Etoro opinion

Without a doubt, eToro is one of the most popular investment platforms around the world, in Spain and Latin America as well. This online broker was launched in 2007 (under the RetailFX brand), and they claim to have 13 million registered users worldwide – it is said soon.



eToro, descubre el trading social, te interesará - El canal del trader, las criptomonedas y el dinero

But of course, all this does not mean much either, no matter how popular eToro is, you will have to know if it suits your investor profile (eg you are looking for short or long term), you will want to know its commissions and if it is a broker of legit (eg regulated by which body?).

So that you can choose if this platform is a good option for you, I will do a detailed analysis and tell you my opinions about eToro. I will also reveal (all) their commissions, pros, cons and aspects to consider before opnening an account.

Note: eToro allows you to invest in many long-term assets (eg cryptocurrencies, stocks or ETFs), and in short-term assets using CFDs. CFDs with assets of greater complexity and risk of losing money, since they allow leverage. 67% of small investors incur losses when investing in CFDs with eToro. Keep in mind if you can afford this risk before investing.

Pros and cons of eToro

Let’s look at the main pros and cons of eToro, so you will know what strengths it has and where it can improve, I will also explain when it is a good idea to use eToro and when you should consider other alternatives.

The main pros of eToro are:

 

  • Variety of assets: I like that with eToro you can buy both real shares and CFDs on other assets (eg indices or currencies). This can be interesting for profiles of intra-day traders or investors looking for the medium and long term.
  • Cryptocurrencies and wallets: It is also possible to buy (real) cryptocurrencies and manage them through the eToro wallet (eg transfer them to your own wallet).
  • Trade with or without leverage: Unlike some online brokers intended for trading, with eToro it is possible to trade without leverage or with it, the choice is yours.
  • Many markets: As we will see below, eToro offers hundreds of assets such as stocks, CFDs or cryptocurrencies that you can trade.
  • Demo account: With eToro it is possible to use their virtual account (demo) for free to see and learn how their platform works. You will have access to 100,000 virtual US $ with which to practice.
  • Copy People and CopyPortfolio: eToro allows investors on its platform to «copy» the investment strategies of other users. This is a double-edged sword since success depends on who you copy, but it can be a good alternative for «the laziest» when it comes to investing.

cons to consider:

  • Account in dollars: All accounts that are opened with eToro work in US dollars. If you use another currency you will have to bear in mind that there is an exchange commission that you will have to assume. On the other hand, the risk, by exchange rate, will be somewhat higher for you. For example, if you operate in euros and the exchange rate rises and favors the euro, your investment (in dollars) will lose value for you.
  • No official news feed: It does not have a section where you can read relevant news for your investments, on the contrary it has a kind of social network where other investors add comments and may link to relevant news (or not).
  • No support on weekends: They are open 24 hours a day from Monday to Friday (eg via live chat), but unfortunately during the weekend you will not have support from eToro. Personally, it has taken me a bit to contact them, as they have taken several days to answer my questions.
  • Minimum deposit: To open an account with eToro and add funds you have to deposit at least $ 200 US (you will not be able to deposit less the first time), although this is not a very high amount either.
  • No Spanish Videos: Unfortunately not all of your videos and educational content are translated into Spanish. If you want to see his videos, you’d better understand some English.

¿Quién debería usar eToro?

By offering both CFDs and ETFs and real stocks, it is a suitable broker for many profiles (eg those looking for short term trading and those investing longer term). It also has features that experts will like (such as leverage and stop loss and take profit).

On the other hand, it also has social media functions applied to trading, the large community of investors that it has can be a good help to those who want to start.

eToro Opiniones ¿Es fiable? Opiniones de sus Clientes en 2021

 

eToro has some aspects that are somewhat difficult for beginners to understand. For example, by offering you the ability to leverage (borrow money from eToro to invest for larger amounts), this can lead to interest costs if the position is not closed before the market close.

eToro Review

In the following table I outline the main functions and aspects that you have to consider when evaluating whether eToro is a good solution for you and your investments.

Broker type

Social-trading

It is an investment platform (they call it social-trading) in which it is possible to interact with other investors. You can trade derivatives, cryptocurrencies, ETFs, and real stocks.

Regulatory entity

CySEC and FCA

Regulated by the Cyprus Securities Market Commission (CySEC), the UK FCA (Financial Conduct Authority) and even the Australian equivalent.

