Avatrade vs eToro

August 17, 2018 — 2:50 PM EDT

AvaTrade and eToro have very different approaches to the Forex and CFD markets. Investors with some experience in the market will likely find AvaTrade’s platforms, products, and pricing very familiar and competitive within the industry. There are a few weak points, but if you are looking for a traditional dealer with strong research and technology tools, AvaTrade deserves a look. 

eToro was launched one year before the 2008 financial crisis but after the market was already saturated with spot Forex dealers. To stand out, eToro has always had a unique approach to its trading platform and products. For example, social trading has become a core focus for eToro, which could be interesting to many traders, but many other traditional dealer functions are weak.

A Quick Look

 
 
 
 
 
 
 
 

 Products & Fees

  • Currency spreads: 1.5 to 2 pips for major pairs
  • Account minimum: $100
  • Stock trade fees: 0.09% per side of trade value
  • Account minimum: $200

 Fast Facts

  • Breadth of trading products
  • Variety of platform choices
  • Negative balance protection
  • Cryptocurrency trading
  • Leader in social trading space
  • 8 million users worldwide

 User Experience

  • Five different trading platforms 
  • Browser-based trading platform is customizable 
  • Auto-trading and custom indicators
  • Mobile application includes all of the same functions
  • In-depth education center
  • Simple trading platforms
  • Easy to access cryptocurrency trading 
  • Mobile app is easy to navigate

 Education

  • MetaTrader 4 video tutorials
  • Trading courses
  • Platform walkthrough
  • Live webinars 
  • Several online classes

 Research & Insights

  • In-house research from SharpTrader.com
  • Daily video commentary on financial markets
  • Fundamental analysis reports 
  • Weekly market reports
  • Basic equity research
  • Pension calculator
  • Momentum indicator
  • eToro blog

 Customer Support

  • Slightly above average customer support features 
  • Average customer support features

 

Products and Fees

AvaTrade’s fees for Forex and CFD investing weren’t out of line compared to the rest of the industry. For example, the dealing spread on the EUR/USD was 1.5 pips and investors pay a $.03 spread on oil CFDs during normal market conditions. AvaTrade only sticks with the dealing spread approach to pricing, which keeps the cost structure simple and easy to understand.

eToro also only uses a dealing spread approach to trading costs; however, the average spread was higher than the industry. For example, the dealing spread on the EUR/USD was 3 pips compared to an industry average of 0.8 pips. eToro may charge higher fees to support some of the features of their copy trading or social trading products.

Both dealers offer access to a similarly broad spectrum of markets including stocks, indexes, Forex, and commodities through CFDs or spot. Both dealers also provide trading in cryptocurrencies, but costs and product availability varies widely depending on market conditions.

Trust

Although eToro has a reputation for offering an easy to use trading platform and innovative products, customers complain about reliability and support. The dealer is regulated in the U.K. and Cyprus; however, unless you are a premium client, your account will likely fall exclusively under eToro’s division that is only regulated by the Cyprus Securities and Exchange Commission. This is a drawback for investors concerned about dealer stability and account protection.

AvaTrade’s regulation in the European Union is under the Central Bank of Ireland, but AvaTrade's accounts have similar levels of monetary protection as eToro's accounts. Regulation in Ireland is considered more credible than Cyprus, but neither dealer represents a gold standard for regulation or account protection.      

Desktop and Mobile Trading Platforms

AvaTrade clients can use the industry-standard MetaTrader 4 (MT4) platform, which can be modified and expanded with “Expert Advisors” (EA) and other plugins. MT4 is old, stable, and familiar to most traders. Alternatively, traders can choose one of a few other trading platforms that do a better job at auto-trading, options trading, or copy trading. This fragments the experience and may be confusing for some investors, but the copy trading features make AvaTrade more competitive with eToro.

A core focus for eToro has always been its trading platform. The web-based interface is graphics heavy and order entry is simple and intuitive. Charts are better than what is available in MT4, which is a slight edge over AvaTrade. However, the real benefit of MT4 is EA’s which are entirely missing at eToro. New investors may prefer eToro’s platform because the learning curve is low, but one of the most significant advantages over AvaTrade is eToro’s more extensive social or copy trading features.

Like most MT4 dealers, AvaTrade’s mobile app is standard and easy to use. Order entry is simple, and the standard charts and watchlist functions work well. eToro’s mobile platform replicates their web-based interface and is similarly easy to use. Investors who focus on copy or social trading will likely see this as an edge in eToro’s favor.

Special Features

AvaTrade’s special features are consistent with other offerings in the market. Autotrading, and a limited version of copy trading called, DupliTrade, is available. Investors can duplicate selected trading strategies designed by “experts” through an MT4 Floating Spreads account.

Where eToro stands out is its marketplace of copy trading strategies. Investors can choose to duplicate the trades of other investors, evaluate some details of prior track-records, and split their funds across multiple strategies. The traders you are copying may be compensated by eToro depending on how popular they are. Before investing through a feature like this, traders should become familiar with the concept of “survivorship bias.” Sometimes the returns of leading traders or funds look surprisingly good because out of all the traders that may have started originally, today’s leaders are the “survivors.” Was their performance from skill (and expected to continue) or were they just the lucky ones? Survivorship bias is a common problem with marketing in the hedge and mutual fund industry.

Customer Service

AvaTrade offers 24-hour phone support Monday through Friday, along with access to chat or email customer service. eToro’s customers can access support through an online form, or potentially the dealer’s Twitter feed. Customer feedback shows that eToro’s service levels are poor which has worsened as the company shifted further into the cryptocurrency markets. While the interface may be easy to use and copy trading is, at a minimum, entertaining, not finding help when you need it may lead many investors to keep their balances low at eToro compared to AvaTrade.

The Bottom Line

While AvaTrade is a fairly standard dealing spreads only firm, there are a few unique features that make the dealer worth further consideration. AvaTrade offers a larger than average choice of trading platforms and special features that include automated chart analysis, research tools, and a limited copy trading service. Investors with previous experience in the market will probably appreciate the standard approach to pricing and functionality offered by AvaTrade.

eToro is difficult to compare to other dealers because the focus on an easy to use trading platform and social/copy trading is unique. However, customer service is lacking, and the promotion around the copy trading feature feels a little like the ubiquitous “forex trading robot” ads on Facebook, which should make traders cautious.