10 Key Points To Note While Choosing EToro Social Trading

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10 Key Points To Note While Choosing EToro Social Trading (Infographic)

eToro is the world’s largest social trading broker. There are more than 4 million traders connected with each other.

eToro was established in 2007 and since then has revolutionized the copy trading industry.

This broker is regulated and there are traders from more than 140 countries.

In this guide, you fill find 10 key things to note when you consider eToro broker for your trading needs.

Make sure you check out our in-depth eToro broker review for a comprehensive analysis on eToro.

Infographic on Etoro Social Trading

Basic Information:

eToro is a leading social trading platform with more than 4 million customers. Anyone can trade and invest in top Stocks, Currencies, ETFs, Indices, and Commodities (CFDs).

You can explore your Cryptocurrency trading experience via this platform.

Regulation:

eToro is regulated and authorized by more than one regulatory body named CySEC, FCA, and ASIC

Features:

  • Minimum Deposit $200
  • Minimum Withdrawal $50
  • 1000+ Trading Instruments
  • 73% Profitable Outcome

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eToro offers a demo account to their traders worth $10,000. Not only the novice traders but also, professional traders can use a demo account to practice trading before playing with real money.

Account Types

There are two account types offered by eToro:

  • Retail
  • Professional

UK Traders:

Traders from the UK can enjoy their trading in eToro platform. Investors from this country will enjoy all facilities providing by this trading broker.

US Traders:

Traders from the USA can enjoy their cryptocurrency trading via the eToro platform. No hidden fees are applicable to traders.

eToro Fees

These are the fees that are charged by eToro:

  • Overnight trading fees
  • Weekend rollover fees
  • Other fees
  • Inactive fees
  • Wallet fees

eToro Social & Copy Trading

eToro trading is the world’s largest trading network. The platform offers pioneer social trading features to make the financial market friendlier.

eToro Education

eToro trading academy offers a wide range of learning tools like videos, guides, blog, webinars and many more along with clear and helpful trading guideline.

Traders who trade cryptocurrency need a crypto wallet to keep their coins safe and secure. eToro offers a cryptocurrency wallet for their traders.

These are the information regarding eToro that is must-know for every trader before you avail their trading platform for social trading.

eToro Copy Systems Explained

eToro’s social features are what makes our platform unique in the online trading space. Both the CopyTrader™ system and CopyPortfolios™ investment strategies lean on eToro’s user-base, which numbers over 10 million users from 140 countries, and are designed to help traders explore new ways to generate profit.

How Does CopyTrader Work?

The CopyTrader system is one of the key reasons the platform is considered among the leaders of the fintech revolution. The general idea of the CopyTrader tool is pretty simple: Choose the traders you want to copy, decide on the amount you wish to invest, and copy everything they do automatically, and in real-time, with one click of a button.

Beyond the basic concept of copy trading, there are quite a few additional elements to the system.

Before we begin, we will refer to:

  • ”Copied Trader” as the trader you are investing in (copying)
  • “Copier” as the user who is doing the copy action (i.e. yourself)

Here are a few important points you should take into consideration before copying:

  • The minimum amount to invest in a trader is $200.
  • The maximum amount of traders you can copy simultaneously is 100.
  • The maximum amount you can invest in one trader is $2,000,000.
  • The minimum amount for a copied trade is $1; trades below this amount will not be opened.
  • If you close a copied trade manually, the funds from this position will be credited back to your copy balance (the amount allocated to copy that person that is not invested in open positions).

CopyTrader – Copying all trades

The CopyTrader system gives copiers the option to copy all of the currently open trades of the copied trader. Copiers choosing this method will have the existing open trades of the trader they are copying opened, with the following terms:

  1. The existing open positions will be opened in the copier’s account with the market rates available at the time of copying (not the rates at which the original trades were opened).
  2. The trades will have the same stop loss (SL) and take profit (TP) as the original trade.
  3. They will mirror the Copied Trader’s future actions including changes in SL’s and TP and closing of the trade, from the moment you begin copying them. If the copied trader extends their SL by adding more funds to a position, your SL will adjust accordingly. However, your position amount will stay the same as its initial amount. Therefore, you may sometimes see differences in gain percentage between your copy account and the copied trader’s account.
  4. You will be able to close a specific copied trade without closing the copy account.
  5. If the Copied Trader opens a position in markets that are closed during the time they are copied (market break for example), the system will open a Market Order for the copier. Once the market is open, the order will execute into a position with the first market rate.
  6. To see all of the trades copied from a single trader, go to your portfolio and click the Copied Trader’s name.

