Broker review

eToro

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eToro is a social trading broker. The Israeli company was founded in 2006 and is privately held. It is not listed on any exchange nor does it have a banking status. eToro is a fintech company that has gained a lot of clients and attention as it has been innovating the trading/investing space within the social trading space as well as the company was very quick in adapting to the cryptocurrency frenzy.

eToro has approximately 8 million customers.

The company is regulated by the CySec in Europe (Cyprus regulator), authorized by the FCA in UK and is registered NFA member in the USA. Note that eToro doesn’t operate in the USA.

eToro is a company offering a user friendly and fun platform for casual trading. It is very nisched towards the social trading space and offers various forms of following other traders as well as the concept of copying other traders and funds automatically, the Copyfunds concept.

You can copy others easily as well as invest by copying trades in various themes. I see the social trading trading and the entire concept as new and fun, but it lacks the relevant platform to manage risk properly and you don’t have access to tools necessary for more advanced trading.

The company offers mostly CFD trading in their product selection. Fees are competitive, but the product selection is limited.

Opening an account and logging into the platform is very easy. There are no real minimum deposit requirement (200 USD is the minimum). The eToro product is designed primarily for the casual trader/investor that wished to use social trading and follow/copy other traders or the CopyFunds concept. For this type of trading you actually don’t need overly sophisticated systems.

The biggest negative is the fact you have limited access to products and markets as well as the trading platform is not designed for sophisticated trading.  


General

Positive

  • Fun social trading broker with possibilities to copy other traders and portfolios automatically
  • User friendly platform
  • Good fee structure
  • Innovative concept

Negative

  • Trading platform not sufficient for more advanced trading and risk management
  • Mainly CFD trading which limits product offering
  • Poor customer support

Products

  • Stocks
  • ETFs
  • Forex
  • Commodities
  • Indices
  • Cryptos
  • CFDs

Fee structure

Positive

  • Good competitive rates

Negative

  • Greedy to charge the no activity fee although it is low itself
  • Conversion and financing fees can be a bit confusing

The Account and Regulation

Positive

  • Easy to open and fund account for example via credit card
  • CySec and FCA regulated

Negative

  • Only USD accounts
  • eToro is private company and has no ties with a bank

Trading Platforms

Web based platform (there is only one trading platform)

Positive

  • User friendly and fun trading platform
  • Intuitive
  • Fresh design
  • Social trading
  • Copy other traders/fund managers

Negative

  • Not sufficient for more advanced trading
  • Lacks relevant risk management tools
  • Poor research possibilities
  • Charts too simple

Mobile Trading

Positive

  • Replica of the web trading platform
  • User friendly
  • Clean design

Negative

  • Too basic for the tech hungry trader
  • Design and placement of buttons not optimal

Research

Positive

  • Some fundamental ratios available and market wrap comments but I would not classify this as a research product
  • Novice trader education

Negative

  • Practically non existent
  • There is some third party research but this is of poor quality
  • No deeper insight into trading in the educational videos

The Trading Platform

eToro is all about social trading. Every trade you and others make are registered and voila the social trading develops. You can track other traders’ trades and copy entire portfolios. You can also invest automatically in the concept CopyFunds which is basically copying entire thematic portfolios.

If you believe in the concept social trading and copying other traders then eToro is a great choice. If you wish to trade more independently eToro is not the preferred choice.

Below is the layout of the various profiles you can choose to follow. Simply click your preferences regarding from where the profile is, market, gains, time period and you are ready to go. Follow other traders, interact, comment and you are a social trader.

The platform shows top investors and many other facts.

The platform gives you the option to filter for trending, most copied etc profiles. This is certainly modern age trading. It has many interesting positives but also negatives you need to consider.

Below is a sample of CopyFunds portfolios you easily can copy.

The Technical analysis tool is very basic. You have several drawing tools that work well and most popular indicators. The amount of indicators is sufficient for most traders but beyond that charting is rather limited.

One good feature is the fact you can trade directly on buttons on the actual chart.

Simply click on the buy/sell button and an order window pops up in the chart you are viewing.

You can study multiple charts in the same screen.

The charting is very basic and you can’t compare the Technical analysis platform with Interactive Brokers or any of the other more advanced brokers.

The menu of assets to trade is clear and the tabs are clearly displayed. The somewhat Microsoft Windows feel to the menu itself is a new way to display assets when it comes to the trading world.

The view of the portfolio is rather straightforward. You can see the aggregate positions as well as the individual trades seperated and displayed with each trade and what at what price the position was opened. One nice feature is the image below that shows the portfolio allocation graphically.

Unfortunately the platform doesn’t provide any deeper insight into risk management tools.

eToro provides some educational content which is rather basic but is informative for the novice trader.

Mobile Trading

Mobile trading with eToro is basically a replica of their web based platform.

It works easily and is user friendly. You can create watchlists, follow your favorite traders, copy trades, look at charts, check your portfolio etc.  

Pulling up an order is easy. Below is an order in NASDAQ. If anything I would change the design of the buy/sell buttons as they are too close to each other and the risk of pushing the wrong button on a mobile device is relatively high.

I would also make sure the leverage button is of a different colour or size in order to make it very clear what you are about to do.

 

The watchlist is easily modified and looks like the image.

The copy social trading copy concept works just as the web based version.

Charting is ok but nothing more.

 


Conclusion:

eToro is a fintech broker that is highly specialised in social trading. With more than 7 million customers eToro is an authority in the social trading space. Fees are rather competitive and the product offering in terms of following other traders, interaction with other traders as well as the concept CopyFunds is rather unique.

All positions in stocks, ETFs or cryptos that are non leveraged are conducted in the real asset itself. All leveraged positions are conducted via CFDs. The CFD offering is rather good while the individual stocks are light. You will probably not be able to trade small your favourite small cap stock.

The trading platform is fun and user friendly for the trader wishing to engage in social trading. Charts, orders, portfolio views etc are all rather basic, but nicely designed.

The platform falls short if you want to trade more advanced type of trading and need more sophisticated tools.


Commissions:

eToro provides basically one type of account and the base currency is USD. Any other currency will be converted. The minimum deposit is 200 USD which is negligible.

eToro basically charges all fees in the trading spread. The spread itself is a bit rich at first look, but when you look at the overnight financing fees, spread and commissions the cost is actually relatively low.

There is no account fee, but a small non activity fee. There are also conversion fees with regards to currency conversions, a withdrawal fee of 25 USD as well as the financing fee. Note there are no custody nor deposit fees.

For full reading on fees on all assets including the conversion, financing fees etc please follow the commissions and fees link.

 

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