eToro Review: Platform Fees, Spreads, Tradable Assets, and Regulation

eToro Review: Platform Fees, Spreads, Tradable Assets, and Regulation

eToro Review, are you a newbie investor that is interested in buying stocks and shares? Or maybe you’re more into forex or Bitcoin? Either way, you might want to try the eToro platform.

The web-based social trading broker is taking the trading world by storm. With over 12 million users, eToro is attractive to trading newbies due to the fact it is super-simple to use. In fact, by committing just 10 minutes of your time, you could have a funded account and be buying your first-ever share!

Before you do, we are going to cover everything you need to know about all things eToro. This includes how the platform works, what assets you can buy and trade, fees and commissions, regulation, and much more.

Hopefully being armed with all of this useful information will help you make a decision on whether or not eToro is the right broker for you!

Table of Content

     

    eToro - Buy and Invest in Assets Commissions-Free

    Our Rating

    • Buy over 800 stocks, cryptocurrencies, and ETFs without paying any commissions
    • Trade thousands of CFDs
    • Deposit funds with a debit/credit card, e-wallet, or bank account
    • Perfect for newbie traders

    What is eToro?

    The web-based brokerage company eToro was first founded in 2006. The platform enables you to trade CFDs (contracts for difference), as well as the more conventional way of buying assets.

    In the CFDs department, eToro hosts everything from indices, bonds, stocks, energies and metal – to name a few. Crucially, you can also ‘buy’ cryptocurrencies, shares and ETFs in the traditional sense – meaning that you retain full ownership of the asset in question.

    Its pricing structure – largely the absence of commission and share dealing fees, is one of the most attractive things about eToro. For example, stocks, cryptocurrencies and more than 150 ETFs can be purchased on a commission-free basis.

    eToro is essentially an asset dealing medium which is aimed at new investors who may not have ever bought a single stock. As such, it is highly recommended for beginners due to its simple yet effective interface. It literally takes a matter of minutes to register, deposit funds into your account, choose some shares to buy, and that’s just about it, you are trading!

    The broker is home to a number of other innovative features that stand out from the crowd. For example,  eToro hosts both social trading and copy trading tools. This allows you to ‘socialize’ with other traders of the platform – sharing and discussing investment tips along the way. The copy trading aspect of eToro allows you to choose a seasoned investor that you like the look of, and then mirror their portfolio like-for-like.

    What Kind of Shares can I buy?

    It should be said that eToro is a multi-asset platform. By this, we mean that it lists several asset classes – both in the form of CFDs and traditional ownerships. Nevertheless, in terms of its stocks offering, you will have over 800 shares to choose from. 

    This comes from a variety of different stock markets, so you have plenty of ways to diversify into several financial marketplaces.

    For those of you who are interested in investing in specific UK  companies like RBS, British American Tobacco, or AstraZeneca –  you are able to do this effortlessly on eToro.

    The same goes for international stocks. As such if you want to diversify your portfolio even further, then you have lots of choice in this arena. As far as the international stock exchange goes, on the eToro platform you have access to the following:

    • Brussels
    • Madrid
    • Lisbon
    • Amsterdam
    • Frankfurt
    • Hong Kong
    • Copenhagen
    • Helsinki
    • Milan
    • NYSE (United States)
    • Brussels
    • Paris
    • NASDAQ (United States)
    • Oslo
    • Zurich
    • Stockholm
    • Saudi Arabia

    With regards to what sector-specific stocks you are able to buy, there is a broad selection to choose from. Just some of the markets available to you include at eToro include:

    • Food and beverage stocks
    • Banking stocks
    • Pharma stocks
    • Tech stocks
    • Retail stocks
    • Dividend Stocks
    • Cannabis stocks

    ETFs

     In a nutshell, an ETF allows you to invest in a group of assets through a single trade. This might be dozens of shares that are tied to FTSE 100, or a basket of stocks from the technology sector.  eToro hosts over 150 ETFs from a huge variety of different sectors.

    It’s clear to see why investors are flocking to ETFs when it comes to building and diversifying their portfolios. With a commission-free passage offered by eToro, it is a superb way of being able to invest in a wide range of different assets via just one investment.

    Given that ETF providers are buying and selling shares for you, a simple one-click investment at eToro is all that is needed. After all, you don’t need to do anything else until you want to cash in the investment.