Please note: The trades will all open in your account at the same time. You will see them at a slight loss which reflects the spread between the Buy and Sell rates, to show you a real-time representation of the funds you will receive if you close the trade. New trades will open at the same rates as the copied trader opens them, and use the Realised equity (balance + invested funds) as the basis for the proportions of copied trades. For example, a trade opened with 10% of the Copied Trader’s realised equity will open a trade in your copy account with 10% of the realised equity in the copy relationship.

However the proportion can change when the copied trader changes their available balance – this can occur when the Copied Trader makes a deposit or withdrawal. When any of these events occur, there is a change in funds in the Copied Trader’s account, and you might notice trades that have a different proportion than before. When the Copied Trader closes all open trades, the trade size proportions between their account and the copier’s account are reset (equal once more).

**These terms and conditions are subject to change at eToro’s discretion, at any time.

CopyTrader – Copying only new trades

Copiers choosing this method will only replicate new trades that the Copied Trader opens after the copy action starts. The following terms will apply:

  1. Only trades opened after the copy action started will open in the copier’s account.
  2. New trades will open at the same rate as the copied trader opens them.
  3. The proportions of the new trades will be calculated from the Realised equity of the Copied Trader (account balance + invested funds).
  4. The trades will have the same SL and TP as the original trades.
  5. All of the Copied Trader’s actions will automatically be duplicated in the copier’s account, including changes in SL’s and TP’s and closing of the trade. If the Copied Trader extends their SL by adding more funds to a position, your SL will adjust accordingly. However, your position amount will stay the same as its initial amount. Therefore, you may sometimes see differences in gain percentage between your copy account and the Copied Trader’s account.
  6. You can close a specific copied trade without closing the copy account.
  7. To see all of the trades copied from a single trader, go to your portfolio and click the Copied Trader’s name.

Please note: The proportion can change when the Copied Trader changes their available balance. This can occur when the copied trader makes a deposit or withdrawal or closes an old trade that was opened before you started copying them (if you chose not to copy the already opened trades). When any of these events occur, you might get trades that have a different proportion than before.

**These terms and conditions are subject to change at eToro’s discretion, at any time.

Copy Stop-Loss (CSL)

CSL is a feature that gives you the ability to effectively manage your Copy portfolio, by providing risk management across each copy relationship based on real-time Profit/Loss values. It is essentially an automated risk control system that allows you to set controls for the entire copy relationship, at a dollar value.

The system will automatically set the CSL at 40%, as a default, of your total invested copy value per copy relationship. Therefore, you will now be able to assume that when the copy value has reduced by 40%, the CSL will trigger and terminate that copy relationship, returning the remaining funds to your balance. The range that you can manually set your CSL at is between 5% to 95%. The 5% value is a true ‘safety net’ that should only trigger when nearly all the money in that copy relationship is gone.
For example: Trader A is copied by Trader B with $1,000. The CSL is set to 60% of the equity to return to the account, which in this case is $600. Once the current equity, including the profit/loss over all trades, is reduced to $600, the whole copy account will be closed, and the remaining funds (60% of the original copy amount) will be returned to Trader B’s balance.

So, what happens when CSL triggers?

If your copy relationship has unrealised losses of 40% of your allocated funds, the CSL will trigger, and all the positions in that relationship will close. The history tab on the platform contains a “Close By” column. The closed trades will be labelled in this column as “CSL”.

The CSL value can be adjusted to a value of minimum 5% and maximum 95% as a safety net. Please note that the system will not allow you to reduce the CSL to a value that is so small that it could trigger the closure of the CopyTrader relationship immediately.

As an example: Let’s say you are copying a trader with $1,000 and you are currently losing $300, while your CSL value is the default 60%, and you want to adjust the CSL value. You will not be able to set it for a value of 70% ($300 in this case) or less as this would trigger the immediate closure of the CopyTrader relationship and all the trades under it. In this case, the maximum CSL you would be able to set is 65%.

Keep in mind that the CSL value will change if you change your copy amount. Adding or removing funds from the copied trader will trigger a recalculation of the CSL value as a percentage of the new copy amount.

