eToro Trading Platform Review
For quite a while I thought of getting into copy trading on eToro, but it often seemed “too good to be true”. That’s why I decided to perform an intense search on the web and come up with an eToro review that would help you – as much as it helped me – understand how it works. I will also start posting my own results from copy trading on eToro.
Things to Consider before using eToro
What is eToro?
The Pros and Cons of eToro
Features and Benefits of eToro
Alternatives to eToro
Things to Consider before Using eToro
Before jumping straight into trading with eToro, there are a few things you should keep in mind so that you always stay on the right track and don’t face any problems.
If you’ve looked into trading, you know by now that it involves a great risk. And that risk gets even bigger if you are trading with cryptocurrencies. I know that they are quite attractive and may get you to spend a lot of capital in order to get some profit, but you should think twice before investing your money and losing it – because it will happen a couple of times until you get to know how everything works.
Another thing you’ll have to carefully analyze is copy trading. This is a social feature integrated into this network that allows you to copy the strategies of other traders and use them to make a profit. As beginners, we usually check on those with the highest percentage of returns – but what we might not know is that those kinds of strategies also involve the highest risk for you and your capital.
It is better that you research the market you want to invest in and see how it fluctuates in order to make the right decision. While copy trading another trader might get you a nice profit at the beginning, you can never know how rapidly things can change. If you are following a successful person, you shouldn’t expect to be as successful. Everyone has a different mindset when starting social trading, and you should do the same – take bits and bits of information from every trader you follow and use them to come up with your own strategy, and you might be less likely to have any issues while trading on eToro.
But What Is eToro Exactly?
eToro is a social trading platform where you can trade commodities, CFD stocks, indices and, of course, currencies in an online environment. As you may have noticed, the word “social” appears in the description of eToro. After watching so many movies about stocks, you may think that trading is something you do alone so that you could get the best results.
However, eToro hands us an innovative way of trading. I mentioned copy trading earlier, but you are not limited to it. On eToro, you can also interact with and learn from the other traders that are part of the community.
If you are curious about the historical events of eToro, you should know that it was founded in 2006 – initially as RetailFX – and the year of 2010 marked the launch of the eToro OpenBook social investment platform, which also introduced the copy trading feature.
The Pros and the Cons of eToro
As with any business out there, we can’t escape the cons eToro comes with, but we might find some relief while discovering the pros.
- Active and large community – with more than 5 million users;
- Payment of share dividends;
- A platform and a portfolio that are easy to manage;
- Innovations such as Copy People and Copy Funds;
- No cryptocurrency deposits – as eToro is based on CFD trading;
- Higher than average spread and roll-over fees;
- Crypto-markets only for BTC and ETH;
- High numbers of non-professional traders.
The Features and Benefits of Trading with eToro
- A large Number of Available Product Types
In terms of stocks, eToro can offer you stocks from Zurich, Madrid, Frankfurt, Milan, Paris, London, NYSE, and Nasdaq. However, they don’t cover all the stocks from one exchange – with Nasdaq giving eToro only around 200 of the 3300 stocks that are on it. Here, it depends on what kind of investor you are.
If you are looking to invest in well-known companies, such as Facebook and Apple, you can easily find them on eToro – however, smaller stocks are almost impossible for you to find on this trading platform.
eToro can also provide you with the ability to trade with 53 ETFs. Sadly, the platform does not offer you very much detail or analysis when it comes to these, so you’ll want to check the issuer’s page, accessed by clicking the “Learn More” button, and get more information. Liquid funds such as SPDR Gold and professional investment firms like Blackrock can be found on the eToro platform.
Also, eToro is offering about 1000 CFDs under the form of the following available assets: stocks, ETFs, commodities, currencies, indices, and cryptocurrencies. Something you should keep in mind is that stock CFDs are also provided and that most of those 1000 mentioned CFDs are stock CFDs.
Regarding commodities, the main ones available on the platform are silver, oil, gold, and copper. You can also trade FX here – but via CFDs and with a limited number of pairings, of only 47.
The Copy Trades is one of the parts that make the social trading feature. What they do is that they basically let you perform copy trading, which implies the copying of another trader’s profile and strategy and using them to manage your capital and eventually earn more profit. Of course, the number of profiles you can copy is not limited and you could start scavenging as many as you want – you should, however, increase the number of people you copy as your funds increase as well, as there are risks you are exposing yourself to if one of the borrowed strategies doesn’t turn out to be working too well.
While scouting for traders to follow, you can see their yearly or monthly performance and decide whether they possess the strategy you need to make a profit. The eToro profiles are public information so you won’t face any mysterious traders. A nice feature offered by Copy Trades is the possibility to see certain statistics that can help your decision-making processes, such as a risk metric, trades per week, performance, average holding time, and the description and news feed of the trader you are currently looking at.
The second part that makes the social trading feature is called Copy Funds. Basically, these are funds based on CFD. If you choose to practice Copy Funding, you will no longer be scouting for individuals, but for themes or traders’ portfolios.
Here, you have the ability to check asset distribution, read the investment strategy of the fund and check the performance as well. This may look very complicated, but it simply means that you are able to invest in a quasi-fund in an easy way. However, you should remember that the minimum investment required for Copy Funds is of $5,000, so you have to make sure that you are doing the right choice before starting to invest.
- The Popular Investor Program
With the Popular Investor program, which requires little to no effort at all, you can get paid in the form of a commission that’s up to a maximum of 2% of the annual revenue belonging to the traders that have copied your profile funds. As you can see, on eToro, being successful is rewarded – because if you get to have 50 or more traders that are using the strategy they’ve taken off your profile, you can earn even $350 per month.
