Recommended for beginners and those interested in social trading (e.g. following other traders’ trades).
eToro is an Israeli social trading brokerage firm established in 2006. It serves UK clients through a UK entity regulated by the FCA. Non-UK EU clients are served by a Cypriot entity regulated by the Cypriot watchdog CySEC.
eToro has a fun, very easy-to-use web and mobile platform. It uses interesting social trading tools that allow you to easily follow other traders and the platform automatically copies their investments for you. You can also invest in thematic strategies with CopyFundsTM. For example you could have Warren Buffett’s public portfolio or a portfolio of tech companies. The account opening process is seamless and very quick: you can be trading live within a day.
eToro provides only CFD trading, which means product portfolio is limited.
The nice social trading features come with relatively high spreads and overnight fees, although eToro does not apply any trading fees, so everything is included in the spread and the overnight fee. Their research offering is not full and there are only broker recommendations and hedge fund manager sentiment indexes for some popular stocks. A desktop trading platform is also missing. Customer service is rudimentary. The account manager is customer focused, but could not answer content questions. The customer service is available in English, Spanish, Italian, German, Russian, French, Polish and Chinese.
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eToro is an Israeli CFD broker founded in 2007. It has some interesting features, like social trading. This means you can follow other traders and eToro automatically makes the same trades for you when your followed trader trades. eToro is widely categorized as a successful fintech company, revolutionizing personal investment. Under the hood it is an upgraded CFD broker.
Our review of eToro contains the following sections:
|eToro Review Scores|
|Account protection you get||★★☆☆☆|
|Account opening process||★★★★☆|
|Money transfer and withdrawal||★★★★☆|
|eToro's product portfolio||★☆☆☆☆|
|Trading platforms offered|
With over 5 million investors eToro is truly a global financial service provider and operates through two separate legal entities.
Generally, at Brokerchooser we categorize an online broker can be considered secure if it is either listed on a stock exchange or it has a retail bank parent. eToro complies 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, puts eToro to a fintech cluster, not a regular CFD broker cluster.
With CFD brokers investor protection scheme works a bit more complicated than with regular stockbrokers. In a nutshell, here is what you need to know: If you do not own the stock (or other underlying), you are running a whole different risk and you need to understand this when trading with CFDs. As an example let’s say Bob have a Siemens stock and Janet is in a long Siemens CFD position. Both with broker “Bust Broker Co.”. Bust Broker Co. goes bust. Bob’s Siemens stock is in custody with his custody service provider. Bob sooner or later will be able to access it. While Janet is in a long position with either a third party or in an unfortunate situation with Bust Broker Co. In the latter case, Janet will be compensated only up to the investor protection scheme of the country.
For more detail browse through eToro’s detailed description about compensation process and general regulatory issues.
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:
eToro is available in English, German, Spanish, Italian, French, Russian, Polish, Chinese and Arabic
You can fund your account only in USD. This means when you fund your account eToro will convert it to USD with eToro conversion rate. The minimal balance for funding the account depends on your home country. In most cases, it is 200 USD, but it can vary between 0 and 1000USD. Anyhow, not a huge amount.
Unfortunately, eToro does not offer tax efficient accounts, like long-term investments or pension accounts (like ISA in the UK).
There is a demo account available, so you can try out the platform without funding it.
eToro has the best account opening process we have encountered so far. It is completely hassle-free and super fast. Remember the endless menu points with other brokers? You can forget all these with eToro. We loved it.
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 USD. 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.
This is it, zou are done. Now you deposit more than 2000 USD.
Similarly to account opening, depositing and withdrawing are both simple and easy.
Money transfers are safe and secure as all transactions are communicated using Secure Socket Layer (SSL) technology. The variety of transferring options are more than plenty, debit/credit card, wire transfer and E-wallet options like Paypal, Skrill, Neteller, and Webmoney are all allowed. 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) but 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. Click to see these specifically on eToro FAQ site. For your convenience, we’ve copied it part of it here:
A common pain point with scam brokers is the almost impossible task to withdraw money. Frankly, we have not tested money withdrawal with eToro yet (also a sign, how much we enjoyed the platform), but we do not expect to have such problems with eToro. Once we have hands on experience, will let you know how it went. Anyhow, there are wide varieties of money withdrawal methods.
