance in virtual funds. To access the demo account, the trader logs into the account. Next, the trader clicks virtual portfolio and confirms the selection.

Once in demo mode, traders have access to the trading screen, the trade ticket, charts and all of the social features of the platform.

In addition to the demo mode, novice traders have access to other resources to help them learn how to trade. eToro has a section on its platform called Trading Academy, which contains educational resources. Trading Academy offers webinars on how to maximize success on the eToro platform and an education center with eCourses and training videos. Trading Academy also offers a section with tips for new traders.

How Does CopyTrader Work?

One of the main advantages of signing up with eToro is that traders can integrate social features into their trading. We broke down in greater detail how these features work.

eToro has certain guidelines that apply when using the CopyTrader feature:

• Minimum amount to invest in a trader: $200
• Maximum amount of traders you can copy simultaneously: 100
• Maximum amount you can invest in one trader: $500,000
• Minimum amount for a copied trade: $1; trades below this amount will not be opened
• If you close a copied trade manually, the funds from this position will be credited back to your copy balance (the amount allocated to copy that person that is not invested in open positions)

Traders that want to copy all of the opened trades of a copied trader must abide by additional guidelines:

1. The existing open positions will be opened in the copier’s account with the market rates available at the time of copying (not the rates at which the original trades were opened).
2. The trades will have the same stop loss (SL) and take profit (TP) as the original trade.
3. They will mirror the Copied Trader’s future actions including changes in SL and TP and closing of the trade from the moment you begin copying them.
4. You will be able to close a specific copied trade without closing the copy account.
5. If the Copied Trader opens a position in markets that are closed during the time they are copied (market break for example), the system will open a Market Order for the copier. Once the market is open, the order will execute into a position with the first market rate.
6. To see all of the trades copied from a single trader, you can go to your portfolio and click the Copied Trader’s name.

The eToro trading platform has a Discover People section that works like a search engine for traders. This is the starting point for integrating search into your trading. The first thing you’ll notice is the series of filters at the top of the page:

These filters allow you to narrow down the traders you want to follow according to specific criteria:

People From: Traders can choose a country from a dropdown list or they can pick “Everywhere.” The platform then returns a list of traders from the country or countries.

Who Invest In: You can filter by “Any Market” or choose a specific asset class (i.e. currencies, commodities, indices, stocks, ETFs or Cryptocurrencies).

Gained At Least and During The: You can filter by trader returns (i.e. 5%, 10%, 25%, etc.) over a specified time period (i.e. 6 months, 12 months, current quarter, last two years, etc.)

Advanced Features

eToro also has a more advanced trading filter page for traders who want more control over whom they follow.

Time Period: The timeframe for the trader’s activity

Status: Traders can choose to follow only traders who have verified their accounts with eToro as well as only traders who are part of the Popular Investor Program (see below).

Country: Location of trader

Name and Picture: You can choose to follow only traders with profile pictures

Copiers: You can choose to follow traders based on how many other people follow them:

Copiers Change: The percentage change in the number of people following the copied trader.

Copy AUM: The total assets under management of the copied trader. With this feature, you can choose, for example, to follow only traders with assets in their account over a certain amount.

Performance: With these filters, you can choose to follow traders based on the returns of their account, their percentage of profitable trading months or their percentage of profitable trades.

Risk Score: eToro assigns a risk score to each portfolio, which is an indicator of how exposed the portfolio is to market volatility. You can filter by risk score to gauge how much volatility to expect from following a particular trader.

Portfolio: A filter for following based on a trader’s allocation or average trade size.

Activity: A filter for following based on how active a trader is in the market.

Popular Investor Program

eToro has a Popular Investor Program, which has four levels: Cadet, Rising Star, Champion and Elite. Each level has its own requirements and benefits.

In order to apply for the Popular Investor Program, traders must verify their account with eToro.

To be accepted at the Cadet level, traders must meet the following requirements:

• You must not have open positions exceeding the leverages outlined in the eToro Responsible Trading requirements
• You must not have had a risk score higher than 6 in the 2 calendar months prior to joining the program
• You have at least 2 months of trading history in your Stats page
• You have your own unique trading strategy and you are not copying an individual trader or CopyFund with more than 25% of your equity
• Your deposits total at least $1,000
• The account has a minimum average equity of $500
• You have at least 1 verified copier with a minimum AUM of $200

Cadet Popular Investors receive a 20% spread rebate. Rising Star, Champion and Elite level traders can receive fixed payments and even higher rebates if they meet the requirements. Essentially, eToro pays you if you have traders follow you and copy your trades.

Does eToro Offer Sign-Up Bonuses?

eToro no longer offers signup bonuses for new customers due to recent changes in CySEC regulations. Customers who have received credits prior to this regulatory change must meet certain trading volume requirements before they can withdraw these funds.

However, there is a potentially lucrative eToro promotion called the Popular Investor program. The program allows traders to supplement their income while they trade by allowing other traders to copy them. Traders can receive up to 2% of their annual assets under management with this program as well as a 100% rebate on their spreads.

• About the Author

Lawrence Pines Author

Lawrence Pines is a Princeton University graduate with more than 25 years of experience as an equity and foreign exchange options trader for multinational banks and proprietary trading groups. Mr. Pines has traded on the NYSE, CBOE and Pacific Stock Exchange. In 2011, Mr. Pines started his own consulting firm through which he advises law firms and investment professionals on issues related to trading, and derivatives. Lawrence has served as an expert witness in a number of high profile trials in US Federal and international courts.

email

larry@commodity.com