- Copy, social and self-trading using one secure and reliable account
- Innovative features designed to improve investor returns
- Simple and user-friendly platform
- Top-tier regulatory framework
- Customer support – limited means of raising queries
- Fund withdrawal process is robust enough but not really ‘client-focused’
• eToro, since it was founded in 2007, has grown to become the world’s leading social trading network with over five million registered users from over 170 countries.
• The company enjoys a top position in the field of social trading networks and online forex brokers. The value added from the eToro experience come from the ability of clients to draw on the comments, thoughts and even trading signals of other traders.
• eToro’s oversight comes from two agencies – one based in Limassol, Cyprus and the other in London. The product range is broader than that of some other brokers. ETF markets are available as well as more familiar stocks, forex, crypto, commodities and indices. Market coverage is global in nature, as is the client protection. There is 24-hour Customer support offered from Monday to Friday, and it is multi-lingual.
eToro offers account holders access to 1,854 financial markets. This is lower than some competitors, but the key is its ability to combine copy, social and self-trading into one account. There are different account membership tiers within eToro, and the first sub-division of account types is into Personal (individual) and Corporate. Both offer the same general formats of trading, though the corporate version does require working through a more detailed onboarding process. The second layer applied to account types works by considering the size of the deposit made and equity held. Account-holders move up through the ranks from Silver to Diamond. eToro also offers Islamic accounts in accordance with Sharia Law.
Trading at eToro is handled using variable spreads. That means all charges and commissions are set within the bid-offer prices. It has an eye-catching and simple to use platform that allows the investor to navigate between self-trading, copy trading and social trading simply. It is particularly helpful to have a Newsfeed area that allow other traders to offer comment and opinion. eToro, like many of its competitors, offers a user-friendly mobile trading app that is downloadable to both iPhone and Android.
eToro leads the way in providing traders and investors with the best aspects of social and copy trading. Social trading on the platform is a significant differentiator, as groups of traders are able to create a trading desk-style environment where ideas and strategies are discussed. It is particularly helpful for newly signed up investors. However, this should not detract from the standardised brokerage offering that is backed by cutting edge technology and enjoys competitive trading costs, backed by the security of eToro being regulated since its inception in 2007.
eToro is one of the key pioneers of the global fintech revolution. It has grown to become the world’s leading social trading network, with millions of registered users and an array of innovative trading and investment tools.
Originally founded in Tel Aviv, Israel by two brothers, Ronen and Yoni Assia and partner David Ring in 2006, eToro began as a vision of a popular financial trading and investment platform suitable for everyone. The company specializes in the field of social trading and has grown considerably since its inception, with eToro currently enjoying a top position among social trading networks and online forex brokers.
eToro’s oversight comes from two agencies in the European Union and the UK. eToro (Europe) Ltd. is based in Limassol, Cyprus and is a registered Cypriot Investment Firm or CIF registered under the number HE200585. eToro (Europe) is regulated by the Cyprus Securities and Exchange Commission or CySEC under license number 109/10.
In the United Kingdom, eToro (UK) Ltd. is based in London and is a registered UK firm under registration number 7973792. eToro (UK) is authorized and regulated by the Financial Conduct Authority or FCA under the firm reference number 583263. Both eToro (UK) Ltd. and eToro (Europe) Ltd. comply with and operate under the EU’s Markets in Financial Instruments Directive or MiFID.
Currently, eToro has over 5 million users from over 170 countries who enjoy access to trading in currencies, CFDs, indexes and commodities via the broker. The company’s online platform attracts thousands of new accounts on a daily basis and theirs is considered one of the world’s largest social investment networks.
The platform is very user-friendly and its intuitive functionality makes it universally appealing. The ‘value added’ from the eToro experience comes from the ability of clients to draw on the comments, thoughts and even trading signals of other traders. The idea sharing can be done informally (social trading) or more formally (copy trading), but both methods will appeal to those looking for a more ‘hands-off’ trading experience.
The product range is broader than that of some other brokers. ETF markets are available as well as the more familiar stocks, forex, crypto, commodities and indices. Market coverage is global in nature, as is the client protection. eToro account holders will come under the protection of one of the following high-quality regulators: eToro (Europe) Ltd clients are CySEC regulated, eToro (UK) Ltd clients are FCA regulated, and professional clients and clients of eToro Australia Capital Ltd are ASIC regulated.
Who does this broker appeal to?
