eToro Review

eToro Review By Lawrence Pines

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.

Leveraged products can carry a high degree of risk. eToro offers protective measures to manage risk effectively, but in rare occasions, it is possible to lose more money than invested. This content is for information and educational purposes only and should not be considered investment advice nor portfolio management.

In this guide:

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

 
www.eToro.com
OverviewSocial Trading Network
Founded2006
Number of Customers5m worldwide
ProductCFDs
MarketsCommodities
Cryptocurrencies
Stocks
Indices
ETFs
Countries Served60+ (Full list below).
Minimum DepositBetween $50 and $10,000 (depending on country)
FeesSpread + Overnight fees(Full list below) . $25 withdrawal, inactivity fee after 12 months.
Regulator(s)UK Financial Conduct Authority and The Cyprus Securities Exchange
Customer Support24 hour support 5 days a week. No live chat though.
AwardsBest Active Trading Platform in the Money AM Online Finance Awards
Demo AccountYes

Background

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.

Countries of Operation

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.

See all the countries eToro operates in

  1. UK
  2. Argentina
  3. Australia
  4. Austria
  5. Bahrain
  6. Belgium
  7. Brunei
  8. Bulgaria
  9. Canada
  10. Chile
  11. China
  12. Colombia
  13. Croatia
  14. Cyprus
  15. Czech Republic
  16. Denmark
  17. Egypt
  18. Estonia
  19. Finland
  20. France
  21. Germany
  22. Gibraltar
  23. Greece
  24. Hungary
  25. Iceland
  26. India
  27. Ireland
  28. Italy
  29. Jordan
  30. Kuwait
  31. Latvia
  32. Liechenstein
  33. Lithuania
  34. Luxembourg
  35. Malaysia
  36. Malta
  37. Mexico
  38. New Zealand
  39. Nigeria
  40. Norway
  41. Oman
  42. Paraguay
  43. Peru
  44. Poland
  45. Portugal
  46. Qatar
  47. Romania
  48. Russia
  49. Saudi Arabia
  50. Singapore
  51. Slovakia
  52. Slovenia
  53. South Africa
  54. Spain
  55. Sweden
  56. Switzerland
  57. Thailand
  58. The Netherlands
  59. Ukraine
  60. United Arab Emirates
  61. Uruguay
  62. Venezuela

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:

RegulatorCountries CoveredProtection OfferedAdditional Protection Offered
Financial Conduct Authority (FCA)UK, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechenstein, Lithuania, Luxembourg, Malta, The Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.All client funds are held in a segregated client bank accountFinancial Services Compensation Scheme (FSCS) may cover up to £50,000 if eToro fails.
Cyprus Securities Exchange (CySEC)Argentina, Australia, Bahrain, Brunei, Canada, Chile, China, Colombia, Egypt, India, Jordan, Kuwait, Mexico, Malaysia, New Zealand, Nigeria, Oman, Paraguay, Peru, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Switzerland, Thailand, Ukraine, United Arab Emirates, Uruguay, Venezuela All client funds are held in a segregated client bank accountThe Investor Compensation Fund may provide up to €30,000 if eToro fails.

eToro segregates all client funds and holds them in US dollars in Tier 1 European banks. eToro account holders also receive protection from the UK’s Financial Services Compensation Scheme and CySEC’s Investor Compensation Scheme. These services compensate account holders in the event of a brokerage firm’s financial collapse or its inability to make customers whole on their account balances.

As mentioned earlier, eToro has received numerous awards for its online trading platform, which serve as a testament to its high quality of service. In addition, reputable news outlets including Forbes, CNBC and the Financial Times have featured eToro’s OpenBook trading platform, which is now integrated with WebTrader, in their coverage.

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;

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:

  • Bitcoin
  • Dash
  • Ethereum Classic
  • Ethereum
  • Litecoin
  • XRP

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 59 different ETFs in a variety of categories including the following:

  • Commodities
  • Indices
  • Countries
  • Geographic regions
  • Fixed Income
  • Volatility products

3) Stocks: Investors can choose equities from the following industry categories:

  • Basic materials
  • Conglomerates
  • Consumer goods
  • Financial
  • Healthcare
  • Industrial goods
  • Services
  • Technology
  • Utilities

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

  • NASDAQ
  • NYSE
  • Frankfurt
  • London
  • Paris
  • Madrid
  • Milan
  • Zurich

4) Indices: Traders on the eToro platform can place trades on12 indices:

  • The S&P / ASX 200–blue chip Australian stocks
  • China50–50 largest A shares in China
  • DJ30–30 Dow Jones Industrial stocks
  • ESP35–Spanish stock exchange
  • EUSTX50–stocks of the Eurozone
  • FRA40–mostly French-based companies
  • GER30–performance of the German DAX index
  • JPN225–main Japanese stock exchange
  • NSDQ100–largest US non-financial companies
  • SPX500–500 leading publicly traded US companies
  • UK100– London’s blue-chip FTSE100 index
  • 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:

  • Copper
  • Gold
  • Natural Gas
  • Oil
  • Platinum
  • Silver

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 charges fees as a spread when a trader closes a position. The firm does not charge spreads when traders open positions. The eToro spreads in the charts below are the minimum spreads. eToro does not guarantee a minimum spread. Spreads will vary as market volatility and liquidity change.

In addition to eToro spreads, the firm charges fees to traders for holding a position overnight. In the tables below, a negative number denotes a fee, while a positive number indicates a credit. The eToro 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.

