etoro

eToro Review

If you are looking for the type of broker that will enable you to trade all kinds of assets from forex to stocks to ETFs and even cryptocurrencies, you will find eToro effective. eToro stands out for its impressive list of cryptocurrencies that you can trade, its revolutionary copy trading platform and many other remarkable features. To learn more about this broker, keep reading this comprehensive eToro review.

What is eToro?

It is an online trading platform established in 2006 that provides a wide variety of trading options. eToro has built up its reputation by branding itself as a leader in social trading. eToro allows traders to trade all kinds of assets, including forex, stocks, commodities, indices, and cryptocurrencies through its social trading platform where they can learn from other investors and utilize the Copy Trading feature. eToro has since opened up offices in Cyprus as well as the United Kingdom with close to universal service presence. eToro expanded its operations into the U.S. market and launched its cryptocurrency exchange and mobile wallet in 2018. It now has over 6 million users worldwide and supports over 15 cryptocurrencies. Initially, it was launched in just a handful of U.S. states, but as of April 2020, traders in 42 States can use eToro for trading. These States are:

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, Vermont, Virginia, Washington, Washington D.C., West Virginia, Wisconsin and Wyoming.

eToro Licensing and Regulation

eToro is regulated and licensed by the FCA (Financial Conduct Authority), CySec, and ASIC.

The broker services are provided by eToro (Europe) Ltd., which is a registered Cypriot Investment Firm (CIF) that’s regulated by the Cyprus Securities and Exchange Commission. This includes a cross-border license for within and outside the European Economic Area.

  • eToro (U.K.) Ltd. operates in the U.K. regulated and authorized by the Financial Conduct Authority (FCA). This also includes a cross-border license for operations within the European Economic Area.
  • eToro Europe as well as eToro U.K. are both in compliance with and operate under the Markets in Financial Instruments Directive (MiFID).
  • eToro USA in the United States is run by eToro USA LLC, which is a Money Services Business that’s registered with FinCEN.
  • eToro AUS Capital Pty Ltd. operates in Australia regulated by the Commonwealth Corporations Act and has an Australian Financial Services License (AFSL) that’s provided by the Australian Securities and Investments Commission (ASIC).

To ensure compliance, and in line with regulation, eToro must have sufficient funds available to meet the minimum capital adequacy ratios as stipulated by the European Capital Requirements Regulations. Client funds are stored in segregated accounts with both external and internal supervision.

Account Types Available on eToro

The two main accounts available on eToro are retail and professional. However, these two accounts are not the only types of accounts offered. eToro also offers Islamic accounts and even demo accounts that allow you to practice trading without risking real money.

Retail Accounts

The vast majority of eToro traders open retail client accounts. This is due to it also being the default option. Retail clients have access to all trading assets available on eToro and can either trade manually or Copy Trade, (which is subject to suitability).

Leverage is restricted for retail clients, but they still receive certain protections such as coverage by the Investor Compensation Fund along with recourse to the Financial Ombudsman Service. Retail clients also receive negative balance protection as well as margin closeout restrictions as required by ESMA regulations.

Professional Accounts

Professional clients waive certain protections enjoyed by retail clients, which include the negative balance protection, coverage by the Investor Compensation Fund and the Financial Ombudsman Service. In exchange, they enjoy the leverage of up to 1:400.

To become a professional client, you must meet the criteria by showing your higher experience in trading, considering the higher risks associated with this type of account.

Islamic Accounts

eToro also offers Islamic accounts. To open an Islamic account, however, you must first open a real account and deposit at least $1,000. Once you have verified your account, you should contact eToro customer service to switch to an Islamic account.

Demo Account

eToro also offers a free demo trading account. The demo account is immediately accessible after registration even before submitting verification documents. The demo account has $100,000 in virtual currency and is the perfect way to see whether eToro is the right fit for your trading needs.

screenshot of etoro demo account layout

Demo Account mode with $1000,000 in virtual funds

Minimum Deposit on eToro

The minimum first-time deposit for the residents of Australia and the United States is $50, which is highly competitive and accessible compared to other brokers. Residents of most other countries have a slightly higher, but still available minimum first-time deposit of $200.

Depositing and Withdrawing Funds on eToro

eToro offers a wide variety of options when it comes to depositing and withdrawing money. All the options have different minimum deposits. The range of options ensures that traders of all budgets can participate on the platform.

Deposits

eToro supports the following options for depositing money:

– Bank Transfers – Wire Transfers – Yandex – PayPal – Neteller – Skrill – MasterCard – Visa – Webmoney U.K.

Withdrawals

Users must fill out a form to facilitate withdrawals. It is only after doing this that users can withdraw their money via the following options:

– Debit Card – Credit Card – Bank Transfer – PayPal

Other requirements of withdrawal are:

– Proof of Address – Passport Copy (Colored) – Signature

Standout Features of eToro

eToro has always been considered a game-changer ever since it was launched. It is the first broker to embrace new and innovative trading features such as social trading, copy trading, and many others. Here are the standout features of eToro:

CopyTrader

The CopyTrader feature was introduced with the understanding that not everybody has the expertise or time to trade actively. The feature allows clients to copy the portfolios and trading strategies of successful traders.

To use the CopyTrader feature, you allocate the amount you want to another trader of your choice. That trader’s trades will then be automatically copied in your account until you decide to stop.

