eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFD assets. Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. You should seek advice from an independent and suitably licensed financial advisor and ensure that you have the risk appetite, relevant experience and knowledge before you decide to trade. Under no circumstances shall eToro have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs or (b) any direct, indirect, special, consequential or incidental damages whatsoever.
Founded in 2007 and based in Cyprus, eToro’s narrow focus on social and copy trading has underpinned rapid growth that now boasts more than 6,000,000 clients worldwide. A unique proprietary platform lets account holders mimic trading strategies of the most successful clients, automatically and in realtime. This has benefits and disadvantages because it’s essentially a “black box” system, in which the copycat may not understand the rationale or technical elements of their exposure, raising the potential for large losses.
The brokerage comes up short in other features, with meager educational resources, higher than average trading costs and a poorly designed customer service portal with no phone numbers or online chat system. As a result, clients are forced to use an antiquated ticket system to fix trade issues, make account inquiries and solve other problems. An adequate help and FAQ database supports those efforts but can’t replace human contact, as evidenced by customer complaints found all over the Internet.
Opening an account requires just $200 for United Kingdom clients but withdrawal fees are higher than average, at $25 plus banking costs. More advanced traders can’t hook up third party software or algorithms into the data feed because they offer no API interface or VPS hosting. Combined with wide spreads and a relatively small product catalog, this lack of customization could send higher skilled clientele to other brokerages.
Social / copy trading platform.
Impressive cryptocurrency catalog.
No standalone version.
No streaming news.
The broker is authorized through Cyprus Securities & Exchange Commission (CySEC) and is compliant with European Securities and Markets Authority (ESMA) rules but the Cyprus domicile raises concerns due to that venue’s poor reputation. They’re also licensed by UK’s Financial Conduct Authority (FCA), which requires more thorough risk disclosures. The fine print admits the broker can hold client funds in banks outside the European economic area, increasing risk in case of a bank default, but they provide EU and UK broker default protection up to €20,000 or £50,000.
They offer no guaranteed stop loss protection or additional coverage through private insurers while an inadequate order entry interface lacks risk management features other than stops and trailing stops. Stop losses for cryptocurrencies cannot be lower than 25% of exposure, further limiting customization while increasing investor risk. ESMA rules that went into effect in August 2018 dictate negative balance protection so clients can’t lose more than 100% of their account value.
Security features include phone-based two-tier authentication and standard SSL encryption. Extensive documentation on best execution and conflict of interest policies builds confidence but the broker acts as a market maker and counterparty in all trades. Fee disclosures are extensive and easy to read increasing transparency, but a marketing blurb stating that client funds are held only at tier one institutions appears flawed, given fine print disclosures.
The eToro social trading platform is web based and geared toward low skilled clients, with no standalone version. Charting is surprisingly full featured, with 66 indicators and numerous drawing tools, but the software has no historical testing other than CopyTrader and CopyPortfolios performance tracking. The News link is disappointing, opening into a social forum, with client posts but no streaming news. Watch lists can be customized and saved while order entry lacks risk management capacity. The broker offers no MetaTrader or other third party alternatives.
Each watch list entry shows client buying and selling percentages in realtime, allowing quick sentiment analysis. CopyPortfolios joined the CopyTrader program in 2017 and both venues can be automated to mirror positioning in realtime. The portfolio program looks just like a list of exchange-traded funds (ETFs) but the broker insists that it isn’t, perhaps to avoid licensing issues.
eToro mobile versions for iOS and Android allow easy syncing between platforms, with well-organized menus but fewer charting features and limited customization. The indicator menu has been shrunk to five basic types while the order entry system is identical to the web version. The watch list includes no client positioning data, unlike the web version, marking an odd omission given eToro’s business focus. Users can set custom price alerts while also receiving push notifications about market events and account issues.
Research is bare-boned and disorganized, accessed through a blog that included many stale and very general articles. For example, the last entry in the “Latest News” link was posted more than three months prior to the review. The blog uses a tag and topic display with no search function, forcing the user to scroll endlessly through old posts. A Research button in the mobile app produced a message indicating that analyst research is only available in funded accounts. A few blog topics like cryptocurrencies were covered in greater detail than forex or market analysis, highlighting 2017 cryptomania more than current events, while few articles covered instrument-specific fundamental or technical analysis.