Say, for example; you’re copying a trader with $1,000. Your investment in this trader has lost $900 of its value, but you still believe in this copy relationship. When you allocate another $1,000 to that trader – the CSL value will now be updated and calculated on the new $2,000 total allocated to copying this trader. Remember you can update the CSL at any time.

Copied Trades SL

The CSL was put in place to limit your overall exposure to any one trader. Because your copied trades are protected by the CSL, we can allow for more flexibility when it comes to their Stop Losses (SL).

With regular trades, whenever you increase the SL, funds are added to the trade from the account balance to represent the extra funds needed to support it.

With copied trades, whenever the Copied Trader extends their SL, there are no extra funds deducted from the overall copy amount. Therefore, any one trade can go 200%, even 300% into loss, which gives it the flexibility to potentially recover the losses without being closed by the SL, and at the same time, leaves the copy amount with enough balance to cover additional trades. However, if the Copied Trader reaches your set CSL regarding an unrealised loss overall, the entire copy relationship will be closed.

This difference creates several discrepancies between the copied trades and the original trades:

We don’t add funds into copied trades. Therefore the percentage of available copy balance might be greater than the balance of the copied trader.

The copied trade’s gain/loss is calculated according to the original amount invested in the trade.

Pause Copy

With CopyTrader, we are proud to present “Pause Copy”, a feature that allows you to stop copying a trader without actually closing all the currently opened positions.

“Pause copy” can be activated from the portfolio page on eToro by clicking on the settings button and “Pause Copy.”

When “Pause copy” is activated there will be no new trades opened under that copy relationship. However, all the currently opened trades will still be copying the SL/TP and close actions from the Copied Trader.

How do CopyPortfolios work?

eToro’s CopyPortfolios are thematic investment instruments programmed for long-term double-digit return. Each CopyPortfolio aggregates various assets or a group of traders and is constantly optimised by machine-learning algorithms.

General CopyPortfolio considerations:

  • The minimum amount to invest is $5,000.
  • The default Stop Loss for a CopyPortfolio is set at 10%.
  • The weights allocation of each CopyPortfolio can change over time.

Market CopyPortfolios

Market CopyPortfolios aggregate various assets together in a single portfolio, following a predetermined market strategy or focusing on a specific market segment. eToro’s financial experts determine the composition of each CopyPortfolio, in conjunction with a machine-learning algorithm programmed to reduce risk and increase profit.

For example, the BigTech CopyPortfolio groups major companies from the tech sector, offering an asset for traders who wish to invest in the industry as a whole.

Top Trader CopyPortfolios

Leaning on the CopyTrader tool, Top Trader CopyPortfolios group successful traders together in different portfolios. Similar to Market CopyPortfolios, the traders within are selected by eToro’s investment committee and a sophisticated algorithm which is looking for specific trading attributes that are optimised for profit.

For example, the GainersQtr CopyPortfolio groups investors who have shown consistent returns, and who are likely to turn a profit over the next quarter, according to predetermined parameters which the CopyPortfolio’s algorithm takes into account. The composition of the CopyPortfolio is updated periodically, to maintain low risk and increase the probability of profit.

For more information about CopyPortfolios, please refer to the CopyPortfolios page.

We hope this article has helped you gain a clearer understanding of our Copy systems. If you have any further questions, please don’t hesitate to contact us via our @CustomerService wall on eToro, or learn more on our help page.

7 Binary Options

eToro had its humble beginnings as a simple forex broker, all the way back in 2006. Founded by two brothers, Yoni and Ronen Assia out of Tel Aviv, Israel, it was initially known as RetailFX. The goal of the company was forex trading made easy, and eToro marketed heavily toward retail and ‘non-expert’ traders.

This could be seen in the design of some of their early trading platforms, such as Web Trader and Globe Trader, which looked more like an 80s Nintendo video game than a professional trading platform. For instance, the Web Trader interface featured images of various business people running a race; the system was called ‘Marathon’ and was supposed to present an alternative to the ‘boring’ trading interfaces.

Here’s an example, want to trade the common USDJPY pair? If you bet on the dollar, then the American Uncle Sam had to be ahead in the ‘race’ against the Japanese sumo wrestler, which showed that the dollar was gaining on the yen. There were no charts, analysis tools, or stop and order limits.

eToro also featured the Globe Trader in the early days and this one was presented in the form of a world map. If you wanted to trade the sterling, then you would have to click on Great Britain. As you can imagine, these interfaces drove off some professional traders, but then again, those were not eToro’s target market in the first place.