You can see the performance history, portfolio, and risk score of successful traders before copying their trades, which allows you to make a fully informed decision with regards to following a particular trader.

screenshot of etoro copy trader section

 

Popular Trader Program

Successful traders can earn some additional income with the Popular Trader Program offered by eToro. The program rewards successful traders for sharing their knowledge. Traders can engage other users through the CopyTrader feature and in the process, grow a following and earn exclusive perks that help increase their earnings.

CopyPortfolios

CopyPortfolios is a premium portfolio management service offered by eToro that copies multiple markets based on an investment strategy. Investors can currently choose from one of the following three types of CopyPortfolios:

– Top Trader CopyPortfolios: The portfolios here look at the best performing traders according to a predefined strategy.

– Market CopyPortfolios: The collections here bundle together stocks/ETFs with a particular theme such as cryptocurrency, farming, travel, or healthcare.

– Partner Copy Portfolios: The portfolios here have been created by eToro’s partners and mimic some of the best companies and fund managers in the world.

The minimum amount required to invest in CopyPortfolios is currently $5,000, and you are not allowed to remove part of the funds from your investment. The only option available to you us to close it out completely. At such a point, any available funds will go back to your account.

screenshot of etoro copy portfolio section

 

Web-Trading Platform

eToro offers an easy-to-use web-trading platform that’s great for traders with less experience. Still, traders of any level will appreciate the ease-of-use. The platform has over 2,000 tradable assets and includes features that suit both beginner and advanced traders. Traders enjoy access to full-featured charting with multiple drawing tools and 66 indicators.

eToro Mobile

eToro offers traders an excellent trading experience through its mobile app, which has a similar design to that of the web trading platform. The app gives you access to trading instruments, community, data, as well as 24/7 updates, and all information is synced with other devices. While the mobile app has only five charts available compared to the 67 on the web platform, it is responsive. However, the app is missing drawing tools, and this is a drawback.

Cryptocurrency Wallet

eToro has its own wallet that allows users to transfer and trade cryptocurrencies via their mobile phones. The wallet is similar in design to the eToro mobile app. However, it doesn’t seem to be a real cryptocurrency wallet but rather a better interface to eToro’s existing platform. The wallet is all about simplicity and accessibility. Everything is clear and easy to do from making watchlists to placing trades.

eToroX (Cryptocurrency Exchange)

eToroX is a cryptocurrency exchange offered by eToro that’s regulated by the Gibraltar Financial Services Commission (GFSC). eToroX offers customized cryptocurrency trading services such as a dedicated cryptocurrency mobile application, an efficient interface, and competitive security options.

Tradable Assets on eToro

eToro currently offers Contracts For Difference (CFD) trading in 6 major classes of assets, which include 47 currency pairs, hundreds of stocks and commodities, ETFs, and indices. The most popular markets in the world are included, and any trader should have more than enough investment opportunities.

eToro currently offers the following types of assets to traders:

Currencies: eToro only supports CFD trading when it comes to currencies, which means that you don’t have to buy the underlying asset (i.e. actual currencies) to trade them. CFD trading also allows for ‘short’ positions and leveraged trades for assets that don’t offer such an option in traditional trading. eToro provides a total of 47 currency pairs, which includes some of the popular ones such as EUR/USD, USD/JPY, and GBP/USD.

Commodities: Energy sources such as oil, precious metals such as platinum and gold are some of the most popular assets to trade just about anywhere. eToro also offers CFD trading of commodities along with others such as natural gas, copper, and silver.

Stocks: Stocks are considered medium to long-term investors. eToro also offers CFD trading of the shares of companies such as Facebook, Google, Apple, and JP Morgan, among many others. Companies that operate in the utilities, services, healthcare, consumer goods, technology, financial, necessary materials, and industrial goods sectors can be traded on eToro.

Indices: Indices are combinations of several stock assets that, when combined reflect a market’s current situation. For instance, the NASDAQ Index aggregates significant companies from the technology sector, such as Google and Apple. eToro also supports CFD trading of indices, which include UK100, SPX500, NSDQ100, JPN225, China50, among others.

Exchange-Traded Funds (ETFs): ETFs are financial instruments made by combining several individual assets. Each fund follows a particular index or market strategy and is designed to be either a low-risk option for investors or meet the hedging needs of a specific financial institution. eToro currently offers 83 ETFs that can be traded including Ultra S&P500, Emerging Markets Index, AGG, ACWI, among others.

eToro: The Pros

– It allows for seamless account opening

– It is the best in its class when it comes to social trading

– It is regulated by CySEC, FCA, and ASIC

– It supports trading of multiple assets including Forex, Indices, Stocks, Commodities, ETFs, and even Cryptocurrencies

eToro: The Cons

– Withdrawals are slow and expensive

– The platform offers minimal customization options

– USD is the only base currency accepted for trading

Verdict

eToro is one of the most reputable online CFD trading platforms that are currently available and is highly recommended. It will suit both beginners and experienced traders.

Beginner traders will love the educational tools offered and appreciate the hands-off approach that social trading offers. Experienced traders, on the other hand, will appreciate the opportunity to become Popular Investors and supplement their trading incomes further.

You can save a bit of money on withdrawal fees or the occasional spread if you choose a competitor, but no broker comes close to eToro when it comes to versatility, ease of use, and design. If you want to trade and trade well, eToro is the way to go!

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