A comprehensive review of eToro
Security, trading fees, tradable assets and more
eToro is a brokerage company founded in 2006 and based in Tel Aviv, Israel. The company has grown tremendously due to the implementation of various trading features dating back to 2010, as well as their early adoption of cryptocurrency CFD trading. It now houses subsidiaries in Cyprus, where it is regulated by CySec (Cyprus Securities and Exchange Commission) and the United Kingdom, where it is fully authorised by the Financial Conduct Authority (FCA) to offer CFD trading services.
In September 2017, eToro changed the way users trade cryptocurrencies to a model by which coins are bought and held by custodians until a trader decides to sell. The result of this being they no longer purely offer CFD trading, although the platform still functions in a very similar way. As of May 2018, eToro have announced future plans to become a fully fledged cryptocurrency exchange, supported with an online wallet service.
Pros & Cons
Account Options & Regulation
|Forex Majors Spread||3.0 pips|
|Min. Trade Size||25|
|Free Demo Account||Yes|
|Day Trading Account||Yes|
|Payment Options||Bank Transfer, Credit/Debit Card, PayPal|
|Crypto Coins||BTC, ETH, XRP, BCH, LTC, EOS, XLM, NEO, ETC|
What can I do with eToro?
Apart from CFD (Contract for Difference) trading on traditional instruments (stocks, commodities, shares and ETFs), eToro allows cryptocurrency CFD trading. CFD Trading means being able to trade against the value of an asset or security without technically owning the underlying asset. CFD trading has been available on the platform since January 2017.
However, since September 2017, eToro has also included the option to buy cryptocurrencies directly, and now provides a large amount of coins up for trade. In May 2018, eToro CEO Yoni Assia declared that eToro would soon open up a cryptocurrency exchange platform (incorporating a wallet function), and expand their trading services to the US. This means that eToro will soon offer users the opportunity to hold cryptocurrencies for themselves. Currently, eToro allows for the direct buying of cryptocurrencies, but holds cryptocurrencies for users as a custodian.
As a social trading platform, eToro allows users to track and copy individual trades from top traders on the platform, as well as read any additional insight or analysis provided by other community users. This is what sets eToro apart from other competitors in the CFD trading space. Another vital tool you get from eToro is the economic calendar. By identifying the date and time of your trade, the calendar provides you with useful information related to the asset you intend to trade based on the timescale. eToro also offers you the chance to learn the trading ropes with a demo account with $100,000 upon completion of registration.
Which cryptocurrencies can I trade?
eToro has a rather diversified cryptocurrency base in comparison to other industry competitors, allowing for the trading of:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Ripple/XRP (XRP)
- Litecoin (LTC)
- Cardano (ADA)
- EOS (EOS)
- NEO (NEO)
Prior to being able to use the deposited funds for trading on your account, you will need to show proof of residence and identification on eToro through their digital service. This will be covered in a latter section. eToro uses various payment methods for funding. This includes:
You can fund your account through a bank or wire transfer. Funds may take up to 5 days to show up in your account. Withdrawals usually occur within 5 days, but can take up to 9 days.
Deposits made using this method are typically instant, and withdrawals depend on the processing time of your bank and can take between 1-4 days. The credit or debit card you use must also be registered to your name.
You can fund and withdraw from your eToro account with PayPal, Skrill, Neteller, and Webmoney. Deposits and withdrawals made with this method usually operate in the same way as a direct or credit card would.
Note that eToro has a flat $25 withdrawal in addition to the withdrawal minimum of $50. Withdrawals can usually be made with the payment method you used to deposit funds, but eToro might sometimes ask for an alternative payment method if that does not work. The platform also only allows for trading in USD.
What devices can I use eToro on?
eToro has both a web-based and a mobile platform for you to conduct your trades. As such you can use it on any device that runs on Windows, iOS, MacOS, or Android. Based on this, you can use eToro with:
- Mobile phones
How easy is it to use eToro?
eToro is generally easy to use because of its intuitive and simplistic design. As such, traders new to trading can easily find the information they need to kickstart their trading, while experienced traders can make use of slightly more advanced tools, such as the economic calendar or other trading instruments that can be accessed from the landing page.
eToro allows for the use of both a web-based and mobile platform which carries the same level of functionality. This makes it much more convenient for people who want to continue or follow their trades on the go. The website also provides some basic interactive educational content for relatively inexperienced CFD traders.
eToro is currently regulated by CySec (Cyprus Securities and Exchange Commission), and the FCA (Financial Conduct Authority), which provides for support for UK based users. eToro also plans to provide their trading services to US based users by the end of 2018. At the moment, their services are available in over 50 countries, including:
- Czech Republic
- New Zealand
- Saudi Arabia
- South Africa
- United Arab Emirates
eToro is regulated by two different entities:
eToro Europe Ltd. this is a Cyprus based investment firm and is regulated by the Cyprus Securities and Exchange Commission (CySEC) under the license number 109/10. In case the company becomes insolvent, CySEC compensates up to €20,000.
eToro UK Ltd. With their headquarters in London, eToro UK Ltd. is regulated by the FCA (Financial Conduct Authority). The FCA can compensate you to a maximum of £50,000 in case the company goes under as per the guarantee from the Financial Services Compensation Scheme (FSCS).