Bulls and Bears

eToro really took off in 2020, because that’s when it launched its OpenBook platform, putting eToro at the forefront of the social trading phenomenon with its Copy Trading feature (more on that below). eToro also released its first Android trading app that year allowing people to trade from their mobiles.

eToro’s success attracted the attention of investors, and eToro has successfully raised a significant amount of funds. Between 2007 and 2020, eToro had 5 rounds of funding and raised $58.5 million from Russian and Chinese investors. This has enable eToro to continue to expand, and it began its UK operations in 2020. At the end of 2020, eToro announced that it was launching in Poland. And through joint ventures with its Chinese investors and Russian investors (PingAn Ventures and Sberbank), eToro is also available in China and Russia.

It has also expanded its product offerings into Contracts for Differences (“CFDs”), cryptocurrencies, and in the beginning of 2020 launched CopyFundsTM for Partners. This feature gives investment companies the ability to create bespoke funds on the eToro platform which eToro’s millions of clients can then invest in.

With this step, eToro has taken a big leap from its days as a humble forex broker as it has now placed itself in direct competition with investment funds and financial advisors. They’re not just competing for the customers’ trading money, now eToro wants your investment dollars as well.

To give you an idea of just how far eToro has come, in 2020, it signed a 3 year sponsorship deal with the football club West Ham United.

eToro Companies

Not counting eToro’s joint ventures, eToro operates primarily through two companies, eToro (Europe) Ltd, registered in Limassol, Cyprus, and eToro (UK) Ltd, which is registered in London.

eToro Regulation

eToro Regulation

When it comes to the case of forex brokers, binary options brokers, or just online trading platforms in general, one of the main questions that should be first asked is ‘is this broker regulated?’ Unfortunately, the requirements for setting up an online brokerage are not very high or stringent, and there are plenty of unlicensed and unregulated brokers out there. Take a quick search on the Internet and you will find numerous stories of unaware and trusting traders being scammed by such unscrupulous traders.

This is not to say that a regulated broker is exempt from unscrupulous or fraudulent activity. In fact, plenty of regulated brokers have been caught in such activities. However, because they are regulated, customers at least have some recourse available and brokers are often penalized with fines.

And the good news is that eToro is that eToro is indeed regulated. eToro (Europe) Ltd is regulated by the Cyprus Securities and Exchange Commission (“CySEC”), license number 109/10, obtained in January 2020. eToro (UK) Ltd is regulated by the Financial Conduct Authority of the UK (“FCA”), license number FRN 583263 .

Now, if you have been around the online brokerage scene for a while, you will know that when it comes to regulation, many such firms turn to CySEC. Because Cyprus is a member of the European Union, being CySEC regulated allows the company to offer their services throughout the greater European Economic Area. This is due the Markets in Financial Instruments Directive (“MiFID”).

Unfortunately, the image of CySEC isn’t the best. The island is heavily dependent on income from such investment firms choosing to register in Cyprus, which is why they have a favorable tax regime and have a reputation of being rather lax on regulation, especially in the early years. However, with the growing number of investment firms being registered in Cyprus, CySEC has in recent years gotten noticeable more stringent in their regulation and enforcement.

For example, Cypriot Investment Firms are required to have a minimum of EUR730k in capital. In addition CySEC also has an Investment Compensation Fund, which is funded by payments from all the regulated investment firms in case an investment firm goes bankrupt and is unable to repay its clients.

The total amount in the fund stands at over EUR17.5 million and each trader is entitled to a maximum compensation of EUR20k. However we should note that to date the conditions under which investors can claim from the fund are still unclear and the fund has rarely been used.

We take further comfort in the fact that eToro is not just CySEC regulated, but FCA regulated as well. Unlike CySEC, the FCA has always been regarded as one of the premier regulatory financial authorities in the world. The fact that eToro was able to obtain an FCA license is a huge positive on their part and sets them apart from much of their competition.

