When it comes to forex and commodities trading, you have a lot of great options to choose from. But few, if any, online forex brokers are anything like eToro.
Indeed, eToro.com is one of the first companies of its kind. Founded by a Cyprus-based forex and commodities trading company, the social trading website now has over 2 million social users in countries around the world. eToro itself claims to have revolutionized the way that social trading is performed. What they have done in this field has been compared to what Facebook and Twitter have done in social media.
Not only has eToro managed to attract a very large number of active users from around the globe, it has also received critical acclaim for its social networking and trader communication features. So what’s the deal? Is eToro.com worth the type?
Below we break down the details behind this new social trading website for those that are interested in learning more or signing up.
What is Social Trading?
A quick note on social trading is necessary before our in-depth review of eToro.com.
One of the newest, most exciting ways to access financial markets, social trading links traders from around the world into one big network. In fact, this is the key to its success. Traders link up with each other, using each other’s skills to make smarter trades. This deep base of collected knowledge helps you take your trading to all new levels, even if you’re a forex beginner.
eToro has taken this idea to heart, expanding it and fine-tuning it. The end product is one of the most innovative social trading platforms around. The ability to copy the strategy’s of other traders as well as the wealth of educational content provided is what helps set eToro.com apart from the rest.
Founded in 2006 as RetailFX by brothers Yoni and Ronen Assia along with David Ring, eToro’s original mission was to make the world of financial assessment accessible to everyone, including newcomers.
Available as a download-only product, the original financial trading platform incorporated graphic trading visualizations to make trading more entertaining and easier to understand. The platform conceptualized the process of trading as a race between currencies.
Soon after, eToro expanded its product line with the launch of a professional trading application. Known as “Expert Mode,” this platform was aimed at more experienced traders. Another product, a web based trading platform known as “WebTrader,” was launched simultaneously.
However, the eToro.com as we know it today didn’t begin to show its true colors until 2010. At this time, the company launched their eToro OpenBook social investment platform. The OpenBook, which is still in use today, gives traders the ability to view, follow, and copy the actions of other traders using the network. A “Copy-Trading” feature was launched at the same time to make such trades even easier to perform. The mobile version of the application was launched later that year.
The headquarters for eToro.com are currently located in Tel Aviv, Israel. They are also present in one form of another in the United Kingdom, Cyprus, and Australia. Though not yet available in every country, eToro is quickly expanding.
eToro currently offers three primary trading platforms. These include their eToro WebTrader, eToro OpenBook, and eToro Mobile Trading Platform. Each of these three platforms is discussed in greater detail below.
The eToro WebTrader is the most popular trading platform offered by eToro.com. It gives traders the ability to trade from anywhere in the world that there is Internet access. The platform is also designed to enhance the user’s trading experience, making it as simple and as straightforward a process as possible.
The WebTrader interface is likewise simple and straightforward. Its clean and sleek design makes it very intuitive to use. It doesn’t take long to learn your way around the eToro WebTrader.
One key feature to note about the WebTrader platform is its chat function. This small feature sets eToro apart from most other forex broker trading platforms. It allows you to interact with other traders in real time. You can also choose to remain “invisible” if you do not want other traders to contact you.
The eToro OpenBook is perhaps the company’s greatest effort to incorporate social media into the forex trading environment so far. The platform allows you to see exactly what other traders are doing in real time. This then allows you to see what specific strategies and techniques are currently working.
Perhaps the biggest benefit of OpenBook is its use as an educational tool for new traders. Beginners are able to get insights into trading strategies by observing the actions of other traders. The ability to see how and why these moves are made considerably shortens the learning curve.
OpenBook uses many of the same actions as Facebook to make the trading experience more effective and accessible. For instance, you can “follow” other traders that you are interested in. You can also “copy” trades made by others. As “copy” implies, this function essentially allows you to make the same exact trade with just the click of a button.
eToro Mobile Trading App
The eToro Mobile Trading App is the last of the three forex trading platforms offered by eToro.com. It gives you the ability to stay up to date and connected on your smartphone or tablet.
The Mobile Trader allows you to access both the WebTrader and OpenBook networks. It does not come with a different network of its own. The eToro Mobile Trader app is available on both Android and iOS devices.
eToro offers four main account types that span their three trading platforms. These include the Bronze Trading Account (Basic Level), Silver Trading Account (Intermediate Level), Gold trading Account (Advance Level), and VIP Trading Account (Professional Level).
Each account type caters to a different type of client. Most beginners choose the Bronze account. This account is for those depositing under $1,000, though it does require a $250 minimum deposit. The Bronze account also has no annual fees and trading starts at just 3 pips for EUR/USD trading.