Account opening

Fully online

To open an eToro account you will only have to register with your email and password (you can use your Google or Facebook account to identify yourself), add a telephone number and upload a document that identifies you with your address (eg bank statement, ID or phone bill).

Deposits

Min. 200 $ US

It is possible to deposit money using your debit and credit card, bank transfer and electronic wallets such as PayPal, Skrill or Neteller. It is possible to deposit in many currencies, among others: euros, pounds and American and Australian dollars. As it operates in dollars, there will be an exchange commission if you enter in other currencies. I personally use the TransferWise card to save on the exchange fee.

The minimum amount for Spain is US $ 200, subsequent contributions may be less. If you do not verify your account (eg by uploading the electricity bill or an identity document), you will not be able to deposit more than $ 2,000 US (or $ 2,250 US).

Refunds

5 $ US commission

In addition to the exchange rate commission that you can receive (this is quite small), you will have to pay US $ 5 for each withdrawal. You will have to withdraw at least $ 30 US.

Leverage

Optional

With eToro it is possible to trade with leverage and without it, you decide. Regulations in some countries allow more leverage than others, so this varies. For example, for investors, from the European Union, there is a maximum leverage (but this will depend on your investor profile and the type of account you have).

Markets and Products

Although eToro is very popular for CFDs, it is possible to buy real shares with its platform. In order to buy real stocks you have to invest without leverage. With stocks it is possible to trade without stop loss or take profit.

Actions

No commissions

eToro will give you access to the main world markets such as the Madrid, Brussels, Hong Kong, London, Frankfurt, New York, Zurich or NASDAQ stock exchanges; in total more than 2,000 shares available. In addition, you can also filter by sectors such as technology, finance, health or services.

Keep in mind that the real shares are divided into eToro (you can buy pieces of shares), this means that they will not be in your name, but are registered in the name of eToro, although eToro, internally, will assign them to you.

Forex (Currency)

By CFD

To invest in currencies using eToro you will do it through a CFD, something quite common. You can choose between zero leverage (x1) up to x30. They have a total of 52 CFDs (eg EURUSD, GBPUSD, EURGBP or USDMXN) to trade currencies – this leverage is for retail investors.

Cryptocurrencies

With your own wallet

It is possible to buy 16 different cryptocurrencies on eToro, among others: Bitcoin, Ethereum, Ripple, Dash, Litecoin, Cardano or Iota. eToro has a wallet available (it must be installed on the phone) that will allow you to send the cryptocurrencies you buy to an external wallet (eg yours).

It is possible to operate with X1 or X2 leverage, you can also add limits for stop loss and take profit – leverage for non-professional profiles.

CFD

Great variety

eToro originally emerged as a market maker for trading CFDs (derivatives). You can trade CFDs on stocks, ETFs, indices, commodities, cryptocurrencies, and currencies. CFDs have the particularity that they allow you to trade with leverage and trade short (against an asset).

ETFs

No commissions

With eToro you can invest in more than 150 ETFs from managers such as iShares, Vanguard, Alerian, SPDR or JPMorgan. It is not possible to use stop loss or take profit.

Investment funds & Fixed rent

No

You will not be able to invest in mutual funds with eToro, the closest they have are ETFs (Exchange-traded fund).

Commissions and fees

Purchase and sale of assets

Economical

eToro operates based on a spread. This means that the purchase price will be a little more expensive (for you) than the real price of the asset, and the sale price of the asset a little cheaper (for you), in this way they earn money. Keep in mind that investing in stocks has no commissions at this time.

Deposit fees

No commission

There are no fees for depositing funds, just the commission for currency exchange if you don’t use dollars.

Commissions for withdrawals

5 $ US per refund

You have a standard commission of $ 5 US for each withdrawal you make.

Currency exchange

Adjusted

The main currency of all eToro accounts is in dollars, so when you enter or withdraw money you will be charged a commission for this service – between 50 and 150 Pips for euro / US dollar.

For example, if € 1 equals US $ 1.1189, your exchange fee when depositing € 10,000 would be US $ 111.39.

Financing interest

Night and weekend



Like all brokers, eToro charges a small commission for lending you money (if you trade with leverage and don’t close a position before 5:00 p.m. New York time). There are two types of fee, the overnight fee (for positions not closed during the day) and the weekend fee. Keep in mind that if you do not have a balance, a negative balance may be generated in your account.

When you open a position with eToro you will be informed of the night and weekend commissions that you will have to assume if you do not close the position.

