eToro Review 2024

Key Takeaways

• eToro started operations in Israel in 2007.
• eToro Europe is regulated by the Cyprus Securities and Exchange Commission (CySEC). eToro UK is authorized and regulated by the Financial Conduct Authority (FCA). eToro Australia Capital is regulated by the Australian Securities and Investments Commission (ASIC). eToro USA is registered with the Financial Crimes Enforcement Network (FinCEN).
• eToro is a signatory to the EU's Anti-Money Laundering (AML) Directive, and the Markets in Financial Instruments Directive (MiFID). 
• European Economic Area (EEA) traders are protected by the Investor Compensation Fund (ICF), with a maximum coverage of €20,000.
• UK traders get the benefit of protection from the Financial Services Compensation Scheme (FSCS) up to £85,000.
• The company was valued at $2.5 billion in 2020.
• eToro has a multilingual Website available in 19 languages.
• The broker uses its proprietary eToro Trading Platform for its Web and mobile platforms.
• eToro claims to have over 17 million users from over 140 countries.
• eToro offers one main account type that is suitable for both retail and professional traders.
• eToro offers over 2,000 tradable assets.
• eToro customers can trade in Contracts for Difference (CFD) or purchase the underlying asset in classes such as indices, cryptocurrencies, stocks, commodities, currencies, and Exchange-Traded Funds (ETF).
• eToro offers mostly competitive spreads and commissions across its account types.
• eToro customers can access an adequate research and education resource that is complemented by third-party material from TipRanks.
• US residents in qualifying states can trade cryptocurrencies.
• US-based traders receive no investor fund protection.
• Traders can follow and copy the trades of designated top investors on the platform.
• Qualifying top investors can make significant commissions if traders who copy their trades are successful.

Overall Summary

eToro was first established in Israel in 2007 under the trading name RetailFX. It quickly moved its base to the UK and rebranded its name to eToro. Its initial forays into the market were as a financial trading technology developer. However, it has since developed into one of the world’s leading social trading brokers. 

As one pioneer of social copy trading, the broker has kept its focus on this area through the years, which has led it to occupy a preeminent position in the rapidly advancing world of social trading. The company can now lay claim to over 17 million users from over 140 countries.

eToro is one of the few brokers to offer its services to US clients. The US is a notoriously tricky market for online brokers to enter because of its myriad of complex state laws. As such, US traders can only access a small part of eToro’s array of products by investing in cryptocurrencies. Still, it has millions of active accounts in over 40 American states. Key states that cannot access eToro’s services include New York and Nevada.

Traders from the rest of the world can access other asset classes, such as outright purchase or CFD trading of indices, stocks, commodities, currencies and ETFs. eToro has continued to improve its proprietary trading platform, which has bespoke functionality for social trading. Its sleek and user-friendly Web and mobile platform is equally suited to beginner investors and elite professionals.

The company has thrived since its 2018 introduction of cryptocurrency trading options. Many brokers steer clear of cryptocurrencies because of their complexity, volatility and difficulty to legislate, but eToro has pressed forward with this asset class. It introduced its market-leading cryptocurrency wallet after the acquisitions of Dutch blockchain company Firmo and Belgian crypto portfolio tracker app developer Delta in 2019.

While, in 2018, the company was valued at $800 million, more recent estimates show that its valuation has tripled to a whopping $2.5 billion. The broker is well regulated in key areas by top-tier regulators. Though its fees and spreads are considered slightly more expensive than many of its competitors, the company can count on the overall value of its social trading offering to overcome most price objections.

Who Is eToro Good For?

Pros Explained

Cons Explained 

Is eToro Safe?

eToro is considered a low-risk broker. With a long history of operations and several strong regulators on its side, it is a safe bet. The broker’s head office is in Israel, and its affiliates in Cyprus, the UK, Australia and the US are all overseen by strong regulators. 

