eToro has lived up to the ‘Your Social Investment Network’ slogan since 2007 from humble beginnings in Israel. Besides being a multi-derivatives brokerage serving more than 13 million clients globally, eToro uses innovative fintech to offer a cutting-edge social trading network.
The broker is a truly international company with offices in Cyprus, London, Israel, USA, and Australia, and regulatory licenses from CySEC, FCA, and ASIC. eToro is one of the very few brokers to offer their services to clients in the USA.
Are you wondering whether eToro is worth considering? This review will impartially analyze the strengths and weaknesses of this brand and give a fair assessment.
As expected, Etoro’s primary source of compensation is the spread. The average spread for EUR/USD is a reasonable 1.1 pips.
Rollover or swap fees can be positive or negative, depending on the traded pairs. eToro provides the daily rates on their websites that change in line with central bank interest rates. For Muslim clients, they also offer a swap-free account or Islamic account.
Although no deposit fees exist, there are withdrawal fees (covered later).
The last fee, albeit insignificant, is the inactivity fee, for which they charge $10 monthly after 12 months of no login activity. They would take the fee from a funded live trading account (no open positions will be closed to cover the cost).
eToro does not offer anything other than a standard trading account. Unfortunately, the maximum leverage for forex pairs is between 1:20 and 1:30, which is woefully low even for the most experienced traders.
Their standard, commission-free trading account comes with negative balance protection that ensures one will not owe the broker in the rare case of a balance going below zero.
Depending on where a trader lives, clients can fund an account starting from $50 or $200. Some exceptions do exist here (which will be covered later).
eToro offers a demo account (insert broker link), and this may be pertinent since they do not provide the standard MT4 or MT5 software. Therefore, any new client will have to get accustomed to their platform’s interface if they are used to MetaTrader.
Traders can only hold a live account in USD. To open a live account with the brand, as expected, traders need to provide proof of identity (government-issued ID book/card or passport) and proof of address (utility bill, bank statement, etc.) not older than six months.
Deposit and withdrawals
eToro has a complex structure for deposits according to the country of residence. The table below will simply break down the categories.
|Country||First-time deposit, $|
|Australia, United States||50|
|Rest of the world||200|
|Algeria, Lebanon, Maldives, Venezuela||5,000|
Regardless of the country, every subsequent deposit has to be at least $50. Fortunately, eToro offers several deposit methods, namely credit cards (VISA, Mastercard, Diners Club, and Maestro), Skrill, Neteller, China Union Pay, and PayPal (not all may be available for every country). The minimum deposit for a bank wire transfer is $500, an unusually high amount.
The broker only allows deposits denominated in USD. Therefore, they will convert any non-USD deposits at a conversion fee.
No third-party deposits and withdrawals are allowed.
Unfortunately, all withdrawals are subject to a $5 fee, and the minimum amount is $30. Most payment options have withdrawal times between 24 and 48 business hours, except for cards and bank wire (both up to eight business days).
Like most brokers, withdrawals operate on a ‘return to source’ policy. The initial withdrawals will be a sum of the total deposits, and they would go back to their funding channels. Any subsequent withdrawals go back via bank wire.
Platform and analytical research tools
One of the most apparent downsides to eToro is they don’t offer the MT4 or MT5 software. Even their own platform is only available on the web and as a mobile app (no desktop version).
The broker has a relatively extensive educational section consisting of news & analysis, a podcast, video tutorials, and a trading school.
Perhaps eToro’s unique selling point is their social trading platform. As a result, you can expect the best user experience with eToro in this regard. Social trading involves investors automatically copying the trades of designated, top-performing traders without the need to trade their own strategies.
The broker prides itself on not just offering a mere copy trading platform but a social network that encourages a sense of community amongst traders and investors. There are no fees for any copied trades aside from the spread.
eToro has two products for social trading, CopyTrader™, and CopyPortfolios™. With CopyTrader™, clients can copy individual traders. With CopyPortfolios™, eToro groups the performance of multiple traders into portfolios.
An extension of the latter product is MarketPortfolios that groups different financial assets like stocks, commodities, forex, and ETFs. The brand proposes MarketPortfolios to be a more long-term investment vehicle.
The minimum investment amount for the CopyTrader™ is $200 and $5 000 for CopyPortfolios.
Pros and cons
|– Regulated by CySec, FCA, ASIC|
– 13 years’ experience
– Comprehensive social trading network and products
– Fee-free deposits
– No commissions
– Negative balance protection
– Wide range of currency pairs
– Wide range of payment options- 21 website languages
– Offers 24/5 live chat, phone, and email support
– Offers services to US residents (only living in the US)
|– Low leverage (between 1:20 and 1:30 for forex pairs)|
– Enforces minimum withdrawal of $30- Inactivity fee
– Doesn’t offer MT4 nor MT5
– Conversion fee for non-USD deposits
– High minimum deposit for bank wire transfers
– Minimum of $50 for subsequent deposits
– One base currency
– Doesn’t offer services to traders in 121 countries
Overall, eToro may not be the best option for the everyday forex traders since there are many product differences compared to other brokers. Some of these include not offering the MT4 platform, different minimum deposits, significantly lower leverage, and not offering their services to a staggering 121 countries.
On the plus side, the broker does offer an excellent educational section. Perhaps the biggest appeal for other traders is their social trading network, which may be particularly attractive for beginners or those who don’t have the time to trade the markets.