See eToro Spreads and Fees

CurrenciesSymbolTypical SpreadOvernight Fee(per 10,000 units)
SellBuy
Euro/US DollarEURUSD3 Pips0.03-0.6
British Pound/US DollarGBPUSD4 Pips-0.3-0.15
New Zealand Dollar/US DollarNZDUSD5 Pips-1.350.15
US Dollar/Canadian DollarUSDCAD3 Pips-0.2-0.2
US Dollar/Japanese YenUSDJPY2 Pips-0.280.01
US Dollar/Swiss FrancUSDCHF3 Pips-1.40.09
Australian Dollar/US DollarAUDUSD4 Pips-10.12
Euro/British PoundEURGBP4 Pips0.03-0.52
Euro/Swiss FrancEURCHF5 Pips-0.90.02
Euro/Japanese YenEURJPY4 Pips0.03-0.36
British Pound/Japanese YenGBPJPY6 Pips-10.03
Euro/Australian DollarEURAUD7 Pips0.23-1.51
Euro/Canadian DollarEURCAD7 Pips0.08-0.72
Australian Dollar/Japanese YenAUDJPY5 Pips-1.80.16
Canadian Dollar/Japanese YenCADJPY6 Pips-0.510
Swiss Franc/Japanese YenCHFJPY6 Pips0.04-0.7
US Dollar/Hong Kong DollarUSDHKD5 Pips-0.98-0.5
USD/ZARUSDZAR20 Pips1.49-2.46
US Dollar/RubleUSDRUB3 Pips1.5-7.4
US Dollar/YuanUSDCNH10 Pips0.1-2.74
Australian Dollar/Swiss FrancAUDCHF4 Pips-0.720.52
Australian Dollar/Canadian DollarAUDCAD4 Pips-0.450.27
Australian Dollar/New Zealand DollarAUDNZD4 Pips0.08-0.18
Euro/New Zealand DollarEURNZD4 Pips0.75-1.17
British Pound/Australian DollarGBPAUD4 Pips0.52-0.83
British Pound/Swiss FrancGBPCHF4 Pips-0.630.43
British Pound/New Zealand DollarGBPNZD4 Pips0.76-1.1
New Zealand Dollar/Canadian DollarNZDCAD4 Pips-0.550.34
New Zealand Dollar/Swiss FrancNZDCHF4 Pips-0.820.53
New Zealand Dollar/Japanese YenNZDJPY4 Pips-0.650.42
Canadian Dollar/Swiss FrancCADCHF4 Pips-0.360.2
USD/NOKUSDNOK10 Pips-0.11-0.02
USD/SEKUSDSEK10 Pips-0.530.3
NOK/SEKNOKSEK20 Pips-0.016-0.066
EUR/NOKEURNOK10 Pips0.2-0.47
EUR/SEKEURSEK20 Pips-0.240.08
USD/TRYUSDTRY15 Pips1.43-3.33
USD/MXNUSDMXN10 Pips0.65-1.44
USD/SGDUSDSGD3 Pips-0.0670.004
GBP/CADGBPCAD4 Pips-0.67-0.013
ZAR/JPYZARJPY5 Pips-0.240.1
EUR/PLNEURPLN20 Pips0.08-0.9
USD/HUFUSDHUF10 Pips-0.7-0.2
EUR/HUFEURHUF10 Pips-0.4-0.6
GBP/HUFGBPHUF10 Pips-0.7-2
CHF/HUFCHFHUF10 Pips-0.5-0.2
USD/PLNUSDPLN20 Pips-0.25-0.5

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.

eToro also charges withdrawal fees of $25 with a minimum withdrawal amount of $50. In addition, the brokerage charges conversion fees to convert into US dollars from a local currency upon deposit and another conversion fee to convert back into the local currency at withdrawal. Fees vary by currency.

Account Requirements

eToro offers several different deposit options for customers. First-time minimum deposits vary from $50 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:

Payment Service ProvidersCountryTime it takes for funds to appear in my trading accountMaximum deposit per transactionRegulatory body
China Union PayHong kongInstantly20,000 USDGovernment of Hong Kong
Credit / Debit card (Visa, Mastercard, Diner's Club)UKInstantly20,000 USDFCA
Giropay (Sofortüberweisung)GermanyUp to 1 business day30,000 USDBaFin
NetellerUKInstantly10,000 USDFCA
PayPalLuxemburgInstantly/ e-cheque payment will take 5-7 business days10,000 USDCSSF, Luxembourg
Skrill Limited UKUKInstantly10,000 USDFCA
WebMoneyUKInstantly50,000 USDFCA
Wire TransferAll3-5 business days depending on value dateUnlimitedDependent on remitting Bank
Wirecard- Wire and Credit CardGermany2-3 business daysUnlimited- Wire 20,000 Ð Credit CardBaFin
YandexRussiaInstantly Ð can take 5 days5000 USDCentral Bank of Russia

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.

See eToro Withdrawal Times

Payment providerTime taken to receive funds on your payment method
China Union Pay1-2 Working days
Credit / Debit cardUp to 5 working days
Neteller1-2 Working days
PayPal1-2 Working days
Skrill Limited UK1-2 Working days
WebMoney1-2 Working days
Wire TransferUp to 5 working days

eToro WebTrader Review

The eToro WebTrader 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 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 drop-down 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 against 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.

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.