The stand-out features for eToro clients are the market-leading copy trading and social trading. It’s also very convenient to be able to manage this kind of trading in the same account as the ‘traditional’ self-trading activity.
Signing up to social and copy trading accounts involves a degree of ‘outsourcing’ of the day-to-day trading processes. Taken to the extreme, this involves giving authority to other traders, ‘Popular Investors’, to book trades directly and automatically to a client account. For those who prefer to keep a closer eye on things, the social trading features encourage the sharing of ideas, even on live trading scenarios, but rely on the client to execute their own trades.
All the time, the client has the option to defer to their self-trade account. Since the firm’s inception in 2006, it has stuck with the ethos of designing an online trading and investing platform that is accessible to anyone. Its universal appeal comes from maintaining a balance between providing ease of access to beginners and improving upon advanced features for more experienced traders. As the site has developed and grown, so has its client base, and today the firm claims to be the world’s leading social trading platform.
The first sub-division of account types is into Personal (for individuals) and Corporate. The setting up of either account involves an appropriate amount of document processing. Some comfort can be taken from a broker demonstrating full compliance with Know Your Client regulations, even though the onboarding is expensive for the firm to support and also possibly frustrating for clients. Both Personal and Corporate accounts offer the same general formats of trading, though the Corporate version does require working through a more detailed onboarding process.
The second filter applied to account types works by considering the size of the deposit made and equity held. As account holders move up through the ranks from Silver to Diamond, they accrue a range of benefits ranging from access to live webinars to an invite to the annual Diamond Gala event.
The Affiliate Account system is set up to allow ‘Partners’ to benefit by directing traffic to the site. Each time a visitor clicks through and then funds their account, the eToro Partners program makes a payment to the Partner responsible for the referral. Passive income streams are always welcome, so while this is a little out of the standard retail broker box of tools, it will certainly appeal to some.
eToro is able to offer Islamic accounts in accordance with Sharia law. Deposits must total a minimum of US$1,000 and accounts must be verified. Verification requires the submission of a clear colour copy of a passport and a clear colour copy of a utility bill, not older than three months, showing the account holder’s name and address.
Markets and territories
eToro offers account holders access to 1,854 financial markets. This is some way short of the more than 10,000 offered by the biggest multi-asset brokers but is still a considerable offering. The attraction of eToro is the ability to combine copy, social and self-trading in one account. Providing almost 2,000 markets ensures that the focus can be on the opportunities that come from blending those three trading strategies.
Demonstrating that there are enough markets to be getting on with, there are, for example, 327 London-listed equities from which to choose.
Each stock comes with its own homepage, where traders and investors can view the Feed, Stats or Chart relating to that instrument. The comments and opinions of other traders are easy to access and shared for no charge. There are 93 crypto markets to choose from, which is a very high number and puts eToro in the same bracket as brokers that bill themselves as crypto specialists.
The ability to invest in ETFs will appeal to some, and there are 145 markets, including names such as PIMCO TOTAL RETURN (Active Ex Bond) and UNG (US Natural Gas). It is also possible to trade the 13 largest global equity indices, six commodities and 47 currency pairs. eToro is in the process of rolling out a service to US clients, and currently the offering in that region is limited to cryptocurrency markets.
Customer service at eToro is available 24 hours a day, Monday to Friday, and is multilingual. While the provision of 24/5 support is a plus point, the live chat function has slower response times compared to that a lot of other brokers. After sending initial messages, we typically had to wait for up to a minute for a response. Our testers also reported that there was a sense that the support agent at the other side was only intermittently concentrating on their query. In addition, there was also a strong appetite to very quickly wrap up any queries, which led to several instances of our testers having to reopen a ticket.
eToro functionality encourages users to be proactive in solving any issues. The FAQs section is extensive and does a lot of the heavy lifting by giving the curious and those in need of support a whole catalogue of information. It is not, however, of such a standard that it could replace a human help desk. In our testing, the FAQs area of the site tended to be useful, but only rarely did it completely resolve our queries. The quality levels of eToro customer support would benefit from less reliance on FAQs and improved live chat interaction.
One neat feature of the live chat sessions is that a transcript is sent to the client email address by default, rather than having to be requested. It was useful to have a permanent record provided automatically. Issues that are more complex can be sent using the email-style ‘Open a New Ticket’ function. This allows users to go into more detail, and the responses that we had using this format were completely satisfactory in terms of message content, but the response time on these emails was closer to days than minutes. The eToro customer support is just about adequate but is certainly not the platform’s strongest feature. The absence of a telephone service takes away the option of addressing the most time-sensitive issues via a call.
