eToro: Review and expert knowledge

eToro is a reliable CFD-broker and one of the pioneers when it comes to social trading. Though eToro is well respected for its liability, the broker and its offers were once again closely examined. The results can be found in the following test review.

Important facts about eToro

The broker’s aim is to allow every trader the easiest CFD-trading available – whether or not the trader is a beginner, advanced or a pro. Back in 2007 eToro Ltd. was founded on Cyprus and was also one of the first brokers which was able to link trading and social media. Meanwhile eToro is one of the world’s most renowned social-trading-companies and has around six million traders using its online platform.

eToro: Security and regulations

eToro is governed by the Cyprus Securities and Exchange Commission (CySEC) of Cyprus and owns license number 109/210. Additional security is offered through the fact that Cyprus is a member state of the European Union and hence the company automatically has to comply with the EU-trading market regulations as outlined in the Financial Instruments Directive (MiFiD). On top of that eToro is also registered as a cross-border service provider with the German Federal Financial Supervisory Authority (BaFin). All these facts contribute to the integrity of the broker.

eToro and its trading platform

This trading platform is not only available as a desktop version but also a web based version. Therefore, you neither need to download nor install any software. Thanks to the neatly arranged trading interface everyone finds his or her way around easily. On a positive note especially, the charts as well as the different features and community tools shall also be mentioned. The community manager is a special tool which excessively supports new traders.

As eToro’s trading platform is web based it can also be accessed from a smartphone or tablet without any issues. Additionally, eToro also offers an app for iOs and Android devices.

Which assets can be traded at eToro?

Traders can choose between a broad variety of assets they would like to trade and invest at eToro. Financial instruments are available in the following categories:

  • Stocks
  • Currencies
  • Indexes
  • Commodities
  • ETFs

Characteristic features of trading crypto currencies

At eToro you may also trade the following digital currencies:

  • Bitcoin (BTC)
  • Bitcoin Cash (BCH)
  • Ethereum (ETH)
  • Ethereum Classic (ETC)
  • Ripple (XRP)
  • Litecoin (LTC)
  • Dash (DASH)

As digital currencies are traded at special stock markets, eToro levies a fee resp. charges an addition of up to 5 percent of the amount invested. Hence these additions are slightly higher than the ones for other assets, but as crypto currencies are very popular at the moment and demonstrate an impressing performance, trading them may be well worth it.

Spreads, fees, margin, and reserve liability

You can find a list of all applicable fees and spreads on the homepage of eToro. For example, stocks can be traded starting at 9 pips and currencies can be traded starting at 3 pips. There is no fee for opening a position only for closing it. It shall also be noted that the minimum value for a position is 1,000 units of currency (micro lots). The safety margin is handled differently but remains within the common expectations.

In general trading CFDs is connected to a reserve liability. This means that if the deposited margin is insufficient in case of a loss, eToro may demand the trader to settle the trading account. Therefore, this option shall be used carefully in case unpredictable events lead to severe market vacillations – even though many trading accounts may be set back to zero out of courtesy. However, those who act recklessly may expect that eToro reserves its right of reserve liability.

Important features: Stop Loss and Take Profit

In order to minimize risks, traders at eToro may use the following features:

  • Stop Loss: A stop-loss-order is only available during sales (limited form). As soon as a predetermined value is reached or exceeded, the sale is automatically initiated.
  • Take Profit: The take-profit-function is also used to increase security and safety. Traders may choose a specific amount of money which shall be earned during trading. As soon as this value is reached, the position is automatically closed.

Social Trading at eToro

eToro’s social network is called OpenBook. Here traders can find many different versions of social trading. With the help of basic functions traders can check out the live feeds of other traders as well as their trading strategies and concepts. While some traders prefer short-term strategies, some other traders may be into long-term investments. Additionally, traders can choose more experienced traders. At eToro those professional traders are referred to as “gurus”. You can use different search options and rankings, in order to find the most suitable guru. As soon as you’ve decided on one or more gurus, you can copy their trading patterns. This means that social trading is, especially for newbies, a perfect alternative to classical trading.

Opening an account/minimum deposit and deposits/withdrawals

A trading account can be opened for free. In order to start trading however you need to pay at least 100 Euro into your trading account. Different deposit methods are available, e.g. credit cards, GiroPay, Paypal, Skrill, and Neteller. There is no fee for depositing money.

In order to withdraw money, your account balance needs to be at least 50 USD. The withdrawal fee depends on the amount you want to withdraw and is limited to 25 USD per withdrawal request. You should also note that prior to withdrawing money, you need to comply with the verification procedure to prevent money laundering; to do so, eToro’s customers need to submit several documents (e.g. copy of your ID card). After your documents have been evaluated, your trading account will be available for withdrawals.

Customer support and practice accounts

eToro’s customer support can be reached Monday through Friday via live-chat, mail, as well as via phone. Random checks have shown that the employees at eToro are always friendly and willing to help.

As a special service eToro offers its customers a free practice account which is already loaded with play money. This way traders can become familiar with the trading business and play around without any financial risks.

On top of that eToro also offers an extensive training program presented in the format of training videos, tutorials, and live webinars. The FAQ section is also very diverse and with the help of the search options eToro’s customers can easily and fast find what they are looking for.

Advantages and disadvantages of eToro at a glance

Here’s a summary of eToro’s advantages and disadvantages at a glance:

  • Broker regulated through CySEC/registered with the German Federal Financial Supervisory Authority (BaFin)
  • Website completely available in German
  • Classic CFD-trading as well as social trading
  • Minimum deposit: 100 Euro
  • Practice account as well as lots of practice materials
  • Lots of different tradable assets; as well as digital currencies
  • Low spreads/margins
  • No commissions or provisions
  • Mobile trading available
  • Withdrawal fees

Final review on eToro

There is a reason why eToro is one of the most popular brokers and social trading providers as the accessibility is easy and the conditions are perfect. It is extremely positive that the minimum deposit is just 100 Euro and that the traders can choose from many different assets. These assets also include the popular digital currencies, such as Bitcoin, Ethereum & co. It is also an advantage that especially unexperienced traders can take advantage of eToro’s free practice account as well as the vast variety of training materials. In conclusion it is not surprising that this review of eToro was extremely positive: eToro is a reputable and competent broker which totally impresses with its trading offers.