eToro Review 2018

eToro is an Israeli social trading broker established in 2006. It serves UK clients by an FCA regulated entity and others by a Cypriot entity. It is neither listed on a stock exchange nor has a bank parent, but it is a well-known fintech startup.

Interested in Etoro Crypto? Jump to eToro cryptocurrencies

As a plus

eToro has a fun, easy-to-use web and mobile platform.  It has innovative features: social trading lets you copy others and CopyFunds allows thematic investing. It has competitive trading fees. Account opening and funding your account are quick and seamless.

On the flip side

eToro has an unreliable customer service, and its trading platform freezes sometimes. Also, all its offerings are through CFDs, making its product portfolio limited.

Recommended for social trading, e.g. following other traders’ trades.

eToro review
Investor protection and regulation

eToro is regulated by a tier one regulator, the FCA, and also by Cysec. However, it is neither listed on a stock exchange nor has a bank parent.

With over 4.5 million investors from 170 countries, eToro is a global financial service provider and operates through two separate legal entities, therefore one must ask themselves: is eToro safe?.

• Citizens of the United Kingdom can choose to open an account at eToro (UK) Limited and thus be protected by FCA. If insolvent, eToro UK clients can expect to be compensated by the maximum amount of £50,000 guaranteed by the  Financial Services Compensation Scheme (the “FSCS”).
• Non-UK investors can have their live trading accounts with eToro (Europe) Limited, regulated by the Cypriot watchdog, CySEC. At eToro Europe branch the covered amount may not exceed €20,000. This threshold is set by the Cypriot Investors Compensation Fund.

Important:

• UK citizens going long in a cryptocurrency without a leverage will not be covered by any investor protection. If they go long with a leveraged position or go short in cryptos, they will be covered by FSCS.
• Non-UK citizens are not protected by any compensation fund while trading with cryptocurrencies.

For more details, check eToro’s description on its regulation and license.

At Brokerchooser we categorize an online broker secure if it is either listed on a stock exchange or it is owned by a bank. During our eToro review, they comply with neither of these requirements, and you should keep this in mind. However, eToro is widely considered as a successful fintech company winning the prestigious Finovate competition several times. Also, company culture, the way it is run, and quality of management put eToro to a fintech cluster, not a regular CFD broker cluster at our ranking.

One more caveat, eToro provides negative balance protection, meaning when you are losing and not closing your position, your balance cannot go negative and lose more than your overall equity. This is a great feature.

eToro would have scored higher if it was either listed on a stock exchange, had a bank parent, or provided more transparency about its financials. Based on our research, testing, and talks with eToro employees we think eToro is not a scam, it is an honest business with operation problems.

eToro review
Account opening

Account opening is completely hassle-free and super fast.

On the other hand, you can have your account only in USD. That can cause a lot of inconveniences if the base currency of your portfolio differs.

Who can open an account?

eToro is proud to have investors from all European countries. It is fair to state that account opening limitations are very thin. However, there are some restrictions and technical limitations stated in the Terms and Conditions. eToro does not accept users from the following countries:

• USA 
• Canada
• Japan 
• Brazil
• Turkey 
• North-Korea
• Iran
• Cuba
• Sudan
• Syria

Account base currencies

There is only USD base account base currency at eToro. 

Minimum funding requirements

The minimum first-time deposit is $200, but for residents of Israel is $10.000. It is not clear for Brokerchooser what happens when your account balance goes below the level of the minimum first-time deposit.

Account types

eToro provides one account type, let's call it the basic account.

There is a demo account available, so you can try out the platform with paper money trading.

Account opening process

The account opening process is very fast, Brokerchooser could open its account within one day.

How does eToro work its magic? You start by registering with your email account or with your Facebook / Google+ account.  After these first steps, you can access the trading platform immediately. Additionally, you receive a very informative, well-structured email on what will happen in the following steps. 

At this stage, you can either start to trade with a $100.000 virtual portfolio or transfer money up to $2000. For more deposit, you need to go through the customer profiling and customer identification process steps.

