eToro Broker Review 2020

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eToro Broker Review 2020
eToro Article Cover Fx Watchdog

Official Fx Watchdog Verdict: eToro comes with high reviews across the masses with an excellent variety of social trading options.

Ready to invest but not sure which broker to choose? Find out if eToro is worth your investing money in this broker review.

eToro ‘the world’s leading social trading company’. This Israeli fintech company is inspiring and attracting international customers since 2007. The initial attraction of eToro stems from its highly informative, clear and modern website. With it being translated into 21 languages, they show they take their business and clients seriously. Through their web-space, they communicate their strengths and qualities while maintaining an honest approach to the customer by explaining the risks of trading.

In addition to their website, they provide two user-friendly apps which are tailored to both new and experienced investors. Following a maturation process and adjustments to their product and service range, they are currently worth $800 million. But why is eToro this successful? Keep on reading to find out.

What makes eToro unique?

Having looked at all aspects of eToro, these are our top findings:

  • eToro has excellent, well-designed and user-friendly products such as their app and responsive website
  • They offer support to inexperienced investors in exchange to a higher price than competitors. They offer a platform for someone wishing to explore the world of trading and gain confidence as an investor
  • They are a ‘safe’, relatively low-risk broker
  • eToro offers many features for social copy trading, which allows investors to follow the behaviour and trades of other more experienced investors. This makes investing more interesting, fun and educational for the less experienced
  • eToro offers a wide variety of investment options

Overall review

Overall review eToro
ProsCons
Social trading experienceCustomer service only available on weekdays
User-friendly app and websiteLive chat takes a long time to load
Virtual demo availableLive chat only available in English, German, French, and Spanish
Suitable broker for both experienced and new investorsConversion costs may apply when you are not using dollars
International brokereToro’s minimum spread fee is relatively high
Top tier regulations
CopyTrading feature
Multiple languages available
Background information and analysis of each financial instrument
FAQ pages have a great structure and are very informative
Many financial instruments available to trade
eToro members club
Used by 11 million investors worldwide


Is eToro a trustworthy broker? 

eToro is a safe broker to trade cryptocurrencies, CFDs, and forex. eToro (UK) Ltd, a Financial Services Company is licensed, regulated and considered a low-risk broker in:

  • eToro UK is authorised by the Financial Conduct Authority (FCA) in the UK
  • Authorised by FinCEN in the United States
  • eToro Europe is a registered Cypriot Investment Firm (CIF) and is licensed by Cyprus
  • Securities and Exchange Commission (CySEC)
  • eToro UK and eToro Europe both operate and comply with the Markets in Financial
  • Instruments Directive in the European Union (MiFID)
  • eToro Australia is the holder of an Australian Financial Services Licence (AFSL) issued by the Australian Security and Investment Commission (ASIC)

A few setbacks

In 2013 eToro was fined €50,000 by CySEC as a result of structural operational weaknesses. This happened despite the fact that eToro was compliant with all its regulators. Two years later, in 2015, the financial regulator added eToro to the Quebec Blacklist as a warning –  they marketed their investment products and services with no authorization. These stumbles do not necessarily mean you should not trust this broker. eToro has its legal affairs in order and they are very transparent.

Protection for traders

Traders are protected by the Investor Compensation Fund (CIF) in the EU up to €20,000. In the UK traders are protected by the Financial Services Compensation Scheme (FSCS) with maximum coverage of £85,000.

eToro is not recorded on any stock market, it does not disclose its annual report on its site and it also doesn’t have a bank parent.

Which investment options does eToro offer?

eToro offers traders a wide variety of investment options, more than 2,000 financial instruments. There are several categories to choose from: 957 types of stocks, 53 pairs of currencies, 12 market indices (collection of shares of large companies), 4 crypto assets, 7 types of commodities and 53 Exchange Traded Funds (ETF).

