eToro Review - Social Trading Platform With Copy Trading

eToro Review - Social Trading Platform With Copy Trading

etoro review

eToro is an instantly recognizable brand to anyone familiar with the world of financial trading. Famous for its trademarked Copytrader, which allows you to shadow and follow the most successful traders using the platform, it’s uniquely suited to both newbies and seasoned veterans alike. In this eToro review, we’ll take a closer look at all of the different elements of eToro, and compare them to what else is out there.

We’ll ask what it offers that other platforms don’t, if anything, and whether or not this is the right trading platform for you. By the end of this review, you’ll have a better idea.

Let’s dive right in and explore it.


Who should consider using eToro?

eToro is suitable for all, from beginner traders to advanced, and everyone in between. However, it is particularly suitable for two groups: 

  • Those new to trading who aren’t confident enough to go it alone.
  • Professional traders who are looking for extra revenue streams

As mentioned previously, eToro is known for its Copytrader feature, which allows anyone to literally copy the trades of advanced traders. This works for both parties since it allows new traders to learn, and allows the trader being copied to make a 2% commission on each successful trade.

  • While these two groups will find eToro ideal, traders who deal in exotic instruments may find the platform a little limiting. All of the most common commodities and pairs are available to trade, but there are limits and eToro offers less than some of the other professional platforms in this regard.

Likes & Dislikes

Likes

Dislikes

  • Easy interface which loads quickly - it's built on HTML5 which is much faster than Flash alternatives.
  • Social copy trading is great for beginners as a way to learn from more experienced traders.
  • Depositing is easy and the minimum is low at just $50.
  • eToro offers a free demo account which is fully functional.
  • There are multiple platforms to choose from, and there’s no requirement to download. eToro is a versatile platform.
  • The trading academy has a comprehensive range of educational materials, all of which are excellent in terms of quality.
  • eToro is not available to traders from the USA.
  • While most popular pairs are available, eToro can be limited when compared to other professional platforms.
  • Charts are both limited and clunky. Switching between them can be a hassle and can be confusing. This may not appeal to experienced ‘old school’ traders who are used to versatile charts which can be navigated seamlessly.
  • eToro has high spreads and its overnight fees are higher than average.
  • Only available in USD, meaning currency transaction fees will slowly eat into profits.

eToro Fees

A consideration of the fees you will incur for using a trading platform should be an essential factor in your decision about whether or not to register. The following is a quick overview of eToro’s fees:

Inactivity fees - If you don’t deposit or login for 4 months, you will have to pay a $5 inactivity fee. The same fee will apply if you deposit and don’t login for 12 months.

Withdrawal fee - You will be charged between $5 and $25 for withdrawals.

Trading Fees - Overall trading fees and spreads vary depending on the instruments you are trading, whether it be currency pairs, indices, commodities, stocks, ETFs, or something else. A full list of all the fees can be found here.

For example, here are some of the current overnight fees. Keep in mind that these are subject to change depending on market conditions and volatility:

Currencies

EUR/USD - Overnight fees 0.03 (sell) to -0.6 (buy)

UAD/CHP - Overnight fees -0.72 (sell) to 0.52 (buy)

Indices

SPX500 - Overnight fees - 0.003 (sell) to -0.15 (buy)

NSDQ100 - Overnight fees -0.36 (sell) to -0.36 (buy)

Commodities

OIL/USD - Overnight fees 0 (sell) 0 (buy)

GOLD/USD - Overnight fees 0 (sell) -0.6 (buy)

Keep in mind that eToro does not charge a fee for opening a position.


A brief overview of eToro

etoro

eToro was founded in 2007 and was built with both beginner and professional traders in mind. The platform is fully regulated by various financial regulatory bodies and is based in Cyprus. Leverage up to 400:1 is available.

The Copytrader feature is patented and is unique to eToro. It’s this feature that allows traders across the spectrum of experience to find the platform useful. You can also build a watchlist to keep an eye on traders you might like to follow as well as instruments you might want to trade.

Of course, you don’t have to copy other traders and can trade freely yourself.

eToro was one of the first on the social trading scene, which has grown tremendously since, as has eToro itself, which has a customer base well into the millions from around the world and is now the official sponsor of West Ham United football club in the English Premier League.

The platform is intuitively simple to use and has been designed with the beginner in mind. Even if you have no previous experience trading, it will take only a short while to get the hang of using the platform.

One of the biggest positives for eToro is the vast range of deposit and withdrawal methods you can use. On top of credit and debit cards, Skrill, PayPal, and even wire transfers are possible when funding your account or taking profits.

There’s also a first deposit bonus available on eToro. You can claim up to $4,000 in eToro credit when making your first deposit by using the bonus code start. In the highest bracket, which is for deposits between $2,500-$10,000 you can claim 40% of the value of your deposit.


eToro Review - Our take

etoro dashboard

eToro is extremely easy to use. When you first log on you will see a snapshot of all the most popular commodities and instruments and their current prices. You can customize this later to get an instant glimpse of the currencies, stocks, and commodities you are interested in or are currently trading - that will be your Watchlist.