Inexplicably, a Trading Academy link has been placed in the footer rather than top menu. A Live Webinar link, also at the bottom, produced an error page with no programs or archives. The education portal is disappointing with just 11 basic programs in a PowerPoint-type presentation. The “Advanced Technical Analysis” course opened into a listing of simple candlestick patterns, with “bullish” and “bearish” designations. No written educational materials were found at the site, other than platform and instrument descriptions in the FAQ and help databases. eToro maintains a YouTube video library but the tutorial section only contains platform how-to presentations.
eToro is narrowly focused on social and copy trading, in-platform social sentiment data as well as automated client and portfolio copy trading. They provide negative balance protection to professional clients as a voluntary incentive because it isn’t required under ESMA rules, but the lack of a volume discount program outweighs this advantage. Weak order management and no guaranteed stop loss protection increase risk of large losses, especially with cryptocurrency coverage that has limited stop loss functionality. They offer no API interface, VPS hosting or platform alternatives, relying primarily on low-skilled traders looking to piggyback the portfolios of advanced clientele in the CopyTrader program or proprietary algorithm (robot advisor) in the CopyPortfolios program.
Most recently, as of March 7th, 2019, eToro has launched their blockchain wallet for both Android and iOS which will now be available in 31 U.S. states. The platform will offer up to 13 different cryptocurrencies ranging from Bitcoin (BTC) to Stellar Lumens (XLM). This new feature broadens their offerings to U.S. traders but makes their focus on crypto evident.
The broker’s product catalog is relatively small, with 47 currency pairs and 19 commodity/index CFDs. It also covers hundreds of shares as well as an impressive 30 cryptocurrency CFDs. All instruments can be traded on the long or short side, but read the fine print because each venue and order type incurs different overnight and weekend holding costs. CopyPortfolio extends the product catalog because the algorithms can access markets not directly available as CFDs. And, although the broker maintains an aggressive program to avoid conflicts of interest, they act as a counterparty, setting bid and ask values that may not match consolidated market feeds.
Commissions and Fees
Minimum forex, commodity and index spreads are high, with EUR/USD at 3.0 pips and SP500 at 75.00 pips. The fine print also notes that spreads can widen significantly as market conditions change. Overnight and weekend holding costs are above average as well, and can greatly reduce profitability. Share spreads are locked at a competitive 0.09% spread per side but weekday overnight holds currently cost 24 cents per $1000 of leveraged long exposure. This fee triples over the weekend but no overnight fee is charged for non-leverage long exposure.
The broker charges a $25 fee in addition to possible bank or credit card charges for withdrawals, one of the highest among European brokers. No withdrawals smaller than $50 are permitted. Withdrawal and other fees are fully disclosed on an easy to read fee page that contains few omissions. Inactivity fees will digest remaining account balances quickly, charging $10 per month after 12 months of no trading activity.
The contact page refers to 24/5 support but there are no phone numbers listed – except for the Australian branch. A Help Center link leads to an FAQ and help database as well as a login gate to a low-tech ticketing system, a type of support abandoned by most businesses in the last decade. A phone number link on that page leads back to the contact page, inviting client frustration. There’s no online chat for prospective or existing clients, and a platform-based customer service link leads back to ticket and database menus. eToro maintains active Twitter and Facebook accounts, which are used primarily for marketing and analysis entries.
What You Need to Know
eToro offers a good fit for low-skilled traders with limited time who want to piggyback on the performance of a robot advisor or the broker’s most successful clients. This can be a risky enterprise because few strategies work in all market conditions. On the other hand, more advanced traders and professionals wishing to allocate resources to alternative copy-based strategies are more likely to understand the risks and take defensive action when required. Retail and professional customers seeking a broader range of brokerage services, prompt customer service, and competitive costs should probably look elsewhere.
Those looking for an impressive catalog of cryptocurrencies can find what they need with eToro. See how they compare against other online brokers we reviewed.
Warning: Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Cryptoassets are unregulated and can fluctuate widely in price and are, therefore, not appropriate for all investors. Trading cryptoassets is not supervised by any EU regulatory framework. Past performance is not an indication of future results.
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