The Two Minute Review
PROS
- 💷 Low-cost trading, with no fees on trading stocks.
- 👬 Social features you won’t find anywhere else.
- 👀 Ability to copy successful traders.
- 🧑🎓 A platform that can grow with you from beginner to advanced trader.
- ₿ Can trade crypto.
CONS
- 💵 Have to trade in dollars.
- 💲 0.5% FX fee when you deposit and $5 when you withdraw.
- 👴🏻 No ISA or SIPP accounts.
- 😐 Some other providers have a wider set of stocks to trade.
- ☎️ Customer service could be better.
What The Experts Say
What Users Say
4.4/5
When you exclude reviews the company itself invited and look only at organic reviews the average score is 4.47.
Some Interesting User Comments
We spend hours reading user comments to see what feedback people are giving. Here are some positive and critical comments that stood out to us:
Positive
5/5
I cannot express how much eToro platform is ideal for beginners and pros. Now they have added the bank account option so it’s quicker and simpler to transfer funds is the icing on top. The app is incredibly easy to use and nice meaning it doesn’t feel like ‘work’ and with the different options you can tailor make each page, watchlist and portfolio page to suit everyone’s different needs. The only tiny con is that other sites have ‘learn centres’ which would benefit true beginners.
5/5
One of the best and easiest of all times trading and investing. 0 upfront fees with great trading options.
4/5
Top notch brokerage. Investing made easy. Love the charts and the ability to use tech indicators. It would be absolutely a game changer if we could have the option to automatically load our favorite technical indicators for all stock charts.
Critical
4/5
It’s good in that the layouts and UI are clean and easy to navigate and there are features to trade both crypto, stocks, ETFs and resources all in one place. The notifications are a bit hit and miss; I get updates for cryptos that I’m not following and I’m also wondering where the dark theme is; there’s nothing worse than an app which non-stop blares bright white at you
4/5
However the UI is very bad, feels laggy, outdated and hard to use, as if it were imported from a mediocre web version. A revamped UI would make eToro truly stand out.
1/5
I have never been more frustrated in my life. The app is designed for beginners really. The features are poor. The fees are high. Don’t get fooled by the no fee. It’s because they take their cut by charging you a bit extra every time you make a trade. That’s basically a fee etoro!!
The Deep Dive
Overview
eToro, established in 2007, is a prominent online trading platform offering access to a range of financial instruments, including stocks, ETFs, cryptocurrencies, FX and commodities.
It has become incredibly popular with over 30 million users across 140 countries. It is particularly used by young investors due to low fees and appealing social features (including copy trading).
eToro often feels like a cross between IG and Facebook. You can decide to become a full-on financial influencer through the platform or just stay a lurker, scooping up good ideas from those who like to share. It’s more than just people mouthing off though – it has a powerful set of tools that can suit beginners right through to advanced traders.
Account Options
🏦 There are five basic account types.
Retail Account: The default account type. You can access almost all assets and features available on the platform
Professional Account: Designed for serious investors with accounts worth over €500,000 this offers increased leverage (explained below) – and with it increased risks! It’s only available in the UK and Europe.
Corporate Account: For the institutional investor.
Islamic Account: Operates in accordance with Sharia law and so doesn’t charge overnight fees (again explained below) on CFDs.
Demo Account: Using this you can try out eToro and trade a virtual $100,000 without risk.
Types of Trading
2️⃣ You can buy assets in two ways on eToro:
Buying The Underlying Asset
This is a straightforward transaction. When you buy a stock on eToro they will simply purchase it in your name and any dividends from the stock are paid to you.
Buying a CFD
Sometimes, if you want to use leverage or short a stock (we’ll explain these below) you will enter into a Contract For Difference (CFD) rather than buying the stock itself. But what is a CFD?
Essentially, it’s a contract between a trader and a broker to exchange the difference in an asset’s price from when the contract is opened to the time it is closed. So if you enter a buy position via a CFD and the price goes up, you will make a profit, if it goes down you will lose money.