While the Bronze account is for those that want to deposit under $1,000, each additional level is for traders wishing to deposit increasing amounts. At the highest end of the scale is the VIP account, which requires a deposit of at least $20,000.
eToro.com also offers an additional type of trading account alongside the four mentioned above. It is a special Islamic trading account for Muslim traders that want to trade Forex while abiding by the no Riba principle.
Top Features of eToro.com
eToro offers a number of different features to enhance the trading experience and make trading on their platform easier and more effective. A handful of the most important top features to make note of are outlined below.
Account and Portfolio Features
eToro.com provides account history reports, downloadable account statements, and gain/loss reporting to help you with bookkeeping and tax planning. Real-time updates on your current trading positions, open orders, and account balance help you track exactly what you’re doing at all times.
Cross Currency Pairs
eToro.com allows you to trade in several cross currency pairs. These include the following:
- AUD/JPY (Australian Dollar vs. Japanese Yen)
- CAD/JPY (Canadian Dollar vs. Japanese Yen)
- CHF/JPY (Swiss Franc vs. Japanese Yen)
- EUR/AUD (Euro vs. Australian Dollar)
- EUR/CHF (Euro vs. Swiss Franc)
- EUR/GBP (Euro vs. British Pound)
- EUR/JPY (Euro vs. Japanese Yen)
Major Currency Pairs
eToro.com also allows you to trade in several major currency pairs. These include the following:
- AUD/USD (Australian Dollar vs. US Dollar)
- EUR/USD (Euro vs. US Dollar)
- GBP/USD (British Pound vs. US Dollar)
- NZD/USD (New Zealand Dollar vs. US Dollar)
- USD/CAD (US Dollar vs. Canadian Dollar)
- USD/CHF (US Dollar vs. Swiss Franc)
- USD/JPY (US Dollar vs. Japanese Yen)
A number of the features provided by eToro.com relate to the network’s trading technology. These include personalized alerts, automated trading, and real-time price quotes.
It is often said that the “e” in eToro stands for “easy,” and if the number of trading resources they provide is any indication, then this definitely could be correct. eToro.com provides charts for you to conduct research on investment products, market commentary from outside experts, and daily market news and updates from third party services.
eToro.com also offers a number of educational resources, many specifically aimed at beginning traders. These include trading and investment courses, training videos, and webinars. A glossary of important investment terms and the online trader community also make learning forex trading with eToro easy.
The services offered by eToro are reasonably priced. Joining is free and commissions are not charged on fees or trades. Indeed, the company’s only revenue comes from the spreads. A spread is the difference between the Ask and Bid price on what you’re trading.
In June of 2014, eToro began to charge overnight rollover fees/credits. Before this date, their only additional charges were their carryover and weekend fees. The eToro website provides a comprehensive, up-to-date list of all their spreads as well as their overnight rollover fees and credits.
Looking at this list on eToro.com, you might note that eToro charges slightly higher on the spreads than other online brokers. However, with this slightly elevated price comes increased performance.
For instance, slippage is extremely low when you copy the trade of another investor. This means that the difference between the price the investor traded at and the price you get when you trade is extremely small. Around 90% or more of copied trades were executed at the same price. As for those that weren’t, slippage only amounted to a maximum of 1 pip.
You’ll likely also notice that eToro’s overnight rollover fees are slightly higher on average than most other online brokers. If you are using eToro.com, this is something to keep in mind, especially because many traders leave their trades open for weeks and months at a time. It is essential to monitor open trades closely to avoid racking up rollover fees.
Pros of Using eToro.com
Now that yo+u have a solid understanding of the various platforms, account types, and features of eToro, as well as basic pricing information, it is time to discuss just how well all of these factors perform overall. Below are the top benefits of using eToro.com broken down in detail.
There is little denying that eToro is one of the most innovative social trading platforms around. The service immediately stands out from other forex brokers by connecting you with thousands of other traders from around the world.
Discussing and sharing trading insights helps make you a smarter investor. Simply put, a community of openness pervades eToro in an industry were investors are usually tight-lipped about their trading secrets.
Every aspect of eToro is designed to make the service as easy to use, for both beginners and experts alike, as possible. All of its features are simple and straightforward. The tools are easy to use and take little time to learn.
The launch of eToro’s OpenBook Social Investment Network in 2010 has made the service even more uncomplicated. Even the mobile version of eToro is intuitive. It allows you to trade on the move with just a few taps of the screen.
Though eToro undoubtedly appeals to trading experts, it is also carefully crafted with newbies in mind. Case in point: their free practice accounts. This account allows anyone to explore eToro and see what it is all about – for free.