Withdrawal requests take up to 1 business day to process given eToro has all necessary information. eToro claims the typical time frame per payment method can be seen in the table below:
20 USD is the minimum request they accept and etoro transaction fees range between $5-25 depending on the amount.
eToro is working hard to innovate personal investment and introduces a lot of features unique to eToro. eToro also brands these features which can cause confusion even for experienced investors. So, let's break down what they really do. 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: eToro operates as a CFD broker. Hence, all offerings are built on CFDs. In case you have doubts about these derivatives we recommend to read our Best CFD brokers in 2017 - Go with secure brokers. With eToro you can:
All branded and interesting offerings will put you in some way or another into a CFD positions. This is neither good nor bad, just be clear about this.
Ok, let's start with trading CFDs directly, aka Trade Markets. Seemingly eToro offers a wide variety of trading opportunities, but as discussed they are all CFDs. E.g. the stock is not a stock, but a CFD on a stock. There are four main product type groups:
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. Additionally, 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:
With CFDs, you can trade with leverage. eToro's maximum leverage levels are:
eToro offers 59 different ETFs visualized as Microsoft Windows-like tiles format under the Markets/ETF menu. It looks nice. eToro does not provide deep analysis or description on 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. You can reach the largest professional investment firms like Blackrock and most liquid funds like SPDR Gold.
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.
The main commodities are on the list: gold, oil, copper, silver.
Offering is sufficient indeed, 49 pairs are available.
Quite simply this is the social trading feature. You can copy one by one the portfolio of a professional trader who also trades with eToro. This can be quite useful. More on this in the platform review.
While with copy trades you were following one trader with Copyfunds you can invest either into a theme or to a portfolio of eToro traders trades.
CopyFunds are built by algorithms and partners of eToro. The portfolio share of CFDs in the Copy Fund is openly shared with you. This all might sound complicated, but at the end of the day, you can easily invest in quasi-fund.
eToro has a simple trading fee structure, where all of the trading fees are built into the trading spread. The spreads are significantly higher compared to other discount CFD providers, but here you don't have to pay an eToro commission fee. Example EUR/USD typical spreads:
So if you want to compare the two brokers here, you also need to incorporate the eToro commission fees, the eToro inactivity fee and eToro overnigth fees. You can check all of these eToro fees in our comparison page. You can also turn to our fee calculator tool which can also work as an eToro fees calculator.
When trading CFD an additional fee is applied for investors holding their position overnight. This is the so-called overnight fee which can be a hefty fee for a buy and hold investor. Let’s take an example as of March 2017. Let’s say you go long with a single Apple stock for one year. The overnight fee is 0.021USD per share. As you bought a single share this is also the overnight fee. The Apple stock price is ~140USD. So, 365*0.021USD = 7.7USD is your yearly fee on a 140 USD stock. Roughly 5.5%. You can compare this with IG’s 1month LIBOR + 2.5% = 3.5%
Overnight fee varies by products, so taking Apple as an example is not representative, but it can give you a grip on what we are talking about.
Besides the usual trading costs eToro will apply inactivity fee, withdrawal and conversion fees. On top these no other eToro fees are applied (e.g. account fee).
The inactivity fee is a monthly USD 5 after 12 months of no sign-in.
Withdrawal fee is between $5-$25 based on the amount.
Etoro charges a conversion when you deposit or withdraw money from your account in a currency other than USD.
One of the biggest advantages of eToro is its gorgeous, easy to use platform. It has
Ok, we will say it out loud: It looks like as a platform should look like in 2017. Period.
We will sing praises about the platform, but we need to start with account login which is a bit of an outlier in our platform review as we did not specifically like it. eToro log in system is a simple username + password approach. This makes it easy to login, but leaves some question mark when it comes to security. There is no digital token, SMS alert or other features which would give a bit more security feeling. This can especially be painful when you have a large amount of money at eToro.