On the platform it can seem like you’re buying a share when you’re really entering into a CFD so look out for the “CFD” label in the trade line.
CFDs can be super risky – especially if you are using leverage.
What Is Leverage?
💸 Leverage in trading is a tool that allows traders to control a large position with a relatively small amount of capital.
It’s essentially borrowing money to increase the potential return on an investment. However, it also magnifies potential losses.
For example, suppose a trader has $1,000 and the leverage offered is 10:1. With leverage, the trader can control a position worth $10,000 (10 times the $1,000). If the asset’s value increases by 5%, the profit on a $10,000 position would be $500, effectively a 50% return on the trader’s original $1,000. Without leverage, the same 5% increase would yield only a $50 profit, a 5% return. However, if the asset’s value decreases, the losses are also amplified in the same way.
eToro offers the following leverage on its Standard Account:
Range of Investments
😐 It’s not the widest range but should be fine for most retail investors.
Stocks: Over 3,400 stocks from various global markets.
ETFs: An ETF (Exchange-Traded Fund) is like a basket of different stocks or bonds that you can buy or sell on a stock market. Usually, they centre around a particular topic – so an ETF might have a mix of green technology company stocks, so when you buy it, you’re investing in all those companies at once. This allows you to invest in a particular sector, trend or gepgraphical area without having to pick individual stocks. 420 ETFs are offered on eToro.
Cryptocurrencies: A range of 80 popular coins for trading.
Forex (Foreign Exchange): 51 currency pairs in the forex market.
Commodities: 32 commodities like gold, oil, and silver.
Indices: Investment in 21 major global stock market indices such as the FTSE 100 and the Nasdaq.
SmartPortfolios: Long-term investment portfolios put together by eToro’s analysts. They centre around individual topics or strategies.
Overall, we think the offerring is pretty comprehensive for everything, except stocks. Let’s do a comparison against some other popular trading platforms:
So we would say eToro is the middle of the pack (just) when it comes to the range of investments it lists. Most of the time this won’t be a problem, but you might be disappointed if you want to trade some niche stocks.
Costs
👛 eToro is a low-fee platform.
eToro touts itself as having commission-free trading, which is great. AJ Bell, for example, will charge you £9.95 for making a trade (plus they have an account fee). However, it doesn’t mean you won’t face costs. These are the main ones:
Deposit Fees: eToro does not charge for depositing funds into your account. However, as all deposits are in US dollars, a 0.5% currency conversion fee is applied if you fund your account in another currency. So if you put in a £100 you will be charged 50p for converting this to dollars.
Withdrawal Fees: eToro charges a $5 withdrawal fee and you will need to withdraw at least $30.
Spread Fees: 0.15% when trading stock CFDs (for other CFDs check here). A spread fee represents the difference between the buying price and the selling price of an asset. From this difference, eToro makes a small profit on each trade.
Crypto Fees: Crypto trading has its own fees on eToro. You pay a single fee of 1% when buying or selling a stock – so 2% for a round trip. This is small if you think you’re coin is going to the moon, but if you’re doing frequent trading to take advantage of short-term volatility you might want to look at a cheaper dedicated crypto platform.
Overnight Fees: You pay a (small) fee for keeping a CFD position open overnight or over the weekend.
Inactivity Fees: eToro will start to charge you $10 a month if you are inactive for a year.
So the fees can be quite complicated for CFDs, but generally, they come out on the low side. However, there are some potentially lower-cost options out there – for example, Trading 212 only charges a 0.15% conversion fee when trading!
The Platform
🖥️ eToro’s platform is user friendly but has advanced tools under the hood. It is also alone in the market in how it combines trading and social features.
It can be a bit marmite – but we love that it isn’t just another trading platform clone. Let’s walk through the key bits:
Opening an Account
🚪 Opening an account is a little bit trickier than other platforms.
There are the normal personal questions like date of birth, address and National Insurance number. We were also asked about our occupation and salary, total cash and liquid assets. eToro says these details are required to verify your identity but other platforms are not this intrusive. However, we didn’t have to provide a passport or proof of address so there are some benefits!