Customer profiling happens by a picturesque menu. It is very neat and easy to use.

Next step is the customer data identification which happens 100% digitally. You will need to upload copies or digital photos of your documents. 

• For customer identification, you need to upload the copy of passport or personal ID
• For customer residency, you upload the copy of your utility bill with the address on. 

This is it, you are done. Now you can deposit.

eToro review
Funding and withdrawal

It is easy to deposit, there are a lot of funding options. Withdrawing money can take more than it is disclosed, but at the end you will receive your money.

Funding Options

The variety of transferring options are more than plenty:

• Debit/Credit card
• Wire transfer
• Paypal
• Skrill
• Neteller
• Webmoney

The fastest way to fill up an eToro trading account is the card option as it literally takes only minutes.

eToro will keep client funds with large top-tier banks, unfortunately not specified.

It is worth to remember that accounts are held only in US dollars hence money transferred in GBP or EUR will be converted at market rate to USD.

Some limitations exist for deposits depending on the payment service providers and country, however, there is no deposit charged by eToro. Click to see these specifically on eToro FAQ site. For your convenience, we’ve copied part of it here:

*No eToro commission rates.

Withdrawal Options

We have tested money withdrawal with eToro. The result can be summarised as the disclosed deadlines are long and you should expect even longer than it is disclosed. We have received the withdrawn money later than the disclosed time (5 business days). Also, we have been well informed about that it takes a long time.

There are wide varieties of money withdrawal methods at eToro.

• Credit card
• PayPal
• Bank transfer

eToro needs to have all necessary information, there is a 50 USD minimum withdrawal amount, and there are eToro withdrawal fees as well, which is a flat fee of 25 USD. It is applied to each withdrawal transaction. eToro states the typical time frame per payment method can be seen in the table below:

However, this was not our experience. For us, it took nine days to receive the money, but we received it. Also we have been well informed by an automated message that it takes time. And lastly, we got a refund of the $25 withdrawal fee.

Additionally to our experience, Brokerchooser received customer feedbacks claiming eToro withdrawal was delayed for others too. Our experience that even though it was a long time, the money arrived. If you have experienced otherwise, please let us know, would be interested to read.

eToro review
Product portfolio

At eToro you can trade with real stocks and ETFs, CFDs and cryptocurrencies. It has also some innovative products, such as Copy People and Copy Funds.

eToro is working hard to innovate personal investment and introduces a lot of unique features. eToro also brands these features which can cause confusion even for experienced investors. So, let's break down what they really are. At this section, you will read about the products strictly. However, some eToro products are partly services, so we will get back to some offered features in the trading platform section.

Mark this: all non-leveraged buy positions for stocks, ETFs and cryptocurrencies are traded as real assets. This means when you buy stocks, ETFs or cryptos with no leverage (one leverage), you will buy real stocks, ETFs and cryptos. All the other positions are traded as CFDs:

• leveraged buy positions and sell positions of stocks, ETFs and cryptos
• all positions of forex, commodities and indices.

Within CFDs you can also: 

• follow and copy other traders trading with a CFD (this is Copy People). This function is also called social trading.
• invest in a CFD portfolio compiled by professionals (this is CopyFunds).

In case you have doubts about CFDs read our article about CFD trading.

Available Product Types

Stocks

eToro helps you to find stocks according to its industry or exchange it is listed on. The range is not fully global as only NYSE and major European exchanges are offered. Another limitation is that not all stocks from the exchanges are offered. To give you a clue, roughly 200 stocks are offered from Nasdaq. For an average investor, this could be enough. Facebook, Snap, Apple are all there. However, you should know there are roughly 3300 stocks on the Nasdaq, so 200 out of 3300 is far from all. If you also want smaller stocks, you might not get it with eToro.

Here are the major exchange lists offered: 

• NYSE
• NASDAQ
• London
• Frankfurt
• Paris
• Madrid
• Milan
• Zurich

ETFs

eToro offers 53 different ETFs visualized as Microsoft Windows-like tiles format under the Markets/ETF menu. It looks nice. You can reach the largest professional investment firms like Blackrock and most liquid funds like SPDR Gold. eToro does not provide deep analysis or description of these products. However, in most cases, there is a “learn more” button leading to the issuer's page where you can read more about the specific ETF.