As aforementioned, eToro Europe is regulated by the CySec. This means that the broker is a signatory to MiFID, the EU’s AML Directive. Meanwhile, EEA traders are protected by the ICF, with maximum coverage of €20,000. As well, UK traders are covered by the FSCS up to the value of £85,000. eToro Australia Capital is regulated by the ASIC, while eToro USA is registered with FinCEN. This means that the broker must comply with rules that ensure it segregates client accounts from its operating funds. It must also use top-tier banks to keep these funds. 

Brokers should know, however, that eToro was fined €50,000 by the CySEC in 2013. The regulator rarely indicates the full reason for the indiscretion, which has been criticized in some quarters as a lack of transparency. However, the CySEC indicated that “The settlement concerns the operating structure of the organization.” The broker settled the fine and has not fallen afoul of any regulator since.

eToro provides traders from its European, UK, and Australia affiliates with additional insurance purchased from Lloyd’s of London. Coverage is granted per trader up to one million Euro, GBP, or AUD. eToro clients automatically qualify for this protection with no additional registration. 

However, there are notable exceptions to the policy. The insurance covers cash, all CFD positions, and securities. Non-CFD crypto assets are not covered by the policy. At the same time, traders in the US are not covered at all. However, taking all this into account, the broker can be viewed as safe with which to invest.

Offering of Investments

eToro offers over 2,000 tradable assets, which is a significant number when compared to its rivals. As a multi-asset broker, the company continually tries to make the experience smoother for traders. For example, traders can easily swap between trading a CFD versus its underlying asset directly from the trade view of its platform. These small details take considered effort. 

Investors can access the following assets that can be traded with or without leverage, and on a short-, mid-, or long-term basis: 

Stocks: These investment staples are medium- to long-term investments. Traders can buy long, or on a non-leveraged basis, meaning they are buying the underlying asset. They can also make use of the broker’s CFD options, where they sell short and use leverage. Popular stocks include Apple, TESLA, and Amazon.

Crypto Assets: These assets have grown popular in recent times. Assets like Bitcoin and Ethereum are riding on cultural popularity and have become a regular investment option for many traders. Traders are advised to have a sound strategy to trade these volatile instruments. Buying the underlying crypto asset is unleveraged and is not covered by investor protection. However, buying short using CFDs is regulated by the CySec and the FCA. US-based traders can only trade up to 15 cryptocurrencies with this broker.

Commodities: Trading these assets as CFDs with this broker means you won’t own the underlying asset. You can sell short positions or use leveraged trades with popular minerals like silver, oil and gold.

Currencies: This the biggest and most liquid market in the world. Traders will find themselves very active in this volatile market. Currency moves in small units, or pips, which is why most trading platforms offer leveraged transactions at a fixed ratio. Traders can buy the underlying asset or trade the CFD. 

ETFs: This asset is created when several assets are grouped together to create a single tradeable fund. They are long-term investment tools. They offer low risk and low volatility with steady profits. Traders can buy long unleveraged positions in the underlying asset or use CFDs. 

Indices: These assets are more stable than individual stocks. Indices are traded on eToro as CFDs, as they are not financial assets that can be directly purchased. The broker offers access to common indices like the DJ30, SPX500, and the FRA40.

Account Types

eToro runs its accounts according to the jurisdictions in which it operates. The broker ensures it categorizes its account holders as either Retail or Professional. 

Retail clients get access to all available trading instruments and can choose to trade manually or copy trade. The leverage of retail clients is restricted by prevailing regulation. The broker grants retail clients negative balance protection and margin closeout restrictions.

By contrast, professional clients must pass a test to see if they qualify. EEA traders should know that professional clients give up their rights to ICF protections and access to the Financial Ombudsman Service. The broker reduces the risk of this by promising professionals that if the market takes a bad turn, it can reset client equity to zero, the same as a retail account.

Professionals can be highly skilled individuals or investment firms, pension funds and institutional investors. The high leverage associated with professional accounts brings its own risks, which is why the broker tests to establish professional-level knowledge are so stringent. 