CFD stands for Contract For Difference. With a CFD, investors can speculate if fast-moving global financial markets will go up or down. These markets include indices, shares, currencies, cryptocurrencies, and commodities. Trading in CFD gives you the option to trade on margin, you can buy when you predict prices will go up. You can sell when you predict prices will go down. eToro is very transparent when it comes to CFDs. They disclose that 62 per cent of retail investor accounts lose money when trading CFDs with eToro. CFDs are complex instruments and therefore you have a high risk of losing money quickly because of leverage.

Stocks

eToro offers you the ability to explore all stock options by industry or exchange. You have access to the following 16 stock exchange markets: Amsterdam, NYSE, New York Tech, Euronext Brussels, Euronext Lisbon, Frankfurt, London, Paris, Madrid, Milan, Zurich, Oslo, Stockholm, Copenhagen, Helsinki, and Hong Kong. 

You can buy stocks in global companies such as Apple, Tesla or Facebook. You have an option to buy stocks with investing in the underlying asset or you can use CFD trading. An underlying asset is the security of a derivative contract. A derivative contract is a contract between two or more parties, which extracts its price from fluctuations in the underlying value.

Cryptoassets

Cryptoassets, such as Bitcoin and Ethereum, has grown in popularity in recent years. The value of cryptoassets can change rapidly with two digits percentage changes sometimes. When investing in crypto on eToro, you will be buying the underlying asset. eToro will purchase and hold the crypto on your behalf.

Commodities

Investing in commodities is one of the oldest forms of trading; they are unique because they have a physical representation. Examples are oil or gold. On eToro commodities are traded only as CFDs.

Currencies

The foreign currency exchange market is the biggest market in the world. But it is also a difficult market to trade-in due to the rapid and sometimes unpredictable changes that can occur within a few seconds. Because of this fac,  investors are usually very active. On eToro currencies are traded only as CFDs.

ETFs

ETF means different assets are grouped together to serve as one tradable fund, with each individual ETF following a different strategy. A team of experts join their knowledge to design a fund. These ETFs are mainly long-term investments on which investors can earn a dividend. This is meant to be a low-risk investment. Examples of ETFs are QQQ and TLT.

Indices

A stock market has an index or multiple indices, which show the status of parts of that market. Indices are a collection of shares of large companies combined into one index. Indices are considered more stable than individual stocks. On eToro indices are traded only as CFDs.  Examples are NSDQ100 and FRA40.

What are the trading conditions of eToro?

You can open a trading account very easily, you only need to register and submit the registration form. To start live trading, you need to place a minimum deposit of $200 for the normal platform.

CopyTrading explained

eToro offers an exciting and innovative tool to use while investing in its platform: CopyTrading. CopyTrading allows investors to follow, check and copy the investments of other traders. It is basically mirroring the trades of the investors you want to follow; the ‘Popular Investors’.

Popular Investor

If you wish to join the Popular Investor program you need to place a minimum deposit of $1000. Popular Investors are traders who have shown their ability to deliver consistent returns. These traders have a unique investment strategy with which they earn a second income by being followed and copied by other clients on the eToro platform. In return for being transparent on their trading strategies, these investors receive rewards for sharing their knowledge. This attracts both experienced and inexperienced investors to eToro. For new investors, this is a helpful tool to start trading without having to do much research.

Membership

Not only can you enjoy the benefits of one of the biggest brokers in the world, but you can also join their member’s club. The eToro club offers its club members a level of services from personalized service, live webinars to improve your trading knowledge, daily market analysis, free subscriptions, access to the newest products and features, access to different events and reduced fees.

The different packages eToro offers are divided into five categories.

  • Silver ($5,000)
  • Gold ($10,000)
  • Platinum ($25,000)
  • Platinum + ($50,000)
  • Diamond ($250,000)

What is mobile trading?

Mobile trading means investors can trade via a website or app. eToro is a user-friendly platform where new traders can learn from experienced traders via the Social Trading option. The website of eToro is responsive, this means the website is on both your computer as on your mobile devices easy to use. eToro provides an app via which you can start trading. The app doesn’t have all the features the website has, for example, the charter settings in the app provide only 5 of the 66 studies available on the website, however it has all the important features, such as changing the chart type, periodicity, and timezone.