Even the functionalities that have associated fees with normal accounts are free in the practice accounts. This includes the “Copy Trader” feature. The free practice account comes with $10,000 in virtual money to aid you in the learning process.
eToro lets you trail, track, and copy any other trader using their service. This is an invaluable benefit to beginning traders. Seeing what the top traders in the industry do on a daily basis has huge dividends. With just a few clicks, all the related data is yours. Better yet, it is updated automatically in real-time.
The company boasts that its “win ratios” average for those that copy traders is 80 percent. Many investors that choose to take this route watch for those top traders that make profitable trades at close to 100 percent. Surprisingly, there are numerous traders that do.
eToro offers instant 24/7 help and support. Known as “Gurus,” these top-level traders are there to help whenever you require them. The website boasts an easy to use chat feature for instant access to assistance and advice.
In fact, eToro is a great way to make extra money if you are a professional trader. They offer an incentive program for experts that want to generate a secondary source of income as an eToro Guru. The incentive program rewards Gurus up to $10,000 each month.
Dozens of educational resources are provided by eToro. It definitely has a leg up on other brokers as far as its trading academy goes. Examples of resources include step-by-step videos to help you understand the technical aspects of both trading in general and trading on the eToro platform in specific.
Webinars and e-courses are also available. These are organized by trading skill level to help you increase your trading skills no matter your level of experience. Finally, eToro has created their eToroPedia. It contains a wealth of information regarding every aspect of trading. eToro wants you to be as successful as possible.
Another way that eToro sticks out from its competition is with its one-click trading that takes risk management into consideration. Unlike other forex brokers, you are able to customize settings such as downside risk level and the amount of money to allocate to a trade. Basically, this allows you to use the one-click feature to enter a trade while remaining confident that your stop levels and risk are preset.
eToro is the exception when it comes to introductory offers in the forex industry. Unlike other brokers, they give you the option of receiving several rewards/offers when you first open an account. An example includes gift cards from companies including Amazon, Google, or Apple.
Recruiting others to use the service also pays off. eToro gives each party $100 through their referral program for each new member that is recruited to the platform.
Stability is a must when it comes to trading with an online broker. Fortunately, eToro is well funded and has a great history of solid financial backing. The company handles tens of billion dollars each year and boasts an impressive customer growth rate of 20 percent. Simply put, eToro is well-funded and here to stay.
Cons of Using eToro.com
There is no such thing as perfection. And despite all of its great benefits, eToro.com also comes with its fair share of negatives. These include the following.
eToro is not the cheapest forex broker around. For example, the stated spread on EUR/USD comes in at 3 pips. Other brokers have similar spreads for as low as 1 pip on the same currency pair.
With only 16 currency pairs on offer, eToro has limited currency pairs compared to other online forex brokers. Other top brokers offer 30 or more pairs. Of course, the number of currency pairs that you require depends on your personal needs, preferences, and skill level.
eToro definitely has no shortage of great tools and features, especially those geared towards a beginner audience. However, they do fall slightly behind when it comes to the implementation of charts. These are generally pop-out windows that do not inlay within a single web screen. With that said, it is slightly cumbersome to toggle between the chart window and the execution window when using eToro.
The Web Trader platform allows for very little in the way of customizability. You are not able to move panes or customize the layout of the screen. Though this won’t affect the majority of traders, it might hinder expert level traders that desire a high level of customization.
Though eToro.com is rapidly growing and expanding, it is not yet available in the United States. It is also unavailable in India, Sri Lanka, and Bangladesh. However, this is likely to change in the near future as the company has placed much focus on expanding to the United States as soon as possible.
eToro.com Customer Support
When using eToro.com as your forex trading home base, you have immediate access to some of the best customer service in the business. Indeed, eToro possibly has the absolute best live customer support of any online forex broker around.
For starters, eToro offers 24/7 live customer support. You can contact company representatives through live chat, email, or on the phone. All of their customer service representatives are friendly, professional, and incredibly knowledgeable. If you have a question or concern, they’ll be able to help you out in a jiffy.
Since eToro serves so many different areas of the world, they have a number of support lines dedicated to their international customers. Better yet, they employ a diverse customer service staff that can provide assistance in a number of different languages.
Finally, it is important to point out that most eToro traders never need to seek out live customer support. The eToro Gurus along with the company’s vast and easily accessible database of information makes finding the answer to your questions on your own very easy. The eToroPedia section of the website is particularly helpful.
Final Thoughts on eToro.com
eToro is a great choice for those interested in forex trading. It benefits both beginners and experts alike. However, much of the company’s focus is placed on beginning traders as well as those that are interested in social networking while trading. That’s not to say that experienced traders won’t love the service though.
Simply put, anyone that genuinely enjoys both social networking and the investing process will love eToro. It’s a great way to learn about forex trading from more advanced investing experts. eToro gives you the tools that you need to become a successful forex trader yourself or to take your current forex trading to the next level.