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eToro – Broker Review and Trader Feedback

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67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Initially established in 2006 as RetailFX, eToro is the world’s leading social trading platform. The brokerage firm first introduced the concept of social trading in 2010 to the online spot forex trading industry and has since revolutionized the way online trading is being carried out today. The concept of social trading relies on the collective wisdom of the crowd to help a trader formulate a trading decision. Through eToro’s social trading platform, traders can connect with each other and use their combined experience to try and achieve better trading results.

1. General Information

eToro is an online social trading platform that was founded by two brothers Ronen and Yoni Assia together with their partner David Ring in 2006 as RetailFX. Today, eToro operates under several subsidiaries all over the world. Its head office is based in Cyprus and is located at the 7th floor, Kanika International Business Center (KIBC), 4 Profiti Ilia Street, Germasogeia, Limassol. The brokerage’s R&D office is located in Tel Aviv, Israel. It has also established an office in the United Kingdom at 42nd floor, One Canada Square, Canary Wharf, London.

In Cyprus, eToro comes under the jurisdiction of the Cyprus Securities Exchange Commission (CySEC) and operates with the CIF license #109/10. Its London operation however is regulated by the UK’s Financial Conduct Authority (FCA) under the license FRN 583263. In addition to its operations in both Cyprus and UK, eToro has also maintained a presence in Australia through its partnership with IC Markets. Today, eToro is reported to be serving more than 3 million traders worldwide.

2. Advantages and Disadvantages

Low Minimum Deposit Requirement: It only requires a first minimum deposit of $200 to open a live trading account with eToro.

Wide Range Of Trading Assets: Currently, eToro has more than 200 different types of instruments to trade with, ensuring one will never run out of instruments to trade with.

Regulated Regulation: eToro is regulated by the CySEC, FCA, ASIC, Gibraltar and US - it has shown that it can play by the rules.

High Spreads: The spreads offered by eToro is higher than what other brokers in the industry are offering.

Lack of Trading Account choices: There are no choices of trading accounts to suit traders with different levels of trading experience.

3. Trading Conditions

When trading currency pairs or CFDs, one of the factors which plays a huge role in determining a trader’s profitability is the trading costs. At eToro, there are no commission charges. Instead, traders are required to pay a small spread on the BID and ASK price. The typical floating spread for the EUR/USD is 3 pips whereas the average spread which traders pay on the USD/JPY currency pair is 2 pips. While these spreads are higher than the industry’s average, these spreads will become lower once a trader becomes a successful “Popular Investor” with a large following. In some cases, the most successful ones can even trade without paying any spreads at all.

4. Underlying Assets

The choice of underlying assets when eToro first introduced its Openbook trading platform in 2010, were rather limited. Nevertheless within a few short years, eToro has improved its asset offerings tremendously. In 2013, stock CFDs were introduced with an asset index of 110 stocks. In January 2014, Bitcoin CFD was added to the list. Later in April 2014, eToro expanded their asset index to include an additional 130 British and German stocks. The FTSE 100 and DAX30 market indices were also included in the addition.

5. Trading Platform

When eToro first started, its trading platform consisted of the main components, the WebTrader and the OpenBook social platform. Today, the features of both these components are integrated into a single trading platform called the eToro CopyTrader. With the CopyTrader, a trader can trade on his own as an independent retail investor under the “Trade Markets” mode of the trading platform.

To engage in social trading, simply click on “Copy People” to view all the top retail investors and their profiles. The main trading screen will change to reveal all the leading retail investors and their success rates. To follow, simply click on a profile name and click “Copy”.

Apart from being a trader, eToro also lets you earn extra revenue by being one of its “Popular Investors”. Under this program, a trader simply lets other traders view the trades that he makes. Once you have reached a minimum number of copiers, you will be rewarded in cash and in spread rebates. Take note that in order to become a Popular Investor, a trader must deposit a minimum of $1000 into his trading account and must have a copier for at least 2 months with a minimum equity of $500.

In late 2016, eToro introduced a new financial product called “CopyPortfolio”. With CopyPortfolio, eToro has taken social trading to a new level. Instead having to comb through individual profiles to select the preferred “retail investors” and trading strategies, CopyPortfolio allows traders to simplify the entire process by letting them select from a range of prepackaged portfolios. These prepackaged portfolios come in 2 main types, Top Trader CopyPortfolio and Market CopyPortfolio. The prepackaged portfolios essentially consist of an aggregation of a selection of top traders or investment strategies.

6. Mobile Trading

For traders who like to trade on the go, eToro has also provided mobile trading apps which are compatible with iOS devices and Android devices. At present, the mobile apps do not offer all the features of the CopyTrader but traders are still able to trade independently or copy trade.

7. Demo Account

A demo account is provided by eToro for potential clients to try out the trading platform. To gain access to the demo account facility, simply register with eToro and log in with your user name and password. eToro has made it easy for a potential client to switch to a real trading account by switching from “Virtual” account mode to “Real” account mode with just a single click of the mouse.

8. Account Types

To keep things simple, eToro has only provided one standard type of trading account. To open a live trading account, traders are required to place a minimum initial deposit. If a trader wishes to participate in the “Popular Investor” program, then he will need to place a minimum deposit of $1000 before he is eligible to join the program.

9. Opening an Account

To open a trading account at eToro, simply fill in the registration form and submit it to eToro. The process of opening an account is the same as a demo account. If a trader has already registered with eToro, he can easily switch to a live trading account by clicking on the “Real” tab located on the menu panel located on the left side of the trading screen.

10. Funds Withdrawal

To support their international clientele base, eToro has provided support for a variety of payment methods which can be used for depositing and withdrawing funds. These methods include:

  • Credit Cards (VISA, MasterCard, Diners)
  • eWallets (PayPal, Skrill, Neteller, China UnionPay, WebMoney, Yandex)
  • Bank Wire Transfer

To initiate a withdrawal, simply click on the “Withdrawal” tab at the bottom of the menu panel that is located on the left side of the trading screen. Funds withdrawn are first channeled through credit card, Paypal or bank wire transfer. The typical time for a withdrawal request to be completed is around 5 business days. However, there is a possibility that the withdrawal time may take longer due to third party payment processor requirements.

11. Trader Training

Like most brokers, eToro also offer their traders an education center where traders can access various educational resources to enhance their trading skills. These resources include training videos, trading courses and webinars. The topics covered range from trading basics to how to navigate around the various features of the eToro’s trading platform. The webinars and trading courses are all conducted by eToro’s trading experts and allow beginner traders to learn at their own pace. In addition to the resources in the educational center, eToro has also provided their traders with a blog which offers tips and updated news of the financial markets.

12. Should I Trade With eToro?

Since the introduction of social trading by eToro, social trading has become extremely popular among many beginner traders. This is because the social trading platform allows a novice to tap into the experiences and wisdom of the more experienced traders in a simple and yet transparent manner. So if you are a beginner trader with very little knowledge about the financial markets, then eToro might be the right fit for you.

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

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eToro – Broker Review and Trader Feedback

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