Inactivity commission

Between 4 and 12 months

There is an inactivity fee of US $ 10 per month if you have an inactive account. Logging into eToro from time to time would be enough to avoid this fee. Your account will be ‘inactive’ if you have a balance and you don’t log in for 12 months, or if you don’t have a balance and you don’t log in for 4 months. Please note that eToro claims that it will not sell any of your positions to charge you that inactivity commission.

Other fees

Nothing

They do not charge a commission for administration or account opening. There are also no extra fees for using the Copy People or CopyPortfolios feature.

Is eToro safe?

With eToro you can configure your account so that when you log in, it asks you to confirm a code using your phone (eg they send you an SMS), similar to logging in with a bank.

eToro Guía: Copia las Inversiones de otras [España 2021]

This extra layer of security can be interesting so that no one can gain access to your account without your authorization.

On the other hand, you can trust that eToro is not a scam, it is an online broker that has been operating since 2007 and has millions of users (investors) around the world.

It is also monitored by various bodies and has to comply with the regulations of the Cyprus Securities and Exchange Commission, the Financial Conduct Authority of the United Kingdom and the Australian Securities and Investments Commission – all of these equivalent to the CNMV in Spain.

EToro fees and commissions

  • By exchange rate: The main commission that you will have to face with eToro is the exchange rate if you do not operate with US dollars. As I have been repeating to you, every time you deposit or withdraw funds in eToro you will have to do it in dollars, you can make the deposits in other currencies such as euros or British pounds, but they will charge you (as everyone would) a commission (p. ex. the change from EUR to USD goes from 50 to 150 pips).
  • Account opening: eToro does not charge anything to open an account.
  • Inactivity: But keep in mind that it will charge you an inactivity commission (be careful, it is US $ 10 per month) if you do not log into its platform in 12 months if you have funds or 4 months if you do not have funds.
  • Deposit: For depositing money there is no commission with eToro (although if you do not deposit your capital in US dollars you will have to pay the exchange rate commission, read above).
  • Reimbursement: A commission of 5 $ US will be charged when withdrawing funds, to reduce the impact of this, try to withdraw funds less times and for larger amounts.
  • Night: This is the financing rate that eToro (or any other online broker) will charge you if you have open positions (using leverage) before the market closes. This is a small amount, but it is for each day that you do not close positions so it can end up being a good peak.
  • Weekend: This is a commission similar to the previous one, but it is the one that applies to the weekend. Come on, if on the Friday before the market close you continue with an open leveraged position, you will have to pay for eToro to lend you that money during the weekend.
  • Cryptocurrencies: For buying or selling cryptocurrencies eToro does not charge commissions, but operates with spreads (eg 0.75% for Bitcoin). But keep in mind that if you want to transfer the cryptocurrencies there will be a commission (eg 0.0005 for transfers in Bitcoins) that you bought in the broker, this has a commission.
  • Spreads (spreads): It is the difference between the price at which eToro will buy an asset from you and the price at which it will sell it to you. This price will always go a bit against you, they buy cheaper than they sell, and this is the way in which eToro and other brokers finance themselves.

eToro Fees and Commissions

Less exchange fees with Revolut and TransferWise

One way to reduce the commissions that you will have to pay for currency exchange is to use an online multi-currency account in which you can make deposits in other currencies (eg soles, pesos or euros) and also allows you to have an account in US dollars.

How does eToro work?

To use eToro you will need an internet connection and a browser (eg Chrome, Safari or Edge) with which to access the platform and investment. It is also possible to use eToro from the applications for Android and iOS (iPhone and iPad) that are freely available.

Open an account with eToro in 3 minutes

To open an eToro account you will only have to:

  1. Visit www.etoro.com and register (in addition to any email you can use your Google or Facebook account for registration).
  2. The next step will be to confirm your email.
  3. To finish and be able to access all the advantages you have to verify your account. Add your personal data (eg name and ID), your investment experience and confirm the phone number (they send you a code).
  4. To finish you just have to add funds, you can do it by transfer, using your credit or debit card or with PayPal and similar services.

Account types with eToro

There are retail accounts for people with no professional financial background, like (surely) you and me. This type of account limits the operation you can perform, for example, the leverage you can access is lower (and the risk is therefore lower, but it does not disappear).

The eToro Club

You may have noticed that in your eToro account, once you start, an icon with the word ‘Bronze’ appears under your username. This is your level in the eToro Club, it is nothing more than a loyalty program – the more money you invest with eToro the more value you have as a customer and the more advantages they give you.