To summarize, at this point in time, we conclude that eToro is sufficiently regulated and customers should not have any worries in this aspect.

eToro USA

eToroUSA is operated by Tradonomi LLC, a member of the National Futures Association (“NFA”) which is under the regulatory purview of the Commodity Futures Trading Commission (“CFTC”). However, eToro USA is not active at the moment, meaning that residents of the USA are unfortunately not permitted to use any of eToro’s services.

eToro Trading Platforms

As we mentioned above, eToro had various trading platforms over the years, with the most prominent being their WebTrader trading platform launched in 2008, followed by OpenBook in 2020 which was its first social trading platform and the base for the current platform available today.

In November 2020, eToro’s WebTrader was integrated with OpenBook plus all the mobile platforms, and today eToro boasts a singular trading platform that has all the features of the previous platforms, plus more. Since the integration into eToro’s current platform, both WebTrader and OpenBook have been deactivated.

eToro’s integrated platform offers two different functions: retail trading, and social / copy trading. Retail trading is your standard trading and eToro functions as a normal broker in this respect. What differentiates eToro from the competition is its Copy Trading and Social Trading feature. Copy Trading allows you to automatically replicate the trades of your selected traders on a proportional basis while Social Trading describes the general umbrella under which Copy Trading falls. More on that in the section below.

Like most brokers, eToro also offers leveraged trading, which allows you to trade notional amounts far higher than your trade amount. Currently, the minimum leverage is 1x for stocks and 2x for all other assets. Maximum leverage ranges from 5x for stocks to 100x for indices and commodities, and all the way up to 400x for currencies. However, eToro’s default ‘Responsible Trading’ setting does not allow you to trade leverage ratios above 50x or place trades that exceed 20% of account equity, although this can be manually changed. When it comes to leveraged trading, one important feature that can help mitigate a trader’s risk is negative balance protection. At the moment it is unclear, whether or not eToro offers this feature.

eToro Asset Classes

By offering CFD trading, eToro was able to evolve from offering merely forex trading into five different asset classes. Currently you can trade currencies, commodities, indices, stocks, and ETFs using eToro. eToro offers hundreds of different assets you can trade in under these classes.

eToro Spreads

As is common with other brokers in the business, eToro does not charge any commissions but makes its profit through trading spreads. And while eToro’s trading platforms are excellent and are probably the company’s biggest draw, one of its biggest drawbacks are its spreads. eToro may have some of the best trading platforms in the business, however it also has some of the highest (if not the highest) spreads in the business.

The spreads are prominently listed on eToro’s website, and the lowest spread is 2 pips which only apply to the USDJPY pair, in the case of currencies. The average spread ranges from 4 to 6 pips for currencies, which is very high considering that other brokers have spreads as low as 0.1 pips!

eToro Social Trading and Copy Trading

Basically, social trading takes advantage of ‘crowd wisdom’ to help traders make the optimal trades. Instead of just relying on your own strategies, traders can now follow more successful traders and replicate all or part of their trading strategies. Social trading is a broad umbrella term; not only can you replicate other traders’ strategies but you can also ‘follow’ them (comments, likes etc.) as well as see their investment statistics in order to find the best traders to copy.

And research shows that copy trading is indeed effective. In an MIT Study conducted in 2020, Dr. Yaniv Altshuler found that traders on eToro who used guided copying (copying a suggested trader) performed 6 to 10% better than manual traders, and 4% better compared to traders that were merely copying random investors of their choice.

Due to eToro’s large network of over 4.5 million users, its social trading is particularly effective. eToro’s main social trading tool is the CopyTrader which is the feature that allows you to discover and copy the best traders on the eToro network. You can copy up to 100 different traders at once, with a minimum amount of $100 each with a maximum amount of $500,000 per trader. The minimum trade amount of a copied trade is $1. CopyTrader has 4 main features:

  • Copy All Trades: You will copy all open trades of your selected trader. These positions will have the same Stop Loss and Take Profit limits as the original trade and will also follow the copied trader’s future actions. For example, if your copied trader changes his stop loss position, yours will be changed as well. Note that you will have to open your trades at the current market rate, not at the copied trader’s original rate. However, you do have the option of closing specific copied trades while still copying the other trades.
  • Copy Only New Trades: You will only copy your copied trader’s trades that he or she makes after you have initiated the copy action.
  • Copy Stop Loss: This feature allows you to manage your risk across your whole copy portfolio. After the stop loss is breached, your copy account with the selected trader and all associated positions will be closed and remaining funds returned to your balance. By default it is set at 40% however it can be manually changed. This feature can be used in conjunction with the other features and is highly recommended for risk management purposes.
  • Pause Copy: This feature allows you to pause any new copy trades being opened with a copied trader, however all open positions will still remain open.