We then faced a quiz about our trading knowledge and experience (a screenshot of part of this is above). This involved questions to test our knowledge of the financial markets and queries about our level of experience. It wasn’t too taxing.
Lastly, you will also be required to verify your phone via SMS and to sign a W-8BEN form (which means you take advantage of the US/UK tax treaty so you only get taxed 15% rather than 30% on US dividends).
For us, the whole process took 12 minutes and we were then free to deposit and use the platform.
For the UK the minimum deposit is $50.
Finding and Trading Stocks
The Discover page displays trending stocks you might want to invest in and arranges them by asset class. You can also search for a stock individually.
Once selected, you will get a very detailed breakdown of the stock including:
- Its price over time.
- Financial performance of the company.
- An ESG rating.
- Latest news.
- A candlestick chart on which you can draw popular technical analyses (e.g. Fibonacci retracement).
- Analysts’s forecasts and buy rating.
- News about the stock.
- Social posts about the stock.
We were impressed by how comprehensive the info was and think it gives a uniquely useful view into what you should buy.
If you want to trade a stock, you simply click the “Trade” button. You can then select if you want to “buy” a stock or “short” it (i.e. bet its price will fall). You can then also select your leverage and a stop loss – the acceptable loss you are willing to suffer before your position is closed.
Social Trading
Social trading is what really makes eToro stand out and there are two important aspects to this:
The News Feed: Front and centre when you login is eToro’s news feed. Its design is reminiscent of Facebook. If you like what a trader has to say, you can click to view their stats and current portfolio. You can also add them to your “watchlist” (so they appear in your newsfeed) or copy their trades.
CopyTrader: This feature allows eToro users to automatically replicate the trades of experienced and successful traders on the platform.
Users can browse a list of popular investors on eToro, and review their trading profiles, historical performance, and risk levels. They can choose to follow one or more of these traders by allocating funds to copy their trades.
Once a user selects a trader to follow and allocates funds, the CopyTrader system will automatically replicate the selected trader’s trades in real time in the user’s own account. This means that if the trader you are copying buys or sells an asset, those same actions will be mirrored in your account proportionally to the amount of money you’ve allocated.
Keep in mind that while using CopyTrader is free, you may incur fees through spreads, overnight financing costs, or other trading-related expenses.
Watchlists
You can also set up lists of instruments you’re interested in even if you haven’t traded in them. You can then follow their change in price, risk score, return and other elements via the Watchlist section.
How Good Is Customer Service?
☎️ Not good for most users.
For standard users, the only way to get in touch is through an online ticket system. In our tests, we were quoted two business days for a reply which is way below average.
However, if you have over $5,000 dollars in your account you become a “Club” member and get a dedicated account manager who can answer your questions.
The online help articles are well structured and written but we would like the ability to speak to someone.
Is It Good For Beginners?
🧑🎓 Yes. It’s great for beginners.
The social aspect of the platform makes it feel like a community which can be a lot less intimidating for new users. We also found the platform itself to be really easy to pick up.
There is also the eToro Academy which has some excellent articles and videos for new investors – but we would like to see it organised in a more logical way.
Is eToro Safe?
🔒 eToro is subject to strict regulation.
eToro is regulated by several financial authorities, including the Financial Conduct Authority (FCA) in the UK. This compliance with FCA regulations ensures a high standard of safety and operational integrity. In the UK, eToro users are also protected by the Financial Services Compensation Scheme (FSCS), which offers up to £85,000 protection if the firm fails. These regulatory frameworks and protection schemes contribute significantly to the platform’s overall safety for users. However, it’s important to remember that while these protections exist, trading still involves inherent market risks.
So In Conclusion, Is It A Good Platform?
Yes, it’s a great platform. It will suit those looking for a social trading experience and those who want to be relatively active in managing their portfolio. Anyone looking to passively “set and forget” their investments might be better off elsewhere.