The capital you have in eToro will mark your level. For example, you will need to have 5,000 US $ to be ‘Silver’, 10,000 to enter the ‘Gold’ level, like this until you have to exceed $ 250,000 in balance for ‘Diamond’.

For example, if you invest more than US $ 50,000 with eToro you will belong to ‘Platinum +’, and among other advantages they offer you a subscription to the Financial Times, they will give you invitations to events (I don’t know which ones). Personally, eToro Club is not what catches my attention the most about eToro.

etero club

Copy People and CopyPortfolios Features

eToro stands out for being a social investment platform, this means that there is a community of investors with whom you can interact and follow (if you want).

There are two types of innovations with eToro:

Copy People

With this function eToro lets you see what other eToro users are investing in (their profiles are public) and so you can copy their trades.

It is a system with which you will not have to replicate the operations that the trader that you choose makes manually, but eToro will automatically copy everything that this investor does with the money that you decide to invest.

eToro Copytrading popular investors

But why would they let you copy their operations?

Well, the fact is that eToro remunerates users who ‘copy’ their investment strategy with the Popular Investor program. They can earn up to 2% of the assets under management.

Copy Portfolios

Although it is somewhat similar to Copy People (automated investments on the eToro platform), CopyPortfolios has similarities to investing using a mutual fund. The difference is that the portfolio is on eToro.

Although there are no specific fees for using this service, when you open or close positions with eToro they charge you a spread, therefore you will have fees each time the fund managers buy or sell assets.

There are three types of investments using CopyPortfolio:

  1. Top Trader Portfolio: You can understand it as a mix of the investments of successful traders on eToro. Investors are typically joined by groups, for example users who invest in long-term stocks.
  2. Market Portfolios: Combine a selection of CDFs and ETFs on a specific theme, do not copy any trader or group of traders (previous case) but rather copy a specific portfolio created from algorithms (which I have not been able to find how they work). For example, you can find portfolios in the video game sector, Chinese technology leaders, or short investments in the banking sector.
  3. Partner Portfolios: In this case they are portfolios created by various finance firms that collaborate with eToro and you can find various types of portfolios. For example, a replica of the well-known investments of Berkshire Hathaway (Warren Buffett’s company) or major cryptocurrencies.
    In general, this type of investment with eToro is more focused on the medium and long term as it is an approach more similar to investment funds. Using the Copy People function (mentioned above) you can find profiles more suitable for the short term and higher risk.

In general, this type of investment with eToro is more focused on the medium and long term as it is an approach more similar to investment funds. Using the Copy People function (mentioned above) you can find profiles more suitable for the short term and higher risk.

Final opinions of eToro

I know, this eToro review got a bit out of hand and in the end it was a bit long. But the truth is that it is an interesting platform with many functions and some complexity. That’s why I wanted to tell you everything.

But let me give you a summary of the most important aspects:

  • eToro is a good option if you are looking to gain experience with trading or you already know what it is about. It’s also not a bad alternative to buying real stocks (more info), and it even has some ETFs that you can trade (this has some limitations, read above).
  • It is undoubtedly one of the most suitable investment platforms if cryptocurrencies are your thing. You can invest in these, or even buy them and transfer them to your own wallet.
  • In addition, all your Copy People and CopyPortfolios options can be very interesting for many – personally I use eToro only with Copy People, keep in mind that I take a high risk so I invest only a small part of my savings and divide the amount between several traders of renown.
  • The other big positive, in my opinion, of eToro is the ease of use. Their platform is really one of the easiest to use and it has a ton of options for starters. But keep in mind that this does not eliminate the risk of your investment.

On the other hand, they are not for everyone.

  • In general, beginners or those who do not have time to study the world of finance could turn to simpler solutions (eg indexed products) such as those of the roboadvisors of Indexa Capital, Finizens or InbestMe.
  • One of the not so positive aspects of eToro are the spreads, in general they seem somewhat high, but of course, they make starting investing simple (be careful, this does not eliminate the risk), you should consider what compensates you more.
  • And at least you will have to add € 200 as an initial deposit, although it is not much.
  • I have to say that in my experience their support is not the fastest either.

Alright, now you should have a very clear idea of ​​what to expect from eToro, and if it fits what you are looking for. But if you still have any doubts or have any questions, leave a comment and I will try to help you.

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