In addition to the above, eToro also has several other features to enhance its copy trading program.

  • People Discovery: This is eToro’s internal search engine to find traders to copy. You can filter your search according to country, invested assets, minimum gain over a certain time period. And that’s just the basic filter. If you use the Advanced Search function you can narrow it down even further with criteria such as portfolio allocation, average trade size, risk score, number of profitable months etc.
  • Top Traders’ Insights: This is a feed which collects data from eToro’s Top 1,000 most profitable traders and provides insights into their most traded instruments plus a breakdown into buy and sell positions.
  • Economic Calendar: A highly detailed economic calendar that shows data such as export growth, GDP, jobs data, industrial production etc. of various countries. The data is even broken down into actual, forecast, and previous.
  • Market News: Live news updates, trends, fundamental analyses, and technical insights.
  • Pips Calculator: A quick tool to translate movement in pips into actual dollar profits and losses.

With almost 5 million traders on the eToro platform, finding the right traders to copy can be a bit of a challenge, even with the People Search function. That’s why eToro has implemented its Popular Investors program, which not only highlights its best traders but enables these traders to earn money from being copied as well.

This is not unusual, as one of the criticisms of copy trading is that is essentially investment management. After all, if thousands of people are copying your trades, aren’t you basically just investing their money for them? The only difference is that there is no real contract between the copier and the copied trader.

Popular Investors can earn money via an ‘asset management’ fee of up to 2% (assets under management would depend on how many traders are copying you) plus up to a 100% spread rebate. This is all in addition to their own trading earnings. And the payments to Popular Investors are not just bonus credits; they are real funds that can be immediately withdrawn. We should note that all Popular Investors must trade using ‘Responsible Trading’ settings.

eToro currently has four levels of Popular Investors. They are:

  • Cadet: Requiring only 1 trader to copy you, plus a minimum deposit of $1,000. Doesn’t earn any monthly premium but instead earns a 20% spread rebate.
  • Rising Star: Minimum deposit of $5,000 and 50 traders copying you. You get a spread rebate of 30% and a monthly payment of $500. Withdrawal fees are also waived.
  • Champion: Minimum deposit of $5,000 and 250 traders copying you. You get a spread rebate of 50% and a monthly payment of $1,000. Withdrawal fees are also waived. You get access to a Premium Account and Trading Central.
  • Elite: Minimum deposit of $20,000 and assets under management of above $300,000. You get a spread rebate of 100% and a monthly payment of $1,000 plus 2% of assets under management. Withdrawal fees are also waived and you get access to a Premium Account and Trading Central. In addition, you get a $500 monthly marketing budget, a $500 quarterly education budget, and a $5,000 annual events budget.

eToro CopyFunds

In early 2020, eToro launched its CopyFunds feature which moves eToro towards a universal investment and trading platform. As we explained above, copy trading is already conceptually similar to investment management; by copying another trader’s trades, he is essentially ‘managing’ your money for you.

Each CopyFund will have its own investment strategy and asset allocation. The minimum investment amount in a CopyFund is $5,000 and there are two kinds of CopyFunds available:

  • Market CopyFunds: A CopyFund that is comprised solely of financial assets such as stocks, currencies, ETFs etc.
  • Top Trader CopyFunds: This CopyFund consists of actual traders instead of assets. The traders that comprise a certain CopyFund will be selected based on each individual CopyFund’s strategy. For example, if a CopyFund’s strategy is long term equities then it will select traders that have high stock allocations with long timeframes.

Unlike investing in a typical fund or financial services firm, there is no management fee associated with using CopyFunds. This puts it ahead of even the low cost ‘robo-advisors’ which are so popular right now, most of which still charge management fees. The only fees will be via eToro’s spreads on the transactions initiated by the CopyFund.

Also, unlike traditional funds which have very stringent redemption conditions and even ‘redemption gates’ to prevent a run on the fund, you can halt your CopyFunds investment at any point in time. The only delay is that if you initiate a stop when the markets are closed, you will have to wait until the markets are reopened for the system to close your positions.