As discussed in the product section you can trade individual CFDs (Trade markets), follow other traders (Copytrades), or invest in CFD "funds" (Copyfunds).
Trade markets is quite neat, it has a tile-like user interface which is easy to follow. "Hot" assets are recommended on top with larger tiles. At the time of the review Snap was a trending asset. When clicking on buy/sell at one of tiles, a pop-up lets you set your trade characteristics. 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.
Copytrades is also nice. You select whom to follow. You can browse through strange looking guys and gals. Luckily there is more information about them than their pictures. When selecting a trader to follow you can see previous performance both yearly and monthly breakdown. Their portfolio is also public information. Additionally, an eToro classification of 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 talk about markets.
You will never guess, but Copyfunds are also good looking. When selecting you can observe performance, asset distribution and read the investment strategy of the fund.
On an easy to navigate menu structure on the left you have:
The watchlist is easy to configure, you add your watchlist assets based on categories. This also means you cannot search for tickers, so you need to know by heart whether Accenture is traded on NYSE or NASDAQ.
Portfolio is basically a nicely formed report on your holdings. Have line by line your assets reported or have a pie chart on your exposures.
News feed is not really an official news feed (e.g. integrated Bloomberg feed), but rather like a market-themed twitter. eToro users and some officials messages are the news feed. Hashtags for themes and $ signs for assets are used. We were not a huge fan of this feature, but this is a taste issue. You might like it.
All investors and traders want to know how her portfolio performed and how much fee she paid. This is relatively easy with eToro, but 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 about all fees. When you are following someone you will see all trades individually.
eToro also operates an alert function which lets you know when an asset reaches a price target you gave. On the web platform this is an icon update. On mobile, it is a push notification.
Platform-wise the eToro mobile platform is the same as the web platform. Our expectations are lower from a mobile platform, so this received a higher review score, although has the same functionalities as the web.
Desktop platform is not provided.
eToro is not a research champion. However, the existing research is helpful for those relying on analyst recommendations and market sentiment. For some of the popular indices, you can find analyst consensus (buy/hold/sell), average price target, and hedge fund sentiment. For analyst consensus, you can find the list of the analysts with articles about the analyst reports.
For some of the stocks, you can also find hedge fund sentiment and the latest holding changes of the biggest hedge fund managers. This an interesting feature not provided by other brokers.
Unfortunately, these research features are available only for a limited number of stocks.
The news feed, as discussed, is very similar to a twitter wall where you can follow other traders’ opinion.
These are only available for stocks and no fundamental data is available for stocks or other asset classes (e.g. oil)
On the positive side, the charting tool is good and you can use lots of indicators. We really liked the charts are automatically saved, so you don’t have to waste your time with setting up your indicators repeatedly.
The weakest point of eToro is its customer service. On paper, you have multiple options:
However, almost all of them have some weaknesses.
eToro says that the wall is 0-24, but in reality, they are monitoring it only in working hours and you can ask only general questions.
The live chat can hardly be found within the platform or web page, but only by googling on it. Unfortunately, we could not use it, since we received an error message at login. The same error happened when we tried to write to help center (trading platform/help/write to us).
At eToro you will have an account manager, who you can call in office hours. Our manager was reachable and had the right amount of customer care style. The tone was also good. However, we have not always received answers to our questions (or received misleading answers) and there were no follow ups on the unanswered questions on this later on.
The customer service is reachable in English, Spanish, Italian, German, Russian, French, Polish, Chinese and Arabic.
As a special offer eToro runs a refer a friend program. It offers up to $100 per every invited person with a $1000 cap. The referred customer also receives an USD 200 trading credit.
Overall, we liked eToro. It is a great decision for beginners and also ‘the’ choice for everyone wanting to do social trading. It is a pleasure to use, has a lot of innovative features, and account opening is spot on. Even though it is transparently priced it is relatively expensive, though. Seemingly you can trade on a wide range of ideas, but at the end of the day, it will always be a CFD provider with all of its pros and cons. If eToro should look into one thing, it is its customer service which has room for improvement.