CFDs

eToro offers more than 1,000 CFDs. This is an average product portfolio compared to other CFD brokers.  The following asset types are available:

• Stocks
• ETFs
• Indices
• Commodities
• Currencies
• Cryptocurrencies

With CFDs, you can trade with leverage. eToro's leverage levels are:

It is a great feature that you can choose the level of leverage in case of each trade.

Stock CFDs

You get the same list of CFD stocks as for real the real stock selection. Most of eToro's 1,000 CFD offerings are stock CFDs. 

ETF CFDs

You have the same list of ETF CFDs as for the real ETFs.

Indices

This group includes the largest stock market indices plus the US Dollar index which is a currency basket. Altogether 12 instruments are in this group.

Commodities

The main commodities are on the list: gold, oil, copper, silver. 

Currencies

Yes, you can trade FX with eToro, again, through CFDs. The offering is sufficient indeed, 47 pairs are available.

Cryptocurrencies

eToro has been one of the first CFD brokers to jump on the crypto trading trend and started to cover cryptos with CFDs. 

At eToro you can go long and short in cryptos.

When you go long in any crypto listed below, you will own the real coin, however, this cannot be transferred to a wallet yet.

Important:

• UK citizens going long in a cryptocurrency without a leverage will not be covered by any investor protection. If they go long with a leveraged position or go short in cryptos, they will be covered by FSCS.
• Non-UK citizens are not protected by any compensation fund while trading with cryptocurrencies.

At the moment only non-leveraged crypto trading is possible at eToro.

If you want to really dig deeper in this topic, read eToro' description about CFDs and we would also recommend Brokerchooser's how to invest in bitcoin 101. There are no additional eToro bitcoin fees, nor there are for any other cryptocurrencies as such.

eToro offers a wide variety of coin types compared to other CFD brokers. Additionally, you can also invest in copy fund of cryptos.

• Bitcoin
• Bitcoin Cash
• Bitcoin/Euro
• Ethereum
• Ethereum Classic
• Ethereum/Euro
• Ripple
• Litecoin
• Dash
• Stellar
• EOS
• NEO

Copy trades

This is the so-called social trading feature. What is eToro good at? Well, this is it! You can copy one by one the portfolio of a professional trader who also trades with eToro. This can be quite useful. More on CopyTrades in the platform review.

Copy funds

Copy funds are practically investment funds, but under the hood, they are CFD portfolios. More about them at the CopyFund section of the platform review section.

eToro review
Fee structure

eToro offers competitive trading fees, while other, non-trading fees are mid-range.

Trading fees

eToro has a simple trading fee structure: all trading fees are built into the trading spread. The spreads might seem a bit high at first, but if you take into account all trading-related fees (spread, overnight fee and commission), eToro has one of the most competitive trading fee structure within the CFD brokers.

Find below the trading-related cost of a typical trade for eToro and two other CFD brokers. (Typical trade means for stocks $2,000 buy, holding the position for one week, and then sell. It is $20k position with the same conditions for FX)

Let's break this down. As said, there are no commissions at eToro, whereas others apply. Secondly, if you hold your position more than one day you should keep an eye on overnight fees, aka. financing rates applied every day. This can be a hefty fee for a buy and hold investor. Overnight fee varies by products, so taking a few examples are not representative. Still ,we think three arbitrary examples can give you a grip.

You can see eToro is somewhere mid-range when it comes to financing rate, but combining spreads, commissions and financing rates results in a competitive fee level. For a deeper fee comparison visit Brokerchooser's compare brokers section.

Non-trading fees

eToro's non-trading fee level is mid-range. Except for currency conversion and withdrawal fees which are quite expensive.

eToro charges a conversion when you deposit or withdraw money from your account in a currency other than USD. 

eToro review
Web trading platform

eToro’s web trading platform is simple and easy to use. However, we have experienced outages and breakdowns. 