There are a few other salient differences between CopyFunds and traditional funds. For one, there is no need for a CopyFund investor to deliver capital to an investment manager, rather the ‘manager’ just opens and closes positions from the investor’s own accounts according to the CopyFund’s strategy. Second, leveraged trading still applies meaning that your notional investment amount can be much larger than your actual investment amount. And finally, eToro’s CopyFunds allows the usage of short positions unlike traditional ETFs, which only take long positions.

Over time, every investment portfolio experiences what is known as ‘portfolio drift’. This is what happens when due to individual price movements of the assets within a portfolio, its allocation starts moving further and further away from the target allocation. Because of this, a portfolio needs to be rebalanced on a periodic basis. eToro rebalances its CopyFunds periodically and automatically however the rebalancing period differs between each CopyFund. You can refer to each individual CopyFund’s prospectus to find out its rebalancing frequency.

Of course when it comes to investment funds, what everyone wants to know is, what is the return on investment? Unfortunately, since eToro’s CopyFunds is not even 3 months old as of April 2020, its returns cannot yet be compared to any benchmark. However, as per most investment funds, investors should look at a timeframe of years for ideal returns. Remember, investment is not trading.

eToro Account Types

eToro Account Types

eToro currently offers 3 types of trading accounts. They are:

  • Standard Trading Account: The most common account with a minimum deposit amount of $50 up to $1,000 depending on country and region.
  • Demo Account: A demo account with $10,000 in virtual credits. Can be used simultaneously with a standard trading account; traders have the option of switching between the live and demo accounts on the platform.
  • Islamic Account: A big plus for its competitors, eToro also offers sharia compliant Islamic accounts. Trades conducted on the Islamic account implement immediate buying and selling without delay with no interest on trades, thus avoiding potentially usurious interest, known as riba. An eToro Islamic account also provides you with interest free leverage, and there is no interest on contractts over 24 hours, nor does eToro take any additional commissions for contracts over 24 hours. However, it has one of the highest account opening minimums, at $1,000.
  • Premium Account: Automatically given to Popular Investors who have achieved ‘Champion’ status and above. However if you have $20,000 in account equity or have made net deposits of $20,000 over an 11 month period, you too can qualify for a premium account. Premium Account holders have a personal account manager, faster withdrawals, direct access to eToro’s trading room, free access to its Trading Central investment research platform, weekly market analysis videos, plus a personal credit card. They may also receive a 25% deposit bonus upon the upgrade and further their referral commissions are higher at $2,000 per invitee with each invitee receiving a $5,000 special deposit bonus.

eToro Deposits and Withdrawals

eToro’s minimum deposit amounts range from as low as $50 to as high as $1,000 depending on region and country. eToro also accepts a wide range of payment service providers; in addition to the usual Visa, MasterCard, and wire transfer, eToro also accepts China Union Pay, Diner’s Club, Giropay, Neteller, PayPal, Skrill, WebMoney, Wirecard, and Yandex. All eToro accounts are USD-denominated and deposits made in different currencies will be converted into USD which will be subject to eToro’s posted spreads.

Depending on the payment option, there is also a maximum deposit amount (unlimited for wire transfers), ranging from $5,000 to $50,000. All transactions are protected using Secure Socket Layer (“SSL”) technology for maximum data protection and privacy.

eToro Deposits and Withdrawals

We should also note that while it is possible to deposit money into your eToro account without first verifying your account, unverified accounts are limited to a total deposit amount of $2,250. Account verification requires proof of identity, proof of address, and phone number verification.

When it comes to withdrawals, only customers with verified accounts can withdraw funds. The minimum withdrawal amount is $20. eToro takes 1 business day to process a withdrawal request, which we note is extremely fast, while the time it takes to reach a customer’s account will vary depending on the payment service provider. In general, it may take anywhere from an additional 1 to 8 working days after the withdrawal has been processed. Withdrawals are also subject to fees, which are described in the section below.

Video ad of eToro below: Note: Remember to read our conclusion of eToro at the end of the review

eToro Fees

eToro’s primary method of income is the spreads it takes on all trading transactions, which are already some of the highest in the industry. Further, eToro applies the same high spreads for currency conversion of a customer’s funds when depositing or withdrawing funds (since all of eToro’s accounts are denominated in USD). In addition to these spreads, withdrawal fees are also applicable, depending on the withdrawal amount.

