eToro is a trading broker which was established in 2007 in Israel.
The broker offers a unique Forex trading platform that incorporates CFD social trading across markets such as cryptocurrencies, indices, ETFs, and more.
But, really, is it the ideal kind of broker that you would want to settle for?
Please don’t answer that.
Instead, try to read this post to the end to decide if eToro fits the bill.
Here are the parameters against which we shall review eToro in 2021:
- Account Types.
- Minimum Deposit.
- Deposits and Withdrawals.
- Trading Cost.
- Client Support.
- Broker Regulation.
- Trading Platforms.
- Markets Offered.
- Risk Management.
- Social Trading.
Basically, eToro offers two account types namely:
- Retail Clients Account.
- Professional Clients Account.
Those two trading accounts types are regulated by ASIC, CySEC, and the FCA.
Let at look at each account type in more detail.
a. Retail Clients Account.
This account type is also known as a retail investor account in eToro.
Here are the basic features that the retail account offers.
- It is ideal for non-professional traders.
- Provides both Copy Trade functionality and manual trading.
- Negative balance protection is provided – ensures losses don’t exceed a trader’s deposit.
- There are strict margin closeout restrictions for traders holding such accounts.
Leverage for the Retail Clients Account is restricted as detailed below:
- 30:1 for major currency pairs.
- 20:1 for exotic currency pairs, gold, and major indices.
- 10:1 for other commodities.
- 5:1 for CFD stocks.
- 2:1 for cryptocurrency CFD.
b. Professional Clients Account.
The characteristic features of the Professional Clients account include:
- It is ideal for experienced traders.
- Experienced traders are required to pass a test.
- Leverage can be up to 400:1.
- Negative balance protection – works in the same manner as in the retail client account by ensuring losses don’t exceed a trader’s deposit.
You can start trading with a minimum first-time deposit of as low as $500!
After your first deposit, there is a minimum deposit amount of only $50.
All deposits via Bank Transfer must be at least $500.
When registering a corporate account or professional client account, a minimum first-time deposit of $10,000 is required.
The minimum deposit for Australian and USA residents is $50.
However, other markets such as China require an initial deposit of $500 while traders example, from Algeria, require a minimum initial deposit of $5,000.
Traders from countries such as Israel, Egypt, New Zealand, Saudi Arabia, and South Korea require a minimum deposit of $10,000.
Undoubtedly, the minimum deposit varies depending on your country and method of payment.
Kindly confirm beforehand, what the minimum deposit for your country should be before you invest.
Deposits and Withdrawals.
Deposits and withdrawals in eToro are not free.
A withdrawal fee of $25 per transaction with which conversion fees also apply when the withdrawal request is made in non-USD currencies, is charged.
The minimum withdrawal amount is $50.
Additional fees may be charged by the withdrawal service provider, so the charges may actually be higher.
Payment methods for deposits and withdrawals supported by eToro include:
- Wire Transfer.
- Credit Card.
- Debit Cards.
Are you requesting your first withdrawal from your eToro account?
Then note that paperwork is required before your first withdrawal can be processed.
You will do better if you use the same payment method which you used to deposit, to withdrawal funds from eToro.
Doing that will save you from delays in payment.
Are you wondering how long withdrawals can take?
eToro withdrawals may take up to a business day.
You can contact their client support if it takes unnecessarily longer.
eToro spreads are higher compared to those of other brokers.
There also are other fees that make the brokerage of eToro higher than that of other low fee Forex brokers.
Spread is the difference between the bid and the ask price stated on currency pairs, cryptocurrencies, and EFTs.
eToro has spread on all their CFDs products.
The spreads are generally higher than other ECN Forex Brokers, such as Pepperstone and IC Markets.
A classic example is what was happening to EUR/USD and GBP/USD at the time this post was being written. Here is the thing:
- EUR/USD spread on eToro was 3 pips while it was 1.16 pips on Pepperstone and 1.1 pips on IC Markets.
- GBP/USD spread on eToro was 4 pips while it was 1.49 pips on Pepperstone and 1.4 pips on IC Markets.
Spreads are not the only trading fees that eToro charges.
We should talk about withdrawal fees, inactivity fees, and overnight charges so that you understand fully how costly trading with eToro can get.
b. Withdrawal Fees.
eToro charges a USD withdrawal fee of $25 per transaction.
If the withdrawal request is made in non-USD currencies, however, conversion fees apply.
The minimum withdrawal amount is $50.
c. Inactivity Fees.
In addition to the $25 withdrawal fee and spreads, eToro also charges an inactivity fee.
You will be slapped with a $10 fee if you don’t log into your eToro trading account for a 12 month period.
d. Overnight Fees.
Did you leave your position to run for days without closing it?
eToro also charges traders who hold a position for a sustained period (overnight).
The fee amount varies depending on the investment product in question.
See what I mean when I say that trading cost is higher on eToro compared to other brokers?
Hope you get that, but the trading cost is not the only feature you judge a broker against.
Keep reading for much more inimitable features by the broker.
eToro client support may not be that pleasant.
According to the eToro clients which rated their client support, eToro scored a mere 40%, meaning that there is a problem.
Here is what we found out, which lead to the poor eToro support performance:
a. Poor Communication Channels.
You can reach eToro client support via telephone number 1-888-271-8365.
However, there are no dedicated lines for clients from various regions and countries.
Etoro also offers the live chat feature.
However, many live chat reviews stated: “The support is really bad, live chat usually not working”.
