eToro was founded in the year 2007 and has around 10,000,000 clients all over the world. It primarily pays particular attention to social and copy trading. Additionally, eToro also provides the same services in the cryptocurrency space.
Implementing copy trading for a client is quite easy on the eToro platform. There are some traders on the eToro platform who follow risk control rules and allow their trades to be copied. In this way retail account holders are permitted to mimic the different trades and strategies of these successful clients automatically as they are carrying them out.
According to this review on business24-7 many other brokerages have similar capabilities but most of them have not incorporated social media communication as well as eToro has. There is no guarantee that copy trading will make a profit or loss in itself.
eToro might have a couple of weaknesses in comparison to other trading platforms, but their platform is extremely well geared towards those who are familiar with forex and cryptocurrency trading. The price of trading on eToro is fairly higher than others for forex trades, a fact which together with their only online customer service, might spur you on to stay or trade somewhere else.
eToro uses an online chat and ticket to solve queries raised by clients like trade issues or account queries. They do not provide more in order to help you sort out trades and such. This lack of top-notch support for customers is most probably driving them away.
To open an account will cost you $200. If you are in the US or Australia, you only need $50 to do the same. eToro has high withdrawal fees, in the amount of $25 plus banking costs. While these withdrawal fees might be annoying, the lack of proper technology for connecting might be a bigger annoyance for traders who are more advanced.
Their platform does not allow adding third party algorithms or software, such as MT4. Reason being that eToro has no API interface. Due to these shortcomings, coupled with high spreads and a small catalog of products, prospective clients could leave for other brokerages.
- Social or copy-trading platform
- Strong and clear charting
- Skilled cryptocurrency catalog
- Standalone version is unavailable
- Very little Customization
- No streaming news
eToro has authorization through the Cyprus Securities & Exchange Commission (CySEC) as well as being compliant with ESMA (European Securities and Markets Authority) rules. To some, the fact that eToro is domiciled in Cyprus, might be a matter of concern, as not so long ago in 2012, the country experienced a financial crisis.
eToro is also licenced under the FCA (Financial Conduct Authority). eToro’s fine print stipulates that they may hold client funds in banks outside of the European Economic Area, a matter which increases risk in the event there is a bank default. However, they do offer EU and UK broker default protection up to €20,000 or £50,000.
eToro offers no stop-loss protection or extra insurance covering. Their order-entry interface has no risk management features, besides stops and trailing stops. Because stop losses for crypto trading cannot be less than 25%, it further increases investor risk and limits customization. Due to ESMA rules of August 2018, clients cannot lose more than 100% of their account value.
Certain security measures are taken which includes multi-factor authentication and standard SSL encryption.
The eToro platform runs on the web and is designed to offer ease of use. Though there is no standalone version, the platform does offer a simple interface. Their charting is full-featured offering 66 indicators and a number of drawing tools. Performance data from CopyTraders and CopyPortfolios is available. The news link does not offer any satisfaction as it opens up into a social forum. Watch lists are customizable and can be saved. eToro offers no MetaTrader or other third-party alternatives.
eToro offers an excellent mobile version that allows easy syncing amongst different platforms for different mobile versions like iOS and Android. The indicator menu is categorized into 5 basic types which are similar to the web version. It offers limited customization and fewer charting options. In contrast to the web version, the watchlist does not include client positioning data. Furthermore, users can set custom price alerts regarding the market events and account issues.
Research Tools And Insights
The research tools at eToro are not as organized and are only accessible through a blog that is in itself only a number of general articles, which are outdated. The mobile app indicates that analyst research is only available through funded accounts. The general blog topics covers titles like cryptocurrencies more in detail than others like market analysis or forex. In fact, crypto craze news from 2017 overshadows much of the current events. A couple of the articles cover topics like instrument-specific fundamental or technical analysis.
eToro has a link to a trading academy in the footer of the website. Another link to a live webinar provides a page that’s shas no archives or any programs on it. Their educational portal only has 11 basic Powerpoint presentations. All of the advanced technical courses opened into listings of candlestick patterns. There are no educational materials but only brief descriptions of the platform and instruments in the FAQ section. It also has a YouTube channel with videos on the how-to section of the platform.
eToro concentrates much of its strength on social and copy trading including portfolio copy and automated client trading. They also provide balance protection to their professional clients even though it is not required under ESMA rules. In comparison with other forex brokers, eToro might appear to be less favorable if its strength is not taken into consideration. Introducing an API interface will hugely reduce these weaknesses they have. For those wishing to piggyback on the portfolios of others or on proprietary algorithms the platform seemed to be just the right place.
eToro launched a blockchain wallet for smartphones on March 7, 2019, offered in 31 US states. 15 different cryptocurrencies are provided for in the U.S while 16 are offered in several countries. In the U.S only cryptocurrencies are accessible, whereas in other countries you can trade forex, CFDs, stocks, and cryptocurrencies.
With 19 commodity CFDs and 47 currency pairs, their product catalog is comparatively small. They cover over 1500 shares and 77 cryptocurrency CFDs in their product line. When trading you can do so on both the long or short side but you should familiarize yourself with the fine print as each location and type of order incurs a different holding fee. With CopyPortfolio they are able to broaden the product catalog as the algorithms are able to access markets not directly accessible as CFDs. Though they maintain a program that is aggressive in order to avoid conflict of interest, they also act as a counterparty, as they set bid and ask values not matching consolidated market feeds.
Commission And Fees
Spreads for minimum forex and commodity is very high. They ask 3.0 pips for EUR/USD and 75.00 pips for S&P 500 trades. Also take into consideration that their spreads can widen tremendously depending on market conditions. Their overnight and weekend fees are also high, which can reduce profit margins significantly. They have recently introduced commission-free stocks with overnight holds during the week costing 24cents per $1000 of leveraged exposure for a long trade. Although this fee triples over weekends, there is no overnight fee for non-leveraged exposure on along trade.
An extra $25 fee is charged on top of credit card or bank fees for withdrawals, which is one of the highest from European brokers. You may not withdraw anything less than $50. All withdrawal and other relevant fees are disclosed on a fee page containing few omissions. For inactivity you will incur a fee of $10 per month after being dormant for 12 months. eToro does offer clients a club program with discounts and some extra services dependent on your account size.
eToro offers 24×5 support with an exceptional FAQ section. They list no phone numbers for direct communication except for the Australian branch. There is a help center link that leads you to a FAQ as well as to a help database. However, the phone number link on that page routes back to the contact page. Very frustrating indeed. eToro has and maintains an active social media account like Twitter and Facebook for marketing and analysis entries.
What You Need To Know
eToro is perfect for beginners who want to start trading based on the performance of a robotic advisor or by piggybacking on their most successful clients. Since only a few strategies work in all market conditions, it can be a risky business. Advanced professionals who understand the risk of alternative copy-based strategies are most likely to take defensive action when so required. If you are a retail or a professional customer seeking a wider range of broker services or prompt customer service and competitive prices, eToro might not be the solution for you.
In the video below you can watch a video overview of the eToro platform, how to open an account and how you can start trading within minutes: