I’ve been using eToro for a while now. It’s an innovative online social trading platform that is now available in Australia. It has some pretty unique features so I thought I would give it a full etoro review for 2020. So is eToro worth it? Read on to find out:
What is eToro
eToro is an online trading platform. Through eToro you can trade shares, forex, commodities (such as gold and oil) and cryptocurrencies. What makes eToro unique is that it’s also a social trading platform. It’s a bit like if you combined Facebook with a broker. Traders on eToro can share their trades, and other people can copy them.
Is eToro Legit?
Yes, eToro is a legit trading platform. eToro has been around since 2006. You can find out more about their history on Wikipedia. So they have stood the test of time. eToro was founded in Israel, but they are regulated in the EU, UK and Australia. As of 2020 they have over 13 million customers all over the world and have a good reputation.
Is eToro Safe?
When you deposit funds to invest through eToro, they are stored securely by a tier 1 bank. eToro operates in accordance with ASIC in Australia.
Can you use eToro in Australia
Yes! eToro is fully available in Australia. They recently added real stock trading for Australians which gives us Aussies access to U.S stocks commission free. eToro has local support people in Australia and have versions of their site built just for us.
Is eToro good for beginners?
While all trading carries risk, I think eToro could be a smarter choice for beginners because it has copy trading and social trading features. Copy trading lets you copy more experienced traders. And social trading lets you follow and interact with other traders.
eToro also has a good virtual trading feature. This lets you practice trade without having to risk any real money. So if you’re completely new to trading, you could start with a virtual account to learn how to trade.
Overall I think eToro is a good platform for beginners.
What you can trade on eToro
Here is what you can trade on eToro
- Stocks – both real stocks and CFDs. You can also trade partial stocks, meaning you can buy just $50 worth of a stock at a time.
- Forex – You can trade currency pairs like the AUDUSD
- Commodities – Gold, silver, oil etc.
- ETFs – eToro lists a number of ETFs from around the world.
- Cryptocurrency – you can trade cryptos like Bitcoin, Ethereum and Ripple.
- CopyPortfolios – you can invest in a themed investments. Such as Warren Buffet’s portfolio which has the same shares that he invests in.
eToro Minimum Deposit
To start trading on eToro you need just $50. This is much less than many trading platforms require and a good thing. This opens up investing to more people. To copytrade however you’ll need a minimum of $200 (more on that below).
Copy Trading on eToro
One of the best features on eToro is Copy Trading. This lets you automatically copy the trades made by more experienced traders. You can browse through the profiles of thousands of traders – and because everything on eToro is shared, you can see all the trades they have made and how profitable they have been in the past. You can also see how risky they have been.
How does Copy Trading Work:
Once you find a trader who has stats that look good to you, you can allocate funds to copy them. Whenever they make a trade, a similar trade will be made in your account. Trades are copied based on proportions. So if a trader makes a trade using 1% of their funds, the same trade will be made using 1% of the funds you allocated to copy that trader.
Here are some important things to know:
- You can copy trade with just $200 – the traders you copy most likely will be trading with 10s of thousands of dollars. But because trades are copied based on proportions you can copy a trader with much less. This means less risk for you, especially if you copy trade multiple people. Only small amounts of your capital will be used for each trade.
- You can stop copying at any time – you can close a copy trading position at anytime. You aren’t locked into copying someone.
- You can set a stop loss – you can tell eToro to automatically stop copy trading someone if they draw down a certain amount.
- You can communicate with the traders – eToro is a social trading platform. So you can ask the trader you are copying questions. It’s a great way to learn more about trading.
- You can build a portfolio of Copy Trading – you can copy multiple people on eToro. So you can build up a portfolio of traders who are doing all the work for you!
- Copy Trading Fees – there are no fees for copy trading. The individual trades may incur fees if the trader you are copying opens short or leveraged trades.
People to Copy on eToro
So how do you find people to copy on eToro? Here are some of the things I look for when I copy trade:
- History – I only copy people on eToro who have at least 12 months history on the platform. You can see a month by month breakdown of a traders performance. I believe that anyone can get lucky for a month or two, but it takes real skill to make a profit consistently over many months or many years.
- Risk Score – eToro assigns a trader a risk score based on the markets they trade, the % of account capital they use for each trade and how much leverage they use. Basically the lower the risk score the better. So don’t copy people with a risk score of 5 or higher. If they have a risk score of 1 or 2 thats a really good sign.
- Trades per Week – I like to copy traders who are quite active on the platform. I don’t really want to copy a stock trader who makes just 1 or 2 trades per year. So I always check this stat.
All of these items can be filtered when you’re searching for people on eToro. Just visit the “people” page and use the Advanced Search.
Trading Crypto on eToro
A popular use of eToro is for trading crypto. It’s nice being able to trade crypto alongside more traditional assets such as stocks. It’s also nice being able to deposit using PayPal or Credit Card and trade crypto without any fees. The spread on eToro is higher compared to platforms like CoinSpot. So you are paying for convenience. But if you’re holding onto your crypto for longer term gains then it won’t have a huge impact.
On eToro you can trade all the popular cryptos like Bitcoin, Ethereum, Ripple, Dash etc. And they have been regularly adding new cryptos to trade.
Before you open a trade on eToro you’ll presented with any fees that may be charged. If you’re just buying stocks, then there won’t be any fees. But if you’re looking to open a short stock position or trade using leverage then there are small daily and weekly fees. Because these fees all depend on the asset you’re trading, it’s best to open an account and see them for yourself.
eToro also charges a $5 withdrawal fee. So if you’re making regular withdrawals, this could really add up. If you’re trading some stocks for longer term profits, then this fee won’t be a big deal.
My eToro Review: Summing Up
What I like about eToro
- Easy to use interface – eToro makes trading less complicated. The platform is well designed and easy to use. It’s available on both desktop and mobile. I’ve used a lot of trading platforms, and most are really complex and difficult to use. eToro is the opposite.
- Deposit Methods – I like being able to deposit using PayPal and credit card. This makes it much faster to use than bank transfers. You can also withdraw to PayPal.
- Trade stocks from all over the world – I like being able to trade stocks from all over the world. Unfortunately they don’t list Australian stocks. But you can trade U.S, EU and Asian markets.
- Real Stock Trading – When you buy US stocks on eToro you are buying the actual underlying asset (you own the stock!). They don’t charge a commission just a spread (the small difference between the buy and sell prices).
- Partial Stock Trading – no need to buy a full stock. You can buy just $50 worth. For stocks such as Alphabet which is currently priced at over $1000, this means you can still invest without needing huge amounts of capital.
- ETF Trading – Trade ETFs listed on the U.S stock markets. These are hugely popular products that let you invest in a diverse portfolio with just one trade.
All in all I think eToro is a very exciting platform. Over the past year or so they have focused much more adding features for Australians. With real stock trading and local support, it is a now a genuine alternative for investing in Australia.
Getting Started: My Tips
- Virtual Account – You can start trading with a virtual or demo trading account. When you sign up to eToro you are automatically given a virtual trading account for free. You get $100k in virtual funds to trade just like you would with real money. It’s a great way to learn about trading.
- Don’t Trade with Leverage – you can open trades on eToro using leverage. Leverage is a powerful tool for experienced traders. If you don’t understand what leverage is, then you shouldn’t be using it!
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
eToro AUS Capital Pty Ltd, ABN 66 612 791 803 AFSL 491139. CFDs are highly leveraged and risky, and may not be suitable for all investors. You may lose more than your initial investment. Trading CFDs does not result in ownership of the underlying assets. Copy trading facilities cannot be construed as financial advice. Use these facilities at your own risk and we are not liable for losses incurred. You should obtain your own advice and refer to our FSG and PDS before deciding whether to trade with us