When opening long positions on cryptocurrencies, these regulations do not apply on eToro. This is because you’re not opening up a CFD, but instead buying crypto which is handled for you by a custodian until you decide to sell.
eToro requires that you verify your account before you start trading. When signing up for an account, you only need to provide your name, email address, and mobile number, but to trade you’ll need to provide extra details. This helps keep the platform as secure as possible.
For verification purposes, you will need to upload documents to provide proof of identification and residence. You can do this directly through their digital platform scanner. The following are the documents needed for verification:
Proof of Identity
For proof of identity (POI), eToro requires any personal document that contains your full name, clear photograph, date of birth, issue and expiry date. As such, eToro prefers that this document be your Passport since it is much easier to verify. Alternatively, you can upload your driving license or any other government-issued ID. If the relevant document is double-sided and has equally important personal data on both sides, you will be required to upload both sides.
Proof of Address
eToro requires that your proof of address (POA) document contain your full name, issue date, and your address. This could be a bank statement or utility bill. The issue date for the document must be within the last 6 months. The logo or name of the document’s issuer should also be clearly visible.
eToro has a responsive customer support that is available 24/5 – Monday through Friday by telephone and email. Email communication usually takes a little more time with a maximum 48 hour response time. Notably, there is no live chat feature available.
Additionally, eToro also has a ‘customer service wall’ whereby users can interact with the customer service staff in a forum type format. Before you get in touch with customer service, however, there are various online guides and FAQs on the site that might answer your common queries. Currently, you can find customer support in English, Spanish, German, Italian, and French.
eToro have done a great job integrating trading functionality with a simplistic and clean-looking design on both their web-based and mobile platforms. The website is intuitive and easy to use, allowing users to get to where they want right from the landing page. However, eToro only provides a one-step approach when logging in (requiring just a username and password), without the security that comes with 2 factor authentication.
eToro’s most unique and distinguishable feature is their social platform. This makes it easy for traders to feel like they are a part of a trading community, as users can interact with each other, discussing potential trade options and recent trade analytics. They can also track the trades of the top performing traders on the platform. As a result, more inexperienced traders feel inclined to follow the key insights of top traders on the platform.
What currency pairs can be traded?
Instead of being traded, as with regular CFD platforms, eToro acts as a brokerage where you buy coins which are held by a custodian. This means you can trade against their value like you would with regular CFDs, as you can sell/buy much faster because you don’t have to manage the coins themselves. You can currently buy/trade:
Are there fees for trading?
eToro has various fees for using the platform to buy and sell cryptos. These include:
- Spreads. Spreads are the difference between the asking (selling) and bid (buying) price. For instance, if a certain cryptocurrency asset costs $100, and eToro might charge $101 for it, and you may only be able to sell it for $99. In this case, the $1 difference is kept by eToro. In relation to other industry competitors, eToro might have higher spreads than usual but this is because they do not charge any directly trading related fees.
- Withdrawal fees. eToro charges a flat fee of $25 for all withdrawals
- Inactivity fees. When an account has remained inactive for a certain period (4 months for non-depositing accounts and 12 months for depositing accounts), a $10 fee will be deducted from the available balance.
- Conversion fees. This is an indirect fee that users will be charged by their respective payment method provider because eToro only allows for trading with USD.
What is the minimum spread?
The spread is the difference between the market price and the price at which the broker (eToro) offers the asset. This is effectively the only trading fee eToro will charge their users. Below is a list of minimum spreads you can expect from each cryptocurrency. However, do note that the website outlines that these spreads may change based on market conditions and liquidity.
- 1.5% for BTC
- 3.0 % for DASH
- 5.0 % for BCH
- 5.0 % for ETC
- 2.0 % for Ethereum
- 3.0 % for LTC
- 5.0 % for XLM
- 5.0 % for NEO
- 3.0 % for XRP
Can I trade cryptocurrencies with leverage?
No. Since September 2017, eToro no longer allows for cryptocurrency related transactions to be made with leverage.
What are the margins required?
The margin is the minimum amount of money you need to put in order to open a leveraged trade, so you only put up a fraction of your exposure if trading with leverage. However, eToro no longer allows for leveraged trades with regard to cryptocurrency transactions so effectively no margins are required.
Can I open long and short positions?