  • Withdrawal amount of $20.00 – $200.00: Fee of $5.00 is applicable.
  • Withdrawal amount of $200.01 – $500.00: Fee of $10.00 is applicable.
  • Withdrawal amount of $500.01 and up: Fee of $25.00 is applicable.

Based on the withdrawal fees above, it is clear the eToro’s withdrawal fees are very high, especially if you express them in percentage terms. If you withdraw $100 your withdrawal fee is 5% and if you withdraw $1000 your withdrawal fee is 2.5%! Only when withdrawing thousands of dollars does the withdrawal fee become small in percentage terms.

Overall, it’s not just eToro’s spreads that are high, its withdrawal fees are as well. Definitely a negative that should be considered.

eToro Trader Education

eToro Trader Education

eToro features an educational ‘Trading Academy’ section which has three main features: live webinars, a trading e-course, and trading videos. Currently there are 7 previous live webinars posted which can be accessed via the eToro website or on their YouTube channel. Their trading videos are more of ‘how to’ videos and are designed to show users how to properly use their platform and its features. This is also available through their website and hosted on their YouTube channel.

Their trading ecourse, while free, is only available to registered members. Currently there are 11 lessons in the ecourse, covering topics such as basic and advanced technical analysis, effective strategies, trading psychology, and market analysis.

In addition to their trading academy, eToro also maintains an active blog which has a wide range of topics from cryptocurrency news, top investor spotlights, market analyses, and of course, eToro updates.

eToro Bonuses and Promotions

eToro has a ‘Refer a Friend’ program, which can earn you $100 in eToro credits for every friend you invite. Further, each friend you invite will himself or herself receive $200 in eToro credits! However, the caveat is that each of your invitees must deposit a minimum of $500 with eToro for you to receive the bonus credits. The invitation process is easy and can be done entirely via email. Premium Account holders receive higher commissions when using this program.

In addition to ad-hoc promotions, eToro offers two main promotional programs; a First Time Depositor promotion and a Re-Deposit promotion. eToro did not specify the amount of credits available under these promotions, however it did note that any credits as a result of these promotions have a six month expiry date from the time they are first deposited.

eToro Website

While eToro’s main website pages are easily navigated to from the main page, we found that the site has a high number of inner pages which are not intuitively laid out. As an example, information about eToro’s Islamic account and leverage ratios can only be found by navigating through its inner pages. Further, we note that a lot of details about eToro itself require you to be a member to learn about them. While overall eToro’s website is adequate, there is still much room for improvement.

eToro Customer Support

eToro offers customer service on a 24/5 basis, that is 24 hours a day from Monday to Friday. eToro has a ‘Customer Service Wall’ feature, which is similar to Twitter for non-urgent inquiries. All complaints posted on the wall are visible to everyone; further, this feature is only available from 8AM to 5PM GMT.

For private or urgent inquiries, eToro customers can use their 24/5 Live Chat feature or submit a complaint to them via web form. It should be noted that complaints submitted via web form may take up to 48 business hours to receive a reply. The downside of eToro’s customer support options is that unlike their competitors, they do not offer any phone support.

eToro Customer Complaints

Given the massive popularity of eToro, with almost 5 million users, complaints are inevitable. Our research showed that most of the complaints against eToro were very minor and mostly revolved around the lack of customer support, high spreads, withdrawal fees, and their focus on social trading over retail trading. With regards to the final point, it appears that more than a few traders were disappointed that the traders they had copied were not successful; but this is a risk you must accept when using social trading.

In addition, back in 2020, CySEC fined eToro EUR50,000 for weaknesses in their operational and organizational structure related to their early days in 2020. eToro paid the fine and all the weaknesses have been rectified.

eToro Social Media Accounts

eToro is active on all the usual social media accounts and you can find them on Facebook, Twitter, LinkedIn, Google Plus, and YouTube.

Conclusion

When it comes to social trading, eToro has pushed itself ahead of the pack. Already one of the first in the game, its features such as the Popular Investor program and the latest, CopyFunds, puts it ahead of the competition.

And with such a large user base, its social trading capability is only magnified. That said, it does have significant drawbacks, namely very high spreads and withdrawal fees. But since top traders can get spread rebates and their withdrawal fees waived, eToro may be the kind of broker where the top traders truly thrive while unsuccessful traders might find themselves left far behind.

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