Ok, we say it out loud: It looks like as a platform should look like in 2018. Period. The tool is available in English, German, Spanish, Italian, French, Russian, Polish, Chinese and Arabic.

Unfortunately, eToro trading platforms had a lot of problems at the end of 2017, mostly because retail investors went crazy about crypto and eToro could not catch up with the demand. We experienced that we could not log in, or could not execute trades. We really hope this will end happen less often in 2018.

Look and Feel

With its clean design and simple functions, eToro did a great job with combining good design with functionality. The menus and buttons are there where you would expect them to be, everything is labelled correctly and the colour scheme is pleasing. One thing which we did not like specifically, that it cannot be really customized, the panels are more or less fixed. One exception is the watchlist which is easy to configure. Good UX is becoming more important for users, as they want easily understandable platforms. eToro's is a pleasure for the eye.

Login and Security

The design was great, but we did not like the account login. The eToro login system is a one-step username + password approach. This makes it easy to login, but leaves some questions about security. There is no eToro sign in (digital) token, SMS alert or other features which would give a bit more secure feeling. This can especially be painful when you have a large amount of money at eToro. 

Search Functions and Charts

The built-in search is predictive and easy to use. You can type in a company name or product name, or also search via ticker symbols. What you can not do is search for a type of product, for example, if you write tech companies it does not return any results. The charting tool is also good and you can use a lot, over 20 indicators. Brokerchooser really liked that charts are automatically saved, so you don’t have to waste your time with setting up your indicators repeatedly. ProCharts is a separate application launched in July of 2017 and being still in beta in 2018.  Brokerchooser felt that this charting tool has similar analytical and 

Placing Orders

You can only do market or limit order, but it is very self-explanatory how to do it. Additionally, you can set leverage size, stop loss and/or take profit right at the time when opening the position.

Alerts and Notifications

eToro operates an alert function letting you know when an asset reaches a price target. On the web platform, this is an icon update or browser notification. On the mobile, it is a push notification. 

Portfolio and Fee Reports

All investors want to know how her portfolio performed and how much fee she paid. Portfolio reports are relatively easy with eToro. Have your assets line by line your reported or have a pie chart on your exposures. When it comes to fee reports, it is not the easiest to find at first. At Portfolio / History / Top right circle thing / Account Statement lets you download a well-structured pdf showing all your cash flows including fees. Fees are aggregated and grouped to fee types, showing a good overview of all fees. When you are following someone you will see all trades individually. You can download an account statement report in PDF or XLS, however, the fees are not consolidated, but listed per fee deduction. 

Special Features

eToro works hard to innovate how people invest. Besides the traditional trading element, it has two distinctive innovation, both being great features. These are CopyTrades and CopyFunds

CopyTrades is social trading, you select whom to follow. At a first glance, you can browse through funny looking guys and gals. Luckily, there is far more information about these traders than their pictures. When selecting a trader to follow you can see their previous performance on a yearly and monthly breakdown. Their portfolio is also public information. Additionally, an eToro risk metric is also given. There are tons of more stats, like trades per week, average holding time, performance on charts, a profile description, their news feed comments. Imagine Facebook profiles with fewer cats and more trades and markets. 

There is one drawback find CopyTrades, that you cannot close part of your position, only the full amount.

The other specific product is CopyFunds, which are CFD based funds. While with Copy Trades you were following one trader, with CopyFunds you can invest either in a theme or in an eToro traders portfolio.

• Investing in themes means for example investing in a portfolio of big banks or cryptocurrencies. Practically, "Big Banks Copy Fund" consists CFDs of largest investment banks like Citi, Bank of America, HSBC, and others.  
• The other way of Copy Funds is to invest in multiple "star" traders parallelly. 

The share of CFDs in the specific Copy Fund is well described. You can check performance, asset distribution and read the investment strategy of the fund. CopyFunds are built around a theme by eToro's algorithms or by eToro external partners. This all might sound complicated, but at the end of the day, this means you can easily invest in a quasi-fund.  There is a $5000 minimum investment requirement for Copy Funds being a rather high entry for the everyday eToro client. 

eToro review
Mobile trading platform

The mobile platform is as the web platform, nice and intuitive.