Virtual trading

The eToro app has a great look and feel. An additional feature of the app is to change your profile from ‘Real portfolio’ to ‘Virtual portfolio’. In your virtual portfolio, you can start trading with virtual equity to get used to the system and for new traders to get used to trading.

eToro Wallet App

The downside of the eToro App is that it doesn’t include cryptocurrencies. You need to download an additional app. Traders can withdraw and deposit cryptocurrencies, which are held by eToroX and it acts as the protector of the private keys and broker.

eToro’s customer service

eToro has a detailed FAQ page where you can find most answers to your questions. For personal questions, you can load a ticket in which you provide all the important details of your question. This gives the customer service agent all the information he/she needs to answer your question.

Live chat

They also provide a 24/5 live chat, in collaboration with SalesForce, with four language options; English, German, French, and Spanish. The downside is that it takes more than 30 minutes to be connected to an agent, this at 4.00 pm on a weekday.


eToro in a nutshell

It is clear eToro tries to entice both new and experienced investors. eToro is a safe and stable platform and a broker. A low-risk broker, regulated and authorised by FCA, AICS, and CySEC. It offers its customers all the necessary information to make responsible investment decisions and attracts all levels of experience. Experienced traders can receive rewards as Popular Investors and as members of the club. New traders can follow investment strategies via the feature ‘copy trading’. The virtual broker function enables inexperienced investors to try-out the program and to get become familiar with investing.

It is really quick to open an eToro account. It provides various innovative and social features, making trading behind your screen or phone more enjoyable. However, context profiling, periodical graphs and CopyTrading provide an excellent overview of the world of investment.

The launch of eToroX made it easy to trade in cryptocurrencies. It allows investors to directly hold and purchase cryptoassets. eToro is the platform for you if you are searching for a wide variety of major cryptocurrencies.

For more than 13 years, eToro has been involved in the investment industry. It is an easy-to-use tool, which we recommend to explore for both experienced and new investors. With more than 10 million users around the world, this broker is worth to explore further. Perhaps compare them with another broker, XM review.

General information

General information
Trading platformeToro Proprietary Platform
Founded2007
Country of regulationsFCA (UK), AISC (Australia), CySEC (Cyprus)
Minimum deposit$200 ($50 US)
Languages supportedEnglish, German, Spanish, Italian, French, Russian, Polish, Greek, Chinese and Arabic
Trading InstrumentsForex, ETFs, Stocks, Cryptocurrencies, Indices and Commodities
Prohibited countries34 countries – Afghanistan, Albania, Belarus, Bosnia and Herzegovina, Botswana, Brunei, Burundi, Canada, Chad, Crimea Region, Cuba, Republic of the Congo, Ethiopia

Guyana, Guinea, Iran, Japan, Laos, Libya, Mali, Myanmar, Namibia, Nicaragua, North Korea, Palau, Samoa, Serbia, Somalia, Sudan, Syria, Turkey, Uganda and Yemen

Publicly tradedNo
Tier 1/2/3 licensesTwo tier-1 licenses and one tier-2 license
Mobile appYes, iOS, Android and Windows
Demo accountYes
Cryptocurrencies(+90) such as Bitcoin, Litecoin, Ethereum, Ripple
Cryptocurrencies spreadsBTC <1%, ETH 2%
Deposit methodCredit/Debit Cards, PAYPAL**, NETELLER, SKRILL, RAPID TRANSFER, Klarna / Sofort Banking, WIRE TRANSFER, ONLINE BANKING, CHINA UnionPay
Trading feeVariable – integrated into the spread
Deposit fee
Withdrawal fee$5 fee on all withdrawals, the minimum withdrawal amount is $30.
Inactivity feeYes ($10)
Broker typeMarket Maker
Social tradingYes
HedgingYes
ScalpingNo
CommissionNo

Good

  • Leading Social Trading platform
  • Excellent international broker
  • Great platform and mobile app
  • More than 10 million users worldwide

Bad

  • Speculative copies
  • Strong sales retention
  • Medium speed payouts
8.4
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