A menu on the left side allows you to view your own portfolio, an eToro news feed with the latest investment news, all of the markets you can invest in, and a list of the successful traders you can copy along with their profiles.

All of this is very easy to navigate and move around. At the bottom of this menu, you can deposit new funds to your account to trade with. It’s a sleek and simple interface, and you will feel familiar with it quickly.

There are actually three separate platforms which you can make use of, depending on the type of device you’re using.

eToro WebTrader

For those who are logging on via a desktop device or laptop, the eToro web trader will be the platform you encounter. It’s laid out exactly as described above and is compatible with both PC and mac devices.

A neat feature of the WebTrader platform is that it can be synced with OpenBook copied trades. These will appear under your ‘copied trades’ automatically in the WebTrader platform. The eToro OpenBook allows other members of the community to review your trades as you open and close them, as you can view theirs.

eToro Mobile Trader

etoro mobile trader

For traders on the move, the mobile trader is a scaled down version of web trader but has all of the same functions.

It can be used on Android, iOS, and Windows devices including phones and tablets.

When you first log on via mobile you will see a snapshot of all of the popular markets, to which you can add the other markets you want to watch.

Scrolling down, you will see the ‘discover people’ section, which allows you to follow traders you are interested in learning from or copying.

The same left-hand menu with all of the same options can be found by clicking the menu icon, and likewise, can be made to vanish by simply clicking X.

There’s also an eToro mobile app which you can download for extra convenience. This allows you all of the same features as the live mobile site.

eToro OpenBook Platform

We mentioned this earlier, but OpenBook is really the main feature or highlight of what eToro is all about. It’s the social hub of the platform, where you can see others trades, swap strategies, and interact with other traders, some of whom might be far advanced on you if you are a beginner.

You can see each trader’s track record, too, which means you can make informed decisions about who to follow or trust. If you see a highly successful trader online, there’s nothing to stop you from watching what (s)he is doing and copying it.

One feature many new traders like is that you can start with a demo account, meaning no risk as you learn the ropes. If you want to test your hunches, theories, and some trading strategies, you can do so using $100,000 in eToro virtual money.

The old OpenBook and WebTrader applications are now combined and are known as CopyTrader. You will find this by clicking ‘copy people’ in the sidebar menu.


Getting started and making trades

Registering at eToro is actually a pain-free process and should take less than a minute to complete. There’s a simple, one-page form to complete asking for your name, username, password, e-mail address, and phone number. Filling this in will get you started, but you will have to complete your profile later to be able to actively trade.

Once you’re on the platform, you will see the ‘Trade Markets’ tab on the left-hand menu. Here you will see a selection of the markets you can trade, including ETF’s, stocks, indices, commodities, and currencies.

You will also see some information related to these markets like price charts which can be changed to different timeframes. You will also be able to see which investors are actively trading that market, and what information or thoughts they have shared on what’s going to happen, as well as what they are actually doing trade-wise.

You can pick from any of these and you will have the option to either buy or sell. There’s an almost game-like feel to the console, which will appeal to some. Don’t get carried away though, the consequences of trading recklessly are very real!


Making trades

Actually making trades can be done by clicking the desired pair, which will take you to a more detailed screen, and then clicking the blue ‘trade’ button. You will then be asked to confirm your trade before executing it.

If at any time you wish to see your live trades you can do so by clicking the ‘portfolio’ tab. To see all of the up to date stats on a specific trade, you will need to click it, and doing so will also give you the option to change some settings such as the stop loss. You will also have the option to close the trade if you’re ready to take profits or cut your losses.

One thing we dislike about eToro is the price charts themselves. They aren’t visually attractive and navigating between them can be clunky. We also would have liked to see options other than candlestick charts. The same criticism can be made of navigating between different pairs - it’s all very slow and doesn’t feel as quick and seamless as it does on some other platforms.

Before you place a trade eToro will always inform you by how much you are leveraged. Always pay attention to this and factor it into any calculations as it will affect your ability to absorb losses if a trade temporarily turns to wrong way, and could lead to the trade being closed if margin calls aren’t met.


CopyTrading

Without a doubt, the distinguishing characteristic of eToro is the Copytrader feature.

You can find this under the tab ‘Copy People’ on the sidebar menu and it is here that you can get a glimpse into the activities of the most successful traders on the platform and copy their trades.

There's a very ‘social media’ feel about this section of the site, and it did in fact first arise when social media was just taking off about a decade ago.

One of the things beginner traders will probably like best about CopyTrader is the fact that you don’t even have to do anything. You can just pick a trader who has a record you would like to emulate and place a ‘copy’ trade. This will then shadow this trader’s activities, executing the same trades for you.

Searching for a trader to copy is a relatively simple process and several filters are available, allowing you to find a suitable trader to copy. You can filter your searches using the following criteria:

Profile country and verification status - If you prefer to only follow and copy traders from your own or other specific countries, this filter will allow you to do so. You will also be able to see if that trader has verified his or her profile, meaning you can be sure of who they really are.

