eToro is the world’s leading social trading network with more than 20 million registered users. In this in-depth eToro review, we will cover everything you need to know before you start trading or investing with eToro.
eToro is currently (December 2021) in the process of preparing an IPO (Initial Public Offering) which informed sources claim is expected to value the broker at around USD 10 billion.
|⚖️Regulation||FCA, ASIC, CySEC|
|🔑Type of broker||Multi-asset|
Pros & Cons
- Copy top traders automatically
- Extremely user-friendly
- 3000+ instruments
- Tier-1 regulation
- Slow customer support
- High spreads
- Not suitable for advanced traders
- Withdrawal fee
- Inactivity fee
Opening an account with eToro is fairly straightforward. To register you need to choose a username and a password, and submit your email.
After doing that, you can test out the eToro platform with virtual money.
In order to trade with real money, you must verify your identity and address.
Proof of identity can be a copy of your passport, driver’s license, or ID card.
Proof of address can be a utility bill, government-issued letter, or bank statement.
Regulation and Safety
eToro is regulated by the British Financial Conduct Authority (FCA), the Cyprus Securities Exchange Commission (CySEC), and the Australian Securities and Investments Commission (ASIC).
Furthermore, eToro offers its users negative balance protection in case of market shocks. If for example you trade with high leverage and something happens in the market that causes a negative balance, eToro will simply adjust the account balance to zero again.
The negative balance protection applies to both retail and elected professional clients.
eToro is a safe and secure platform to use and they have applied security measures way above the necessary requirements from the regulatory bodies.
eToro is a multi-asset platform, which means you can both invest in assets and speculate in the underlying asset through CFDs (contracts for difference).
You can invest in real stocks and cryptocurrencies. You can trade the following asset classes as CFDs:
- Stocks (2000+)
- Cryptos (40+)
In addition to those aforementioned instruments, you can invest in CopyPortfolios. These are carefully constructed portfolios that have a theme or certain specialization.
eToro doesn’t charge any commissions but earns money through a markup on spreads (except stocks).
You can invest in stocks with zero commission, no markup, and no stamp duty!
Forex: From 1 pip
Crypto: From 0.75%
Commodities: From 2 pips
Indicies: From 0.75 points
Stocks / ETFs (CFD): 0.09%
Crypto (CFD): From 0.75%
Deposit & Withdrawal
All major payment providers are supported including PayPal. The minimum deposit varies between countries, but $50 is usually the absolute minimum.
There are no fees associated with deposits, but if you deposit in another currency than USD, eToro might charge a conversion fee.
eToro charge a controversial flat fee of $5 for withdrawals.
The eToro platform is available on PC (via web-browser) and mobile (IOS, Android).
On the platform, you will have a profile just like Facebook where you can write a short bio and add a profile picture.
You can choose to either have your profile public or private.
eToro offers all European clients standard leverage in accordance with ESMA’s guidelines (European Securities and Markets Authority).
It is not possible for eToro EU/EEA clients to choose a license other than eToro’s default European license (CySEC or FCA).
At eToro, you can choose how much leverage you want to use on a trade, so the leverage isn’t “built-in”.
In practice this means;
- X2 cryptocurrency leverage
- X5 leverage for stocks and ETFs
- X20 leverage for commodities, indices, and exotic currencies
- X30 leverage in major currencies
You can also trade without leverage in most asset classes.
When you buy a stock (without leverage), eToro will buy the stock on your behalf. You have no control in terms of transferring the stock to another broker.
The moment you buy a stock or a cryptocurrency with leverage, it becomes a CFD.
When you trade CFDs, eToro acts as the counterparty on all transactions (Market Maker model).
The history behind eToro
eToro (originally called RetailFX) was founded in 2007 by the two brothers Yoni and Ronen Assia.
eToro was initially an ordinary forex broker, and in 2010 they launched what was then referred to as the eToro OpenBook. This has evolved into the very well-known social trading platform eToro offers all its customers today.
eToro’s OpenBook brought all users together on a social platform (like Facebook) and enabled them to share analytics, ROI, portfolio composition, etc.
In addition, through the eToro OpenBook, you could choose the traders who performed best, and copy everything they did – completely automatically.
This made eToro very popular with retail investors – not just traders…
In 2014, eToro began offering cryptocurrencies, and Bitcoin was first introduced on the eToro platform in the form of a Bitcoin CFD.
In 2015, eToro began offering more cryptocurrencies in a “physical” state – i.e. not as CFDs.
In other words, eToro offered real cryptocurrencies without the clients needing to have their own crypto wallets.
This brought in a massive influx of crypto investors and the user base grew with millions.
In recent years, eToro has also chosen to offer physical shares (not only as CFDs) and this without charging a commission.
Is eToro safe or a scam?
eToro is safe to use and not a scam. It’s under supervision by top-tier regulators such as the British FCA.
The user reviews are very good considering the massive user base.
Negative reviews of brokers are actually quite common, mainly because it’s hard to be a trader and somebody wants someone to blame.
Most negative reviews are actually linked to rules set by regulators. Many don’t know you have to verify your identity before trading with a financial company.
So they deposit BEFORE verifying and call it a scam because they must provide documentation of their ID.
Conclusion and Verdict
We believe eToro is suitable for investors and beginners, but not advanced traders. The spread cost is higher than its competitors and if you trade actively, these kinds of costs matter.
The Copy Trading feature makes the platform perfect for beginners who want to invest in the markets, but not trade themself.