Telephone and live chat are not the only channels of communication though.
You can use email and see if you get a response in 24 hours. The email address is [email protected] as indicated on their site.
b. Unaddressed Issues.
Most traders have issues with copy trading and issues with deposits and withdrawals.
Other traders, though the provider states clearly that 75% of traders lose money while trading CFDs have claims of mysterious losses.
The fact that eToro has not come out to address such issues is a negative on the part of the client support for me.
Try them today and maybe, just maybe, you can change my mind on this issue of client support being poor. I’m open to adjustments Haha.
eToro is a registered, regulated, and supervised trading firm that follows the regulatory framework of the world’s most powerful and reputable regulatory bodies.
Here are the bodies which strictly regulate eToro:
- Australian Securities and Investments Commission (ASIC) in Australia. eToro is registered by ASIC as eToro Aus Capital Pty Ltd. The company’s Australian Financial Services Licence (AFSL) number is 491139.
- Cyprus Securities Exchange Commission (CySEC) in European markets. eToro is registered by CySEC as eToro (Europe) Ltd.
- Financial Conduct Authority (FCA) in the United Kingdom (UK). eToro is registered by FCA and trading as eToro (UK) Ltd.
Yes, eToro is regulated by reputable regulatory bodies.
But to avoid scams, it’s important to make sure an online broker is regulated in your local market.
Be sure to find out if eToro derives regulation from the market regulators of your country.
What trading platforms does eToro offer? Three of them, namely:
- Desktop trading platform.
- Mobile App.
a. Webtrader and Desktop Platform.
The Webtrader and the desktop platform for eToro are characterized by the following features:
- User-friendly interface.
- Ease of use.
- Comfortable design.
- Advanced functionality.
- Customizable watch list with all other panels fixed.
- Both indicative prices and current market prices are displayed on the platform.
- There is advanced search functionality with predictive text.
- Leverage can also be set for any position that is opened.
- You can also view a Fee report to see the total fees you have paid overtime or on a particular trade.
- You can set alerts on your desktops such as an icon update for market-sensitive events or movements.
- There is the option of a demo account or you can trade with real money on a live account through the eToro platform.
That is not all, because a range of order types are also available on the platform. Including
- Market orders.
- Limit orders.
- Stop Loss orders.
b. Mobile Trading Platform.
The eToro Mobile trading platform is characterized by the following features:
- Availability for both Apple and Android devices.
- Allows trading CFD stocks, indices, EFTs, Forex as well as commodities.
- Social trading such as the ability to copy leading investors is also available using the mobile app.
- You can get notifications of movements across relevant markets.
eToro Platform Charts.
For all trading platforms, traders can have access to two chart types.
You can choose between standard charts and ProCharts.
So what markets can you trade with eToro? A lot of them. Below is a breakdown:
eToro offers the major currency pairs such EUR/USD and GBP/JPY, as well as exotic pairs such as NZD/CHY.
You can visit the broker platform to know more about the currency pairs they offer.
eToro offers cryptocurrency trading on 17 digital currencies (Bitcoin BTC, Ripple XRP, Dash, Neo, etc.) with low trading fees and 0% commissions.
Note: UK eToro retail traders should note that cryptocurrency trading is not allowed starting from March 2021due to the regulatory frameworks imposed by the UK’s FCA.
c. Share CFDs.
eToro Australia Capital Ltd (ASIC regulated) clients can access leverage of between 10:1 to 20:1 to trade share CFDs.
Note that CFDs are complex instruments and it’s recommended to use a trial account if you are new to leveraged products.
Tradable commodities are assets such as oil, gold, and platinum.
Traded as CFDs, traders can short a commodity if they predict prices to fall or trade long if prices are predicted to rise.
The key commodities offered by eToro are:
- Natural Gas.
eToro also offers Exchange-Traded Funds (ETFs) and major Indices on leverage.
Trading is a risky affair, especially CFD trading, as CFDs are complex instruments. Leverage amplifies profits as well as losses, so there is a high risk of losing money.
Understanding these risks is critical and learning the tools that can help manage these risks.
Here are the risk management features that eToro offers:
a. Stop-Loss Orders.
eToro offers a stop-loss order functionality.
This means that a trader can set the maximum amount they are willing to lose on a trade and when the market hits that price level, the broker software exits the trade.
eToro has a margin call trigger that exits a trade when a trader’s account hits a zero balance, meaning that all their funds are depleted.
When that happens, most brokers will request a repayment of a negative balance, but for eToro, it is different.
eToro will pay the difference when losses exceed a trader’s deposit, hence protecting the trader from the effects of negative balance.
eToro is a unique broker in CFD trading due to the copy trading feature.
Over 140 countries, translating into millions of users, have access to the social trading platform.
While copy trading, you can find the most popular investors using the ‘editor’s choice’ or by filtering via the search tool.
Filters include location, risk score, and other factors.
CopyTrader and CopyPortfolio allow the copier to reproduce selected trader’s strategies.
The selection criterion is such that copiers tend to choose the traders who performed best in the past.
However, note that past performance is not an indication of future great results when choosing a trader to copy.
Top traders who share their data to eToro receive payments depending on how many copies they have.
This means that experienced traders can make money based on their trades and additional profits as high as 2% of assets under management as rewards for having copiers of their strategy.
What are you looking for in an ideal broker?
Does eToro have it according to our 2021 review?
If yes, then go for eToro, holding all other factors constant.
If eToro, however, lacks what you are looking for, see more reviews for other brokers on this site.