Instruments and spreads
Trading at eToro is done using variable spreads. The firm’s decision to prioritise simplicity and transparency means that all the charges and commissions are rolled up into the one set of bid-offer prices.
The spreads can look a little wider than other brokers that don’t offer ‘all-in’ pricing, but breaking the numbers out shows that eToro spreads compare very favourably with its peer group. Something else to remember is that the spreads remain the same regardless of whether you are copying someone or trading manually.
The broker offers a very clear and transparent breakdown of all spreads in all markets. Accessing it will provide information on all the latest rates – you can find it here: https://www.etoro.com/trading/market-hours-fees/.
eToro does not currently offer the ECN format of trading.
Fees and commissions
Overnight financing fees are included in the trading dashboard. Having them come up on the execution interface is a really positive step towards transparency and also demonstrates that eToro thinks that its financing rates are something worth promoting. The financing fee calculations are provided in the main part of the site rather than an obscure appendix.
The equations are as follows:
For BUY (long) positions: (Units * Price) * (1% /365) + (Units * Tom-Next Rate)
For SELL (short) positions: (Units * Price) * (1% /365) – (Units * Tom-Next Rate)
Long (BUY), non-leveraged crypto, stock and ETF positions are not executed as CFDs but as ‘receipt vs payment’ transactions and do not incur any fees.
The commissions on trade execution are included in the bid-offer spreads – there are no separate trading costs.
Cash processing fees
eToro charges a $25 fee for cash withdrawals and the minimum withdrawal amount is $50. There are also conversion fees ranging between 50 and 100 pips on wire transfer deposits and withdrawals. The broker offers a full and clear breakdown of fees here: https://www.etoro.com/trading/market-hours-fees/.
In line with the current market trend, eToro applies an inactivity fee of $10 per month for accounts that haven’t been used for 12 months or more. Even just logging in is sufficient interaction to avoid the fee.
Platform review in depth
The eToro platform has a crisp and clean aesthetic and is very easy to navigate. Its simple layout means that traders can move with ease between the site’s three key areas: self-trading, copy trading and social trading.
One very appealing feature that helps eToro stand out from the pack is the News Feed area, where comments and opinions of other traders mingle with official announcements.
The eToro trading platform epitomises the broker’s approach to trading the markets. In summary, it could be described as having powerful trading features that are close to hand but don’t clutter the dashboard. These are supported by a range of unique and innovative features that just make the trading experience so much more pleasurable.
eToro provides mobile trading apps that are downloadable to both iPhone and Android devices, and the functionality of the mobile platform is the same as that of the desktop version. The service is very user-friendly and the clean aesthetics of the site work well on a smaller screen.
The Social Trading area of the eToro platform is a great resource. Groups of traders are able to create a trading desk-style environment where ideas relating to trading strategies are discussed as the strategy actually trades the markets. It all feels very real time, and the groups are a good area to visit to develop trading ideas.
Traders can be even more proactive and start off their own discussions by sharing ideas and questions with the trading community. The ‘Write a Post’ feature allows for any chart to be put up for others to comment on.
One of the main attractions of eToro is its copy trading service. Those wanting to get a better understanding of it or even run a virtual copy portfolio can do so using an eToro demo account. Some other brokers don’t offer copy trading to demo accounts, so eToro already scores positive marks for doing so. A demo account also allows users to get a feel for the site as a whole.
When it comes to automated trading, the copy trade feature is the main plus here. This allows less-experienced users to find and copy other successful eToro traders and involves the ‘following’ account automatically opening and closing positions as and when the ‘Popular Investor’ account does.
Successful traders who gain followers are rewarded through the Popular Investor Program (https://www.etoro.com/en/popular-investor/). There are thousands of Popular Investors from which to choose.
All Popular Investors are required to share not only their ideas but also information about their strategy so that investors can make a more informed choice. eToro also applies an algorithmic filter to present its clients with what it sees to be the best of the Popular Investor Trader accounts. The eToro rankings are based on performance statistics such as total gain or winning ratio.
The Copy Portfolios feature is provided so that clients can copy a bundle of traders rather than a single one, the intention being to diversify risk.