The mobile platform has the same functionality as the web platform. It applies mobile-specific intuitive functions, such as push notifications or good touch interactions. E.g. you can swipe left and right in your portfolio giving you new quick actions like access to charts and opening a new trade, like using the functions of the Mail application in iOS or Gmail. 

eToro review
Research

Its research is okayish. There are analyst recommendations and market sentiments, but deeper research is unavailable.

eToro does not have its own research team, but provides its research through third-party research companies, like Tipranks.

You can find some basic fundamental data on eToro's platform. In case of stocks, this is the profile of the company and some very basic, actual ratios like P/E, EPS, dividend yield and beta. No fundamental data is available for asset classes other than stocks.

For some of the popular stocks, you can find analyst consensus (buy/hold/sell), average price target, hedge fund sentiment and insider trading sentiment. In some cases, you can also read the analyst reports. Unfortunately, these research features are available only for a limited number of stocks.

The news feed is not really an official news feed (e.g. not an integrated Bloomberg feed), but rather like a market-themed twitter. eToro users and eToro analysts post messages and this is the news feed. Hashtags for themes and $ signs for assets. We were not a huge fan of this feature, but this is a taste issue, you might like it.

You can also sign up for a daily market analysis newsletter in which you get a useful list of the market highlights. 

The research is available in English, German, Spanish, Italian, French, Russian, Dutch, Norwegian, Portuguese, Slovenian, Polish, Chinese and Arabic.

eToro review
Education

Education is not strong, there are medium quality videos about investing and the markets.

No videos are available for tutoring on how to use the trading platform, but some basic education videos are available about investing, trading and the financial markets. The quality of these educational videos is sub-par according to Brokercshooser's opinion.

eToro review
Customer service

It has a very poor customer service, hard to reach and providing irrelevant answers.

Before we jump into the detailed review of the eToro customer service, it is worth to mention eToro has received a lot of clients at the end of 2017 thanks to the cryptocurrency mania. They did not scale their customer service at the same pace resulting in endless waiting times. Their customer service might improve in the near future, then we will update the eToro customer service review. For now, this is a letdown.

In theory, the customer service is available on email, and per phone. You can call an account manager and a call centre. In practice, all of them has a very long waiting hour.

For emails, you need to start from the eToro website and submit a support ticket. You have to wait at least several days for an answer which does not answer your question. In some cases, we experienced two-week waiting time. The quality of the answers was not acceptable either. To give you a few examples. We asked eToro why we cannot close part of a CopyTrade, or at another occasion, we wanted to know how they calculate stop-loss levels. Yes, these are not 101 questions, but also not rocket science. For the CopyTrade question, we received an answer, but it was merely describing what we cannot do and failed to provide suggestions how to move forward. In the stop-loss case, it was evident that customer service did not understand the question. 

You have a dedicated account manager who is more responsible to help you with the onboarding. As such, they have limited knowledge to answer questions. In some cases, they did not answer our call, at others when the line dropped, they did not call us back.

There is a central phone number too. This is not promoted by eToro. Frankly, neither by Brokerchooser, as we have never got through the waiting line. 

In theory, the customer service is reachable in English, Spanish, Italian, German, Russian, French, Polish, Chinese and Arabic. We only tested it in English.

On the bright side, the customer service was always kind and used the right customer-centric tone.

eToro review
Bottom line

We liked eToro last year, but from roughly September 2017 it got unreliable because of the huge demand for cryptos. We hope this will change in the near future and then we will change review scores.

On the plus side, it is a good choice for social trading, it is good for crypto CFDs, it is a pleasure to use, has a lot of innovative features, and the account opening is spot on. Its trading fees are competitive, and non-trading fees are mid-range.

It has some drawbacks though. Customer service was a letdown, the platform did not work on multiple occasions. Also, its product range is only CFDs. Seemingly you can trade with a wide range of ideas, but at the end of the day, it is a CFDs.