    Cryptocurrencies

    If you are looking to add some cryptocurrencies to your trading portfolio then you are in luck, as eToro offers 16 digital coins.

    Crucially, eToro has been one of the global leaders in fintech (financial technology) ever since the early stages of blockchain. It doesn’t matter if you’re a crypto pro or thinking about entering the market for the first time – eToro makes the investment process easy.

    Cryptocurrencies investments are 100% secure on the eToro platform. On top of this, the cryptocurrency section comes with access to a variety of forward-thinking social features and analysis tools. This also includes automated risk management – something that is imperative when accessing cryptocurrencies. 

    Currencies which are currently available to own and trade on eToro are as follows:

    • Bitcoin
    • Bitcoin Cash
    • Binance Coin
    • Cardano
    • Dash
    • EOS
    • Ethereum
    • Ethereum Classic
    • IOTA
    • Litecoin
    • Neo
    • Stellar
    • Tezos
    • Tron
    • XRP
    • Zcash

    If you simply want to buy a cryptocurrency and hold on to the coins for several years, you will not pay a single penny in commission. This is because all cryptocurrency investments are fee-free at eToro. You will, however, pay a fee if you decide to short-sell cryptocurrencies or apply leverage.

    When it comes to the process of shorting cryptocurrencies at eToro, you can do this via a CFD position. Although you do own the underlying asset, your cryptocurrency trades are bound by the same system as that of other CFD orders.

    If you’re still not 100% sure you feel confident enough with trading in cryptocurrencies, it is also possible to copy trade. This means that you can copy an experienced cryptocurrency trader like-for-like.  In this scenario, whatever decisions the trader makes are mirrored (in proportion) in your personal portfolio. We are going to cover more on copy trading a little bit later on.

    Forex

    Interestingly, eToro actually started as a specialist forex trading platform that was designed for newbies. As such, you will find a wide selection of currencies at the platform – all of which can be traded on a 24/7 basis. 

    This includes dozens of majors and minors, as well as a selection of exotic pairs.  When trading forex using eToro, you need to keep an eye on your ‘watchlist’ to see whether or not your currency pair of choice is trending down, or actively trading.

    It would be advisable to inspect the support and resistance by looking at the forex charts offered at the platform. The idea is to buy after support and to sell just prior to the resistance line. Always check the fees when trading forex at eToro, as this can vary depending on current market conditions.  

    As we discussed earlier, you can always find a copy trader on eToro whose field of expertise is trading in the foreign exchange. 

    Indices

    Every single stock market worldwide has several indices or an index – and these mirror the standing of a particular portion of the market.

    Indices include a number of different equities, it is because these assets usually balance each other out that indices are considered to be a bit more steady than individual stocks. For example, the FTSE 100 tracks the 100 largest companies on the London Stock Exchange. 

    Given that companies tend to differ when it comes to market cap and size, each and every stock has a differing effect on the index in question. For example, as Google has a lot more weight than smaller companies on the index, if its stock rises significantly, the full value of the index could rise too, and vice versa.

    Below we have listed 5 of the most popular indices on eToro, and they are as follows:

    • FTSE 100
    • DJ30
    • GER30
    • SPX500
    • NSDQ100

    On eToro, indices are traded as CFDs. The reason for this is that they aren’t financial assets and cannot be invested in directly. However, a slight workaround at eToro is to invest in an ETF that tracks an index. In doing so, you will own the underlying shares and thus – be entitled to dividends! 

    eToro Commission and Fees Explained

    Before you commit to a stockbroker, it is essential that you check the platform’s trading fees and share dealing charges.

    With this in mind, we have put together a breakdown of the most common eToro fees that you are likely to encounter.

    No Commission on Stock Trades

    The ability to trade stocks without being charged any commission is what sets eToro apart.  This is the case regardless of whether you are investing in UK or international shares.

    It’s this kind of generosity that has attracted over 12 million investors to the platform. After all, other user-friendly brokers rarely offer such a great fee policy, with some ending up being as much as 1-2% on each trade.

    It’s very important to be aware that you can only bypass these share dealing fees if you do not short-sell, and do not apply leverage to the position.

    If you apply leverage or short-sell the company – you’re now dealing with stock CFDs. As such, instead of investing in the asset in question, you are trading it.

    The Spread

    Understanding the spread, which is the difference between the ‘sell’ price and the ‘bid’ price of an asset, is important. This is one of the fee’s to consider as part of your ‘return on investment’ (ROI).

    As far as spreads go on eToro, they will change in accordance with the market conditions at the time. So in this respect, there is no particular structure in place. With that being said, eToro is generally very competitive in the spread department – especially on major asset classes like stocks, gold, and indices. 

    You will be able to make use of the most competitive spreads by trading within standard market opening hours.

    Withdrawal/Deposit Fees

    Although there is no official deposit fee, you do need to consider the currency conversion cost. The reason for this is that your account on eToro will always be shown in US dollars.

    When you deposit into eToro account (using your payment method of choice) there will be a small charge of 0.5% on that amount. So, let’s say you have deposited £1,500. This is going to cost you £7.50 (0.5% of £1,500).

    When it comes to withdrawing your funds, there is a small flat fee of $5, and that’s currently around £3.99. 

    The eToro Platform – Trading

    When it comes to buying and selling your stocks and shares, eToro makes the process really easy for you.

    To be able to find a particular investment there are only two options to choose from.

    • Utilise the filters in the eToro stock library by narrowing the search to the sector or exchange of the company.
    • Get straight to the point by entering the specific company name on in the search box.

    Available Stock Orders

    Despite eToro being aimed towards new investors, there is still a good handful of orders available for you as far as trading goes.

    Below we have listed 5 market orders you will be able to use when trading on eToro.:

    Limit Orders

    eToro allows you to buy a stock at a specific price and then set up a ‘limit order’. If the so-called trigger price isn’t achieved then the trade will have a ‘pending’ status until it is cancelled (by you). If the price is met then your order will be executed.

    Market Orders

    With a market order, you are able to ‘place’ the trade at the nearest available price. Outside of standard trading hours, your order will be executed as soon as the corresponding stock exchange or marketplace opens.

    Stop-loss Orders

    If you are looking at buying and selling shares on more of a short term basis, stop-loss orders will probably be well suited to your trading style. You can choose to close your trade as soon as the investment drops by a certain amount., This will all be done automatically at a predetermined price.

    Take-Profit Orders

    As this one enables you to close a trade as soon as a pre-established target is met, take-profit orders are particularly good for short-term traders. Again, this will be done automatically.

    If you are thinking about holding shares on eToro for a number of years, you can probably just use a market order to get the job done.

    Social Trading and Copy Trading

    You could be forgiven for thinking that eToro is just a social trading platform. But, the truth is, it has a lot more to offer.

    This brings us to the genius idea of copy trading. Put simply, as well as using eToro for all the latest news, tips and trading strategies – you can also mirror the trading decisions of seasoned investors with not a lot of effort at all.

    What is Social Trading?

    You could say that eToro is to social trading, what Facebook is to social media. It’s about sharing ideas and opinions, but for investors of stocks and shares. You are able to check out a plethora of market insights in a public setting on eToro, and it is more popular than ever.

    To give you an example, let’s say a well respected and experienced trader posts some great trading strategy tips on eToro. On this platform, you are able to view the trader’s post, and even reply to it like in a social media setting.

    If you’re are a bit of a novice when it comes to investing, this insight can be invaluable. In fact, you are even able to add the trader you are interested in as a friend (meaning you are ‘following’ them)

    What is Copy Trading?

    Social trading is great and is very popular for the reasons mentioned above. However, it has to be said that copy trading is a cut above social trading.

    If you’ve never heard of copy trading, the simplest way to put it is that you are able to copy the moves of an experienced investor, like for like (but in proportion). When you copy the whole portfolio, you are also building on the diversity of your own investment goals as well, including future investments.

    The thought of trawling the internet for hours or days on-end to weigh up what stocks and shares you should invest in can be a very daunting prospect. By copy trading, you save yourself a lot of research, as the expert is going to do all of that before making any decisions. After all, it’s the investor’s money at stake too.

    So long as you invest a minimum of $200, you can actually invest as much as you like. You can even copy more than one eToro copy trader at once if you wish. Some traders do this to lessen the blow if one investor makes a bad decision.

    Here is a simple example:

    • Let us say you copy a trade which has 25 different stocks, with £200,000 invested.
    • With this amount, the trader has 10% in Twitter stocks – which would be £20,000.
    • Now let us say that you have invested just £2,000 into the copy trading portfolio
    • Because everything has to remain proportionate, your 10% investment in Twitter will amount to £200

    eToro does not charge a fee for using the copy trade feature. In fact, you are able to exit your position whenever you like with ease. On top of that, you have full control over your funds because you are able to cancel singular orders manually yourself within your portfolio.

    Copy Portfolios

    Whilst eToro has the standard copy trader tool available for free, there are other options for perhaps more advanced traders. The two main types of advanced copy trading tools available on the eToro platform are ‘market portfolios’ and ‘top trader portfolios’.

    Here’s a brief explanation of both:

    • Market portfolios – this trader tool is responsible for grouping together a selection of assets under the umbrella of 1 selected market strategy.
    • Top trader portfolios – this copy trading tool essentially puts together the highest performing traders on the eToro platform.

    Both of these copy trader tools use algorithmic trading and artificial intelligence, and both are professionally managed. To use these copy trader tools you need to invest $5,000 into your copy portfolio, at the very least.

    Free Stock Trading Application

    If you don’t like to take your eyes off the ball whilst you are in the throws of trading, then the eToro investment app is a bit of a lifesaver. And even better, it’s free of charge.

    You can access the free stock trading app on Android and iOS devices. If you don’t have a compatible device, you can still access eToro via your mobile web browser. 

    By using the app – you can buy or sell shares on the move.  check your portfolio’s value and even deposit or withdraw your funds.

    Analysis Access at eToro

    eToro doesn’t have as many options for you as other platforms when it comes to analysis and research. You won’t have access to thorough expert analysis, earnings reports or public accounts.

    It’s not all doom and gloom though, as there are a variety of graphs and charts based on historical pricing action – as well as the general mood of the leading hedge funds.

    It has to be said that eToro is unable to provide you with fundamental news, and so the platform is limited to users sharing news developments themselves.

    When you weigh it all up, the lack of commission fees, as well as lots of other great features, make up for the weaknesses in analysis and research. After all, there’s nothing stopping you from thinking outside of the box and getting this information from elsewhere.

    We recommend sources like Morningstar and Yahoo Finance.

    Payment Methods at eToro

    It is really easy to deposit with eToro as they have such a huge selection of supported payment methods.

    At eToro, this includes:

    • Credit cards
    • Debit cards
    • E-wallets such as Paypal, Skrill and Neteller
    • Bank transfer

    If you are looking to buy shares straight away, then this is going to make depositing your account a breeze. Please note that most deposits are processed immediately, but it will depend on your payment method of choice.

    Is eToro Totally Safe?

    Of course, one of the first things we think of when signing up to anything new is ‘how much will it cost me?’. However, in this case, it is crucial to first check that the platform is fully regulated.

    Of course, this ensures that you have peace of mind that the broker you are dealing with is above board and not running wild with your hard-earned trading funds.

    Fortunately, eToro has 3 tier-one licences, which includes:

    • CySEC: Cyprus Securities and Exchange Commission
    • FCA: Financial Conduct Authority
    • ASIC: Australian Securities and Investments Commission

    All UK investors fall under the FCA and eToro (UK) is a member of the FSCS. 

    Thanks to a fairly recent development, UK investors are now covered for anything under £85,000 by FSCS, whereas previously that figure was £50,000. As well as these super important regulations and licences, you have to give credit where credit is due. By this, we mean that eToro has been around for 14 years and thus – over 12 million investors can’t be wrong.

    Are Cryptocurrencies at eToro Regulated?

    No. It’s important to mention that in the context of cryptocurrencies specifically, there are no regulations in place – at least in the UK. This means that when you own an underlying asset you are not insured by UK compensation schemes.

    This also means that if you are dissatisfied with the service for any reason, you are unable to put forward your complaint to the Financial Ombudsman Service. With that said, the general consensus is that eToro will strive to resolve any issues or answer any questions you have – as its customer support team is top-rated. 

    This doesn’t mean that you won’t have any safeguards at all though. This is because cryptocurrency CFD trades at eToro do come with the added benefit of regulatory protections. This is because CFD instruments are regulated separated from other asset classes. 

    Getting Started on eToro

    If by now you are thinking an eToro account might be for you, then we’ve put together a few simple steps to get you started.