All investors are recommended to carry out their own due diligence before deciding to copy another trader. The parameters used by eToro would form a good starting point of that process. eToro even provides a breakdown of some of the metrics it uses when ranking traders.
eToro offers an impressive 93 crypto markets. When looking for which Popular Investor to copy, it’s possible to set filters by ‘instrument type’, which means those users who want to can set their search to focus on traders of crypto.
Charting and tools
In terms of charting and technical indicators, the platform comes with market standard functionality. It is simple to use and extends to metrics such as moving averages, Bollinger Bands and stochastics.
More experienced traders may find that some particular indicators or advanced charting tools are not available on the eToro platform.
Basic tools such as an Economic Calendar and Daily Market Review are available and form a basic framework with which to approach the trading day. There are more in-depth reports available in a section entitled ‘The Complete Guide to Fintech’.
eToro is very much a pioneer of social trading, and as a result, clients of the site can interactively engage with other traders and get down to discussing the pros and cons of real strategies being applied to the live markets. This is a great way for traders to learn more about the markets, but the more formulaic education and learning areas of the eToro site can only be described as adequate.
Trader protections by territory
Clients of eToro can take comfort from the platform demonstrating an awareness of the importance of regulatory compliance and choosing to operate under licences from top-ranking regulators. Depending on their domicile, clients will fall under the regulatory protection of one of the following.
eToro (Europe) Ltd, a Financial Services Company, is authorised and regulated by the Cyprus Securities Exchange Commission (CySEC) under the licence number 109/10.
eToro (UK) Ltd, a Financial Services Company, is authorised and regulated by the Financial Conduct Authority (FCA) under the licence FRN 583263.
eToro AUS Capital Pty Ltd is authorised by the Australian Securities and Investments Commission (ASIC) to provide financial services under Australian Financial Services Licence 491139.
Operational risk is also considered. All transactions are communicated using 128 Secure Sockets Layer (SSL) technology, ensuring that your personal information is safe. Client funds are kept in tier-one European banks and segregated from the broker’s own accounts.
The eToro General Risk Disclosure can be found here: https://www.etoro.com/customer-service/general-risk-disclosure/.
How to open an account
Setting up a demo account takes moments and leads new users through to the core of the site, and it’s possible to explore the copy and social trading features as well as the self-trading area.
Leverage rates in the self-trading area are set to the preference of the account holder and on a trade-by-trade basis. At the time of execution, traders can adjust the amount of leverage on the trade by just clicking a button. Leverage is dependent on the domicile of the account holder, but UK-domiciled accounts can take levels of 1:1, 1:2, 1:5, 1:10, 1:20 and 1:30.
The minimum account balance is dependent on account holder domicile and whether it is corporate or individual, but the amounts mentioned are generally in line with the industry standard:
USD50 (Australia and the US), USD200 (UK and Europe), USD500 (Russia, China, Hong Kong, Taiwan and Macau). Corporate accounts USD10,000.
Judging by the amount of KYC documentation requested by eToro during the onboarding process, it’s clear that the firm takes its compliance role seriously.
Deposits are allowed using the following methods: credit card (Visa, Mastercard, Diners Club, Maestro), PayPal, Neteller, Skrill, WebMoney, Giropay and Yandex Money, bank transfer (with minimum $500).
The bottom line
eToro continues to lead the way in terms providing traders and investors with the best aspects of social and copy trading. The service is well thought out, and the eToro experience stands out because it provides some very appealing innovative features that other brokers just don’t offer.
eToro also compares well in terms of the ‘standard’ part of the brokerage service. The platform is especially user-friendly and allows all social, copy and self-trading to be carried out in one place. Trading costs are competitive, and the regulators that oversee the operation are as strong as you’ll find. There is only a basic offering of educational and research literature, but eToro clients will more likely engage in the ‘on-the-job’ learning found in the social trading areas of the site, where it is possible to interact with other traders.
The customer services function is something that could be improved. The site is very straightforward and has a transparent layout, but should clients find that they do have a question to ask, they may find it harder than imagined to gain an answer.
Clients of eToro benefit from the site’s cutting-edge technology, but the firm offers the security of having been around the markets since 2007. Over that time, it has acted as a pioneer of the social and copy trading space, and it now hosts in excess of 10 million client accounts.
All trading involves risk. Only risk capital you’re prepared to lose. Past performance does not guarantee future results.
This post is for educational purposes and should not be considered as investment advice.
Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. Your capital is at risk.