To sum up, we recommend eToro for social trading.

eToro review
FAQ

Who owns eToro?

During the time of this eToro review, it is a privately held company, therefore they are not required to publish their ownership structure. What we know is that eToro does not have any banking parent company (little chance for a bailout in case of bankruptcy), and it is currently operating under two legal names. The well-known founder and CEO of eToro is Yoni Assia.

eToro is funded by venture capitalist funds. Here are a few of them:

• Anthemis Group, UK
• BRM Capital, Israel
• CommerzVentures GmbH, Germany
• Cubit Investments, Israel
• MoneyTime Ventures, USA
• Ping An, China
• Spark Capital, USA

Who regulates eToro?

eToro is regulated by Cyprus and UK regulators, eToro operates under two entities:

• eToro (Europe) Ltd. - Cyprus - is regulated by CySEC (Cyprus Securities and Exchange Commission) under license # 109/10, for servicing EEA (European Economic Area) member states, and countries outside it.
• eToro (UK) Ltd - UK - is regulated by the UK regulator: FCA (Financial Conduct Authority).

How does eToro make money?

eToro makes money through several fees, and trading services they provide on their website. Although eToro does not make its financial statements public, the main source of funds for eToro is likely to be:

• Spreads: Spreads are the gap between the price you buy/sell and what the broker buys/sells for. To put it simply, if an Apple stock costs 100 USD at market price, eToro will charge 100.1 USD for it. The difference of 0.1 USD / CFD is kept by eToro. For further info read how CFDs work.
• Overnight fees: For this, you need to understand two things: Leveraged trades and loans. Leveraged means that you can trade with more funds than you actually have. Let's say you want to trade Apple with 1:10 leverage and you have 10 dollars, this means that you can buy 100 USD worth of Apple with your 10 bucks. The missing 90 dollars eToro fronts for you. eToro finances the remaining 90 USD by providing a loan and charging you for it.
• Other non-trading fees: eToro charges fees for several services on their website, these are fees not directly related to trading, also known as non-trading fees. Some examples of non-trading fees are:
• Withdrawal fees (25 USD/transaction): pay to withdraw your money
• Conversion fees: pay when eToro converts money to fund your account

Can eToro be trusted?

eToro is regulated by CySEC in Cyprus and the FCA in the UK. This is a good thing. eToro is not listed on any stock exchange, nor does it publishes its financial data. As a summary of the aforementioned, Brokerchooser feels that eToro is not a scam, but it is not a fully transparent broker.

How does eToro copy work?

eToro copy, a.k.a. CopyTrade, is a tool for social trading, it works by you copying the trading decisions of other people, or other people copying your trades. You can search for traders and other users, and see how their portfolio has done historically. Once you have found a trader of your liking, you can copy their every trading decision, which is managed automatically by the platform. You can decide how much money you want to invest in copying another trader, and you can close it whenever you wish. If you want, you can also make money by having other traders copy you.

Are eToro profits taxable?

If you make profits on eToro they can be subject to taxation laws and regulations. This always depends on the country of your origin. For further information, we recommend contacting your local tax authority.

Can I use eToro in the USA? Can I use eToro in Canada?

Currently, people from the USA can not use eToro because SEC regulation does not allow brokers to provide CFD (eToro is a CFD broker) instruments for US residents. This means no regulated broker will accept retail clients from the USA to trade CFDs so in this sense it is not only eToro that cannot serve US residents.

eToro cannot be used by the residents of the following countries:

• United States of America (residents and citizens, including its incorporated and unincorporated territories)
• Belgium
• Canada (including Quebec & Ontario)
• the Republic of Turkey
• Japan
• Brazil
• the Islamic Republic of Iran
• Democratic People's Republic of Korea (DPRK)
• Cuba
• Sudan
• Syria

Otherwise, eToro has a registered entity in the States but it is a dormant company and probably it will stay so. eToro USA

When will eToro be available in the US?

The US SEC (Securities and Exchange Commission) does not allow CFD instruments to be sold to US citizens. Until this law does not change, eToro will not be allowed to operate in the US under its current business model.