Traders may request an Islamic account, but a minimum deposit of $1,000 applies. The Islamic account comes with reduced overall trading costs while allowing traders to access all assets. 

Account Opening

New account applicants start by filling in an online form. The process is quick and simple and takes only a few minutes if all information is available. As demanded by regulatory requirements, the trader needs to supply their official identification and proof of residence documentation. Depending on the jurisdiction, it could take several days for trader identity to be verified, and the account opened.

In our review, we found a lot of unexplained variability in the account opening minimums. Most UK and EEA customers will have to make a first-time deposit of $200. There are notable exceptions. US residents will need a minimum of $50 to open an account. However, it gets progressively more expensive for several other countries. A clutch of countries as varied as New Zealand, Saudi Arabia and India, must deposit $1,000 for their first deposit. Curiously, Algerian residents must deposit $5,000, and Israeli traders must fund their accounts with $10,000.

The broker advertises its account opening as "free," but this refers to the absence of management or ticketing fees, not the level of account-opening minimums.

Demo Account

Traders can access a free Demo Account loaded with $100K in virtual funds. They can practice their strategies on the easy-to-use eToro platforms. They can open and close trades, build a virtual portfolio, and develop their trading and investment skills without the risks of a live trading environment.

Deposits and Withdrawals

• Credit/Debit cards.
• PayPal.
• Neteller.
• Skrill.
• Rapid Transfer.
• IDeal.
• Klarna.
• Local bank transfer.

• Credit card.
• PayPal.
• Bank transfer.

Customer Service

Commissions and Fees

Overall, we found eToro’s fees to be at the higher end of the scale. As a Market Maker, they are slightly higher than the industry average. Typical spreads on a currency pair like EUR/USD can be one pip, which is wide, especially for high-volume transactions.

Retail traders are not attracted to eToro for its spreads. They come for its class-leading social copy-trading platform. Its fee structure is genuinely a mixed bag. It is expensive, but there are some low fees woven into the overall offering.

With cryptocurrency trading fees, the broker is slightly above the industry average for trading the underlying asset. Traders will pay a fee of 0.75% for buying or selling a coin like Ethereum. Yet, its flat crypto conversion fee is exorbitant at 5%. Converting from one crypto coin type to another coin type costs a mere 0.1% with this broker, plus the prevailing spreads. With its mature and diverse cryptocurrency offering, eToro is a top broker in this area.
A $5 withdrawal fee is low as it is not percentage based, but it can be waived by other brokers. This withdrawal fee does not apply to US traders. eToro also levies a $10 inactivity fee per month on dormant accounts after 12 months of inactivity. Conversion fees for differing currencies is carried out at the prevailing spot rate with a typical mark-up of 50 pips.
Leveraged swap rates on overnight positions give this broker a steady stream of income. Overnight fees are an interest payment for the borrowed amount to sustain open trades. While this fee is an industry standard, only the most transparent brokers go to pains to explain their formula. eToro does not explain how it arrives at its overnight fee calculation.

Bonuses and Promotions

One important aspect of copy trading is that there must be the copiers, and the copied. The many novice traders must rely on the few high-performing traders for strategic direction. With a tagline of “Get Copied, Get Paid” eToro calls its popular Investor Program an “online marketplace for talented and experienced investors”.

The program has four levels: Cadet, Champion, Elite and Elite Pro. It primarily offers monetary incentives to selected popular traders. The broker now has over 1,000 popular investors from over 80 countries in the world. These traders are frequently industry professionals with deep trading experience whose strategies can probably outperform the market. 

As the traders themselves gain more followers, and those followers make more money, the investors receive perks like spread rebates and monthly commission payments. The broker is proud to say that 77% of its popular investors beat the S&P 500 index in Q1 2020, and the average yearly profit of its 50 most copied popular investors in 2019 was 29%.