You can open long and short positions on eToro. If you believe the prices will drop, then you can go short (sell), and in cases where you project prices to go higher, you can take a long position (buy). However, do note that when taking a long position with some cryptocurrency pairs on eToro you are effectively buying the underlying asset, whereas if you are opening a short position you are still conducting a regular CFD trade.
When you take a long position currently with eToro, they will act as your custodian and hold the underlying cryptocurrency asset for you.
Are there withdrawal and deposit limits?
Deposit limits on eToro depend on your country’s specific limitations but generally, the deposit limit is up to $10,000. However, unverified accounts are limited to a maximum deposit of $2,250. To verify and upgrade your account, you will need to contact eToro’s customer service and upload the relevant documents to show proof of residence (a copy of recent bank statements or utility bills within the last 6 months) and identification (a copy of your passport ID, driver’s licence or any other government-issued ID).
For corporate accounts, the minimum first-time deposit amount is $10,000. For withdrawals, the minimum required in a single transaction is $50. However, there is no limit on the maximum amount you can withdraw, so long as you are willing to pay the base fee of $25.
Summary of eToro CFD trading
Having entered the world of cryptocurrency as early as January 2017, eToro has become a staple cryptocurrency trading platform, offering a slightly larger amount of cryptocurrency pairs than other CFD platforms. However, since September last year things have changed a little.
In September 2017 eToro changed the way their trades operate so that users are effectively buying the relevant asset (cryptocurrency) and subsequently allowing for partners of eToro to hold the coins for you as a custodian. There are two exceptions to this: 1) when a long position is opened for a cross transaction of a cryptocurrency, such as ETH/BTC, or 2) when the buy trade is leveraged.
The latter option should not be possible as eToro currently no longer offers leveraged trading on cryptocurrencies. However, opening a short position under eToro is still a CFD trade under eToro. This is crucially important for traders because, in the situation where users are opening long positions not covered by one of the exceptions above, they will not come under the protection of the Financial Services Compensation Scheme (FSCS) of Financial Conduct Authority (FCA).
eToro’s platform is still straightforward to use and reliable, but the inability to trade with leverage and the fact that accounts have to be funded in dollars may put off some UK users. However, the social trading options of eToro make it a great resource for those who want to learn from successful traders to improve their own portfolio.
Search Functions and Charts
eToro offers you a built-in search function that is both predictive and easy to use. You can choose to either search by product/company name or with ticker symbols.
It also has a handy charting tool where you have an array of over 20 indicators to help you interpret trade analysis. Your preferences will automatically be saved.
This is a social trading feature that lets you choose specific traders to follow. With this, you can track their trading performance over a weekly, monthly, or annual basis. You are also provided with useful information and statistics such as average holding time, trades per week, news feed comments, and a profile description. The overall feature ultimately creates a sense of community within the trading platform, as traders are encouraged to interact with each other often.
Copyfunds are CFD-based funds. Unlike in Copytrade where you might have been following a specific trader, Copyfunds lets you invest either in an eToro trader’s portfolio or in a theme. Investing in themes is exactly what it sounds like. For instance, investing in ‘Big Banks CopyFund’ allows you to directly invest into a mix of assets including Bank of America, Citibank, HSBC, and other big banks.
eToro is one of the most recognised CFD traders in the cryptocurrency space, owing to their early adoption of crypto. As such, they currently provide the option to trade for more cryptocurrencies than most other CFD traders. However,since September 2017, their policy with regards to opening long positions on most cryptocurrency differs from regular CFD trading. You can read more on long positions in the sections above, but effectively, most cryptocurrency buy transactions carried out on eToro results in the user ultimately buying the underlying asset. This is largely because eToro is positioning itself to be a leading cryptocurrency exchange in the future, as suggested by their CEO in an announcement made in May 2018.
However, if this is not so much of an issue for you as a trader, eToro no doubt stands out in comparison to other competitors in the trading industry, largely due to the uniqueness of their social trading functions, which have successfully established trading communities on the platform. The intuitiveness of both the web-based and mobile platform (which have the same functionality) is appealing to first time traders due to its simplistic design. The company also comes across as fairly transparent to its users, frequently providing marketing insight on their own blog.
How to set up an account
Decided to register an eToro account? Great, here’s how it’s done:
- Head over to eToro’s official website and click on ‘sign up’ on the top right of your screen
- You will be led to a sign up page where you will be required to fill in your full name, username, email and password. (You can also sign up through Facebook or Google+).
- After checking on the terms and conditions box, click on ‘create account’. You will be led right away to your new demo account.
- You will also receive an email that will guide you on what will happen next.
- If you wish to upgrade to a live account, you will then be required to verify your identity (with a passport, government issued ID, or driving license) and residence (a bank statement or utility bill within the last 6 months). This can all be done with their own digital scanner.
- You can now deposit the first-time minimum $200, and start trading!