    Step 1: Opening an Account

    To get started you are going to need to go to the eToro website to sign up. As with any share dealing platform (regulated ones) you are going to need to enter a few details to tell them who you are. As such, you need to enter:

    • Your first and last name
    • Username (this has to be unique)
    • Email address
    • Unique password
    • Phone number
    • Date of birth
    • National insurance number

    Step 2: Confirm Your Identity

    Next, eToro is going to need to make sure you are who you say you are, to prevent identity theft and other such horrors.

    You will now be asked to upload a couple of forms of identity and they will be along the lines of the following:

    • Something with your name and residential address on – such as a bank statement or phone bill.
    • Government ID – like your passport or your drivers’ licence

    Generally speaking, eToro will confirm your new account within an hour. If you feel like it’s taking a while, just contact the customer support team for advice.

    Step 3: Make a Deposit

    This part is easy because chances are – you already have an idea of what payment method you want to use on your eToro account.

    Now from the drop-down menu, select the payment method you want to use. Then, you can select the amount of money you want to deposit into your eToro account.

    Bear in mind that the minimum deposit needed is $200 (£160-ish at the time of writing), and depending on the payment method your money will go into your account immediately.

    Please note that bank transfers can take a few days, so if you want to start immediately you might need to choose another payment method.

    Step 4: Purchase Some Shares

    So, now you have funds in your eToro account you can buy yourself some shares. Like we covered earlier on, there are various handy filters you can use at this point to save you a lot of time.

    So, if you know what company you want to invest in, or have a specific asset in mind, you can filter out the search results quite easily. If you have nothing specific in mind then you can just browse the eToro asset library and see what takes your fancy.

    For example, if you want to buy shares, simply hit ‘trade markets’ and then ‘stocks’. Once you have found something you would like to buy shares in, you can simply enter the amount you want to invest (in US dollars).

    Click ‘open trade’ to complete the stock order when the market is open. Or, if the stock exchange in question is closed at that time, just hit ‘set order’.

    The Pros and Cons of eToro

    The Pros

    • Special features for social and copy trading
    • No annual charge
    • A choice of over 800 shares
    • No share dealing charges
    • Trade CFDs or buy shares, ETFs, and cryptocurrencies
    • User-friendly platform
    • UK and international stock access

    The Cons

    • Not much in the way of analysis and research
    • Currency conversion charge of 0.5% when depositing

    To Conclude

    With over 12 million users, it is clear to see why investors are using eToro to grow their trading capital. The eToro platform is super simple, so it is great for beginners. Crucially, the noticeable lack of commission fees and dealing charges is also very appealing to investors.

    Add in the fact that there is annual fee and a wide variety of payment method options on offer, eToro is also attreacting seasoned investors. eToro doesn’t only support bog-standard investing, as you can also short-sell and even use leverage.

    As well as the fact there is over 800 different stocks available, there really is something for everyone here. This includes everything from commodities and CFD bonds to forex, indices and cryptocurrencies. Even if you are still undecided, you won’t be short of options.

    Table of Content

       

      eToro - Buy and Invest in Assets Commissions-Free

      Our Rating

      • Buy over 800 stocks, cryptocurrencies, and ETFs without paying any commissions
      • Trade thousands of CFDs
      • Deposit funds with a debit/credit card, e-wallet, or bank account
      • Perfect for newbie traders

      FAQ’s

      How long ago was eToro founded?

      eToro was founded in 2006 with a mission to reduce the dependence on conventional financial institutions and make trading more accessible to the average Joe.

      Is there a mobile app for eToro?

      Yes. There is a free mobile trading app available on android and iOS devices.

      Can I get dividends on eToro

      Yes. But only if you buy dividend stocks. When the dividends are paid your share of the dividends will be reflected in your eToro account.

      Is eToro fully regulated?

      Yes. eToro has 3 different licences and they are CySEC, ASIC and FCA.

      Is there a minimum deposit applicable at eToro?

      Yes, there is. The minimum amount required is $200 (about £160 at the time of writing)

      Author : Samantha Forlow

      Samantha Forlow

      Samantha is a UK-based researcher and writer that specializes in all-things finance. This covers everything from traditional equity and fund investments, to forex and CFD trading. Samantha has been writing financial-based content for several years and has a variety of publications in the online domain. Crucially, she is able to explain complex financial subjects in a newbie-friendly manner.