Leverage

eToro is a regulated broker, each instrument it offers has maximum leverage limitations set by the regulator in the area. eToro also inserts measures to promote responsible trading and reduce the dangers of trading with high leverage. It appears to have taken the ESMA standards of leverage, such as 1:30 for major currency pairs and applied it to all its retail accounts (1:400 for major currency pairs for for clients of eToro (Seychelles) Ltd).

eToro has also introduced tools designed to manage the risk of damaging losses for retail traders. Clients can initiate a stop-loss, which allows for a trade to be closed when it moves by a designated amount against the trader’s position.  Though helpful, the feature does not have the exact effect of autotrading.

Traders can also Take Profit, which is a setting that allows them to automatically close their positions when profits from a trade hit a certain amount. Negative balance protection often means that the broker will absorb trader losses in the event of a bad market. Each instrument has its own leverage minimum and maximum, depending on the regulator’s advice, so traders should pay attention to what works for them.

Platforms and Tools

The eToro Trading Platform is the broker’s proprietary trading app that combines all the best features of its offering in a seamless and intuitive package. The platform allows traders to access a variety of financial assets using the broker’s preferred methods of self-directed trading and copy trading. It is one of the rare examples of a broker who forsakes the popular MetaTrader platforms in favor of its own proprietary tools.

Traders used to the benefits of autotrading are in for a shock, though. In our view, one of the biggest disadvantages of moving to this social trading account is the complete loss of an auto trading option. Automated trading software allows traders to set their own trade entry and exit points. Once set, trades happen automatically. With social trading, only manual trading is allowed. Some social trading brokers allow manual and automated trading, but not eToro.

That said, the eToro platform is easy to use and quickly carries out basic operations, such as creating watchlists and adding instruments. The platform is enhanced through TipRanks, which gives traders insights from over 15,000 expert analysts, covering a range of instruments. Another helpful addition is ProCharts, which allows manual traders to carry out detailed technical analysis.

The platform is supplemented with helpful internal tools like CopyPortfolios. This innovative feature groups traders into a single fund from which new traders can copy. According to the broker, copied portfolios are managed by its expert investment committee. CopyPortfolios act like a fund tracker in which passive traders can invest. Even highly active traders can diversify their portfolios by adding some CopyPortfolios to spread out their risk.

eToro offers users crypto trading ideas sourced from high performing individual crypto traders, or groups of traders. The broker offers this service across 73 cryptocurrency pairs, giving investors another good option to back. Traders who buy the underlying cryptocurrency assets can get access to the eToro mobile wallet app.

Users can spend some of their capital to access the copy trading service. This ability to mimic the trading strategies of provably successful traders is one of the most compelling reasons it attracts many users to this broker. Despite watching other traders, each retail trader keeps total control of their trades and can exit positions whenever they wish. 

Mobile Trading

Research and Development

Education

Final Thoughts

Conclusion

eToro in Brief

Review Methodology

The team at Arincen collected more than 120 pieces of data covering in excess of 100 licensed FOREX companies. Data collection was done in three ways:

1. Companies’ Websites.
2. Other Websites that have ranked FOREX companies.
3. A survey questionnaire (referred to here as Survey “1”) we had sent to the companies invited to participate in the exercise. 
We have identified 12 criteria for our assessment, each containing several aspects and carrying its own relative weight. These include licensing, deposits and withdrawals, number of assets etc. 

Afterward we validated the data by:

1. Registering with FOREX companies as a secret shopper and/or as Arincen.
2. Survey number “2,” in which we asked these companies’ customers for important feedback and past experience. 

The next step saw us evaluate and rank each company, relying on the hard work of 15 Arincen employees. We were very careful in ensuring the most accurate assessment possible, including taking into account different languages, as well as the various mobile-app operating systems, e.g., Apple, Samsung etc.

To add credibility to our research project, we sent a final and third survey (referred to here as Survey “3”) to enable participating FOREX companies evaluate our own research and whether it accurately reflects the realities on the ground. We were fortunate enough to receive a mark of 9.9 out of 10! We have kept to a minimum the margin of error, which stood at a measly 1%. To learn more on how we came up with the evaluation, please click here.