Amount of copiers and change in the number of copiers - It stands to reason that a trader with a lot of followers is probably one worth watching and that one who has lost a lot of followers recently is probably on a losing streak. This can be invaluable information when deciding who to follow and copy (or not).

Amount of money following the trader - Of those watching and following, how many have gained enough confidence in this trader to take the plunge and copy them? This is a key indicator that should factor into any decision to copy a given trader.

Gain Percentage - You can see a percentage figure indicating the percentage of profitable weeks and percentage of overall profitable trades in a trader’s record.

Average risk score - A score is given to every trader based on the risk involved in his or her trading strategies and records.

Maximum weekly or daily drawdown - Again represented as a percentage, this will allow you to see the loss of a trader’s capital since s(he) achieved their most recent peak.

Maximum high leverage - This will allow you to see how leveraged a trader has been.

Instruments traded - You can search for traders who tend to play stock markets or traders who prefer commodities, currencies, ETFs, or a mix.

Average trade size and exposure - You will want to follow a trader who plays in your financial league. This filter will allow you to do so. Again this figure will be represented as a percentage.

Percentage of weeks active, exposure, & total number of trades to date - You will be able to see how active this trader is and identify patterns in their trading activity.

These filters definitely make finding a suitable trader to follow and potentially copy a lot easier and make Copytrader ideal for beginners.

Once you have found a trader you like you can just click ‘Copy’. Once confirmed you will automatically follow this trader’s activities, but you will be asked to define stop limits at this stage so as to pre-determine any potential losses and manage risk.

One thing that is important to note is that you will be asked whether or not you want to copy the trader’s current open trades. If you do not exercise this option, the copy feature will kick in only on any future trades placed.

You can use Copytrader with a demo account using virtual money to get a feel for it, but when it comes down to trade for real, you will need to stake a minimum of $100 on any given trade.

You may also notice that some traders have a small green mark beside their names. This is a positive indicator as it means the trader has verified his name and added an image, which eToro has independently verified. This adds that extra element of trust when deciding who to copy.


CopyFunds Function

For those looking for a safer way to copy, eToro does bundle some successful traders together into a fund managed by them.

This has the added advantage that if there are one or two traders who are manipulating data or who will behave recklessly after a string of successes, the others are likely to cancel him or her out leading to an overall successful trade.

The drawback to this is that the minimum investment is $5000.


Investment Offerings

eToro offers ways to get in on the action of all of the popular pairs, but some experienced traders who wish to stray outside the safe lines and deal in more exotic instruments may find what's on offer a little limiting.

That said, eToro does offer you the chance to trade forex, commodities, indices, stocks, ETFs and bitcoin. Remember that if you have a specific instrument in mind you can search for traders to follow or copy based on what they trade.


Customer Support

Getting in touch with someone when you need help can be done in one of two ways when trading on eToro.

First, you can use the Customer Support Wall, which is a Facebook-style feature, allowing you to drop comments or questions. It's monitored continuously from Monday-Friday between 8am-5pm, and you will usually get a fairly rapid response.

Alternatively, you can contact the customer support team directly through a ticketing system. This will take up to 48 hours to get a response, which is OK considering the millions of active traders eToro has on its books.

Generally speaking, the customer support is good. It could always be better, but as far as comparing it to rival platforms go, it's not bad at all.


Educational Material

Since eToro has many features geared towards the beginner trader, it only makes sense that there would be plenty of educational material for beginner traders. It does so through the trading academy.

You can take advantage of free trading e-courses, lots of webinars, and can browse through a vast number of how-to guides produced with the beginners in mind. There’s plenty of written material for those who like to read and there are also lots of videos if you prefer.

For example, if you click Trading Course’ you will be presented with sections of forex, trading psychology, information on global markets, capital management, market analysis, technical analysis, trading strategies, and even a glossary.

Most platforms these days offer some sort of educational material for traders. The eToro trading academy is very good in terms of quality and covers a broad range of topics related to trading. It’s one of the most comprehensive we have seen.


Conclusion

If you’re a beginner trader, you can’t go wrong with eToro. It’s built for newbies and you will quickly feel at home.

For more advanced traders, whether or not this is the right platform for you will depend on what you’re looking for. The Copytrader feature can work to your advantage in that you can build up a following and earn 2% commission on every successful trade, but you may find the limitations on the available currency pairs to be frustrating if you tend to venture outside the lines.

Overall, eToro could do a few things better such as speeding up the platform, bringing in more attractive visuals on graphs, and perhaps taking the extra measure of forcing traders to verify their accounts before others can copy them, but on the whole, it makes for a great choice.

eToro is an instantly recognizable brand to anyone familiar with the world of financial trading. Famous for its trademarked Copytrader, which allows you to shadow and follow the most successful traders using the platform, it’s uniquely suited to both newbies and seasoned veterans alike. In this eToro review, we’ll take a closer look at all of the different elements of eToro, and compare them to what else is out there.

Andrew
 

My name is Andrew and I run Slick Bucks to help folks learn to manage money cleverly, and how that clever management can make you wealthier.

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