eToro platform overview: Everything traders need to know

18, Nov - REVIEWS

Founded in 2006 as RetailFX, eToro is a leading trading platform. The broker first introduced the concept of social trading to the spot Forex trading industry in 2010 and has since revolutionised online trading. The concept of social trading relies on the collective wisdom of players to help traders make trading decisions. With eToro's social trading platform, traders can connect with each other and utilise their collective experience to achieve better trading results.

Getting to know eToro

eToro is an online social trading platform founded by two brothers Ronen and Yoni Assia and their partner David Ring. Today, eToro operates under several subsidiaries around the world. The company is headquartered in Cyprus, with a research and development department in Tel Aviv, Israel; it has also opened an office in London, UK.

In Cyprus, eToro is under the jurisdiction of the Cyprus Securities and Exchange Commission (CySEC) and operates under CIF licence number 109/10. In London, it is regulated by the UK Financial Conduct Authority (FCA) under licence FRN 583263. In addition to its operations in Cyprus and the UK, eToro also has a presence in Australia through a partnership with IC Markets. In the US, eToro is also a member of the National Futures Association (NFA) and is therefore legally authorised to accept US clients. Today, eToro serves around 3 million traders worldwide.

Advantages and disadvantages of trading with eToro

Among the main pros of eToro are its intuitive trading platforms. One of the key features is CopyTrader, an innovative system that allows users to copy trades of successful traders, simplifying the trading process even for beginners. In addition, eToro has low minimum deposit requirements: only 200 dollars is required to start trading, making the platform accessible to a wide range of users.

An additional advantage of eToro is its wide selection of trading assets. More than 200 different instruments are available on the platform, including stocks, cryptocurrencies, commodities and currencies, which provides traders with huge opportunities for diversification. Moreover, eToro is a regulated broker in several jurisdictions such as CySEC, FCA, ASIC, and is also regulated in the US and Gibraltar. This ensures a high level of reliability and adherence to strict international standards.

However, eToro does have disadvantages to consider. One of the key disadvantages is high spreads, which are significantly higher than the market average. This can negatively affect the overall profitability, especially for active traders. Another disadvantage is the lack of choice of trading accounts. Regardless of the trader's experience level, a single account type is offered, which may not meet the needs of more experienced users who are used to flexibility in trading conditions.

eToro trading conditions

When trading currency pairs or CFDs, one of the key factors that determine a trader's profitability is the cost of trading. At eToro, there are no commission fees. Instead, traders must pay a small spread over the buy and sell price. The typical floating spread for EUR/USD is 3 pips, while the average spread paid by traders on the USD/JPY currency pair is 2 pips. Although these spreads are higher than the industry average, they decrease when a trader reaches the status of a successful ‘popular investor’ with a large number of followers. In some cases, the most successful traders may even trade without a spread.

The underlying assets of eToro

When eToro introduced its Openbook trading platform in 2010, the choice of underlying assets was rather limited. However, in just a few years, eToro has significantly expanded the range of assets on offer. In 2013, price difference contracts were introduced with an asset index of 110 stocks. In January 2014, CFDs on bitcoin were added to this list. Later, in April 2014, eToro expanded the asset index to include a further 130 UK and German stocks. The FTSE 100 and DAX30 market indices were also added.

The eToro trading platform

In the early days of eToro, its trading platform consisted of its main components - the WebTrader and OpenBook social platforms. Today, the functionality of these two components is integrated into a single trading platform called eToro CopyTrader. With CopyTrader, a trader can become an independent investor using the ‘Trading Markets’ mode.

In addition to being a trading platform, eToro also allows one to earn additional income by becoming one of the ‘Popular Investors’. Under this programme, a trader simply allows other traders to observe his trades. Once you reach the minimum number of copiers, you will receive cash rewards and spread discounts. Note that in order to become a featured investor, a trader must deposit at least 1000 dollars into their trading account and have had a copier for at least 2 months with a minimum capital of 500 dollars.

In late 2016, eToro introduced a new financial product called CopyPorfolio. Rather than having to wade through individual profiles choosing favourite ‘investors’ and trading strategies, CopyPorfolio provides the ability to choose from a number of pre-selected portfolios. These portfolios come in two main types, Top Trader CopyPorfolios and Market CopyPorfolios. Pre-selected portfolios are essentially a collection of the best traders or investment strategies.

Demo account on eToro

eToro offers potential clients a demo account to try out the trading platform. To access the demo account, simply register on the eToro website and log in with your username and password. eToro has simplified the process so that potential clients can switch to a live trading account by switching from a ‘virtual’ to a ‘live’ account with a single click.

Withdrawals on eToro

To cater to the needs of international clients, eToro offers several payment methods that can be used to deposit and withdraw funds. These include credit cards (VISA, MasterCard, Diners), e-wallets (PayPal, Skrill, Neteller, China UnionPay, WebMoney, Yandex) and bank transfer. The normal turnaround time for a withdrawal request is about 5 working days. It is possible that the withdrawal time may be longer due to the requirements of a third party payment processor.

Trader education

Like most brokers, eToro also offers its traders a training centre where traders can access various educational resources to improve their trading skills. These resources include instructional videos, trading courses and webinars. Educational topics range from the basics of trading to how to navigate the various features of the eToro trading platform. Webinars and trading courses are hosted by eToro's trading experts and allow novice traders to learn at their own pace. In addition to the resources of the education centre, eToro also provides its traders with a blog with tips and fresh news from the financial markets.

Should you become an eToro trader?

The eToro broker has become extremely popular among many novice traders. This is because the social trading platform allows beginners to benefit from the experience and wisdom of more experienced traders in a simple and transparent way. Therefore, if you are a novice trader with little knowledge of the financial markets, eToro could be the perfect option for you.