Also, with more and more popularity among traders, you also become eligible and receive rebates on the spreads of your own trades – rebates that can get even up to 100%.
- Live Webinars and Training Academy
Those behind eToro care very much about transparency and are completely against money laundering – having systems in place that are specially designed to prevent this from happening. And because of this, they are offering you live webinars as well as an updated blog to get the information you need.
Taking advantage of these benefits can help you make better decisions when trading and may eventually challenge you to make some profit from your investments. Among the benefits mentioned above, there’s also the Training Academy that eToro has set up on its website, where you can learn even more about the do’s and don’ts you have to keep an eye out for when starting to trade.
In the beginning, this may seem quite difficult as it is a lot of new information that you need to get accustomed to. But it is better that you take some of your free time and participate in one of those live webinars, for example, instead of making unprofitable – or even bad – investments and trades.
- The Costs of Trading
I’ve added the costs that come with trading as a feature on my eToro review because of the way they work and affect the trading activities.
Basically, these costs are separated into two categories, the commissions and spreads – and some overnight financing charges, which are also referred to as “swap rates” and apply if you are a night trader. You can easily find the swap rates published on the eToro website.
But moving on to the commissions and spreads, they are always very important because you are being charged according to their value. For example, during peak hours of market activity, eToro is usually charging a spread of 3 pips on the EUR/USD currency pair benchmark; if we are to look at the GBP/USD spread, we may find out that it is of 4 pips, while the USD/JPY one is of 2 pips. My point is that these spreads – as I have mentioned earlier – are quite high and are seen most of the time as a disadvantage that this trading platform has. Commissions, on the other hand, are not charged – just so we’d get them out of the way.
Getting back to spreads, there is one thing you could do in order to reduce their value and, eventually, stop being charged with them at all. Here is where the aforementioned “Popular Investor” program comes in handy. If you manage to become popular enough – and successful as well – you can be able to trade without worrying about spreads.
- It Is Available Both on PC and Mobile
If you’ve ever had anything to do with the stock market, you know that it was something you just had to keep an eye on at all times – especially if you have made an investment. Well, we are lucky that eToro always understands our need to be updated with every single situation of the market and of our account. That’s why they took their WebTrader and OpenBook platforms and have redesigned and optimized them for all of today’s devices.
Still, you should keep in mind that the Copytrader and most of its features haven’t been fully updated yet, so you might want to stick with your PC or laptop for the moment if you want to take full advantage of eToro‘s features.
Also, something I didn’t get the chance to mention is that you can use any of the most common payment methods in order to make a deposit and start trading. So, you have at your disposal methods such as Skrill, Neteller, WebMoney, MoneyBookers, and PayPal and your usual credit cards and bank transfer ways.
The Verdict – Is It Good or Is It Bad?
Trying to decide whether eToro is a good trading platform or not, I have taken up the task of scouring the Internet for reviews and comments regarding this platform. At the same time, I took into consideration different factors that I will explain below.
Here are my results:
Overall, the reviews and ratings regarding eToro were pretty good. Even if some people complained about the costs of trading – namely, the spreads – many confronted them and said that due to those higher spreads, they are able to make money out of this platform, and they are in the right.
However, there were some that were unhappy about the fact that you can’t withdraw your cryptocurrency to an electronic wallet, as it is based on CFDs as well.
I’ve also read some interesting reviews about the customer support that eToro provides its traders with – and they were mixed reviews. Some traders complained that the customer support is not effective at all and that the eToro mobile application freezes from time to time.
On the other side of the pit, I found reviews that praised the customer support because they were able to help the certain trader and fix the problem in no time and even read articles about traders that have been called to eToro’s headquarters in order to check some issues related to cryptocurrencies.
Three Alternatives to eToro
Of course, you might not be fully satisfied with what eToro has to offer, and I’m surely not here to try to persuade you to think otherwise. That’s why even if this is an eToro review, we will be looking at three alternatives to this trading platform, so you’ll know where to head from now on in case eToro does not match your style.
- Naga Trader
This trading platform has been until recently known as SwipeStox and it is a serious competitor to eToro mainly because of the way it deals with cryptocurrencies. The Naga group – owns the Naga Trader – has created its own cryptocurrency, called the Naga Coin (NGC), which comes with many advantages on the platform.
Tradeo is yet another social trading platform that takes full advantage of the Social Trading and Social Copy features it has available for its traders – making it available for the latter to copy the desired profiles with just one mouse click. The fairly weird part with Tradeo is that it doesn’t matter how many people have copied your profile – you won’t be rewarded in any way, and no one else will.
- Zulu Trade
What’s interesting about this trading platform is that it does not function as a broker, but instead as a cross-broker platform, thus connecting the brokers of various traders. They also seem to have focused more on the Copy Trading feature rather than on the Social Trading one – instead, they have created a personal Signal Provider portfolio of their users.
The Bottom Line
In the end, you can be sure of one thing: trading can be very hard, especially the way it has begun to develop in the last years. Also, with cryptocurrencies storming the world with their ups and downs, who knows when we’ll see eToro allowing us to withdraw our crypto coins to our electronic wallet.
But, overall, eToro does a good job at being a social trading platform – with features such as Copy Trading and Copy Funding and certain benefits given to hardworking traders. What I hope is that you have learned something new by reading this eToro review and that you will know to be cautious when trading on this platform.