Being able to tap into different markets worldwide requires you to often use an online broker. Long gone are the days where you needed to call your broker and place a trade over the phone. In today’s fast-moving markets, traders and investors can simply access all of their financials with a few clicks. On the other hand, this entails that you’ll be trusting this broker with your trading activity. From online safety all the way to fast executions, there are many aspects to look for when choosing a broker. In this article, we’re going to look at Etoro, an online broker that managed to establish itself as one prominent broker. In this Etoro review, we’re going to see the good, the bad, and the ugly.
So buckle up, grab a drink, and let’s see if eToro is worth it to trade cryptos and other assets.
What is eToro Broker?
eToro is a social trading platform that started operating back in 2007. When we say “social trading”, this means that traders have the ability to look at other users’ trade setups, discuss and ask questions in a forum-like community. The platform offers access to stocks, commodities, indices, and crypto. This is done in a CFD setting.
CFDs or contract for difference is a type of trading that allows traders to profit from the price fluctuation of the underlying asset, without owning it. This allows traders to worry less about keeping the asset, and focus more on their trading strategies. Of course, this entails that security and good management is an important factor when trusting a broker. Many traders lost big amounts of money due to mismanagement from brokers in the past. That’s why regulators tend to enforce strict measures to make sure that those events don’t happen.
It is worth noting that eToro has not only been in the market for more than 14 years but also as valued in their last funding round at around USD 10 Billion. The company is planning to go public, and this alone instigates trust and solid business ethics.
Is eToro a Good Broker?
In order to assess whether a broker is good or not, there are a lot of areas to check. Traders always seek a solid platform to trade on, low fees, fast execution, and reliable customer support. With eToro, they seem to nail most aspects. That’s why we’re going to divide the positive and the negative aspects, while specifically go into the details and break down each area.
What’s GOOD about eToro?
- Easy to use Platform: If you are new to the trading game, eToro is the perfect place to start. Their platform is super-easy to use. With a few clicks, you can place a trade with little to no previous experience. It’s basically like using facebook for the very first time, but in the trading world.
- Good support: eToro’s support team is very professional. They will alway reply with a helpful and tailored response, rather than an automated message.
- A wide variety of assets: Most of the times, you will find a good broker and decide to start trading with them, only to find out after a long KYC process that they don’t offer the stocks, crypto or other assets which you were looking to trade. eToro on the other hand offers a wide variety of assets to choose from. Specifically, they offer more than 3,000 instrument to trade from.
- Low deposit requirements: You can start trading with eToro with as low as USD 50. The barriers to entry are too low to ignore. Most of the times, brokers require large amounts to deposit in order to start trading. This defeats the purpose of testing a live account with a broker, and see the real trading experience. With eToro, you can easily do that by depositing a dinner’s bill.
What’s BAD about eToro?
- Expensive fees: Yes that’s right, when a broker doesn’t charge commissions on your trading activities, he’s going to probably take his profits from somewhere else. Spreads on eToro are known to be slightly higher than industry standards. But unless you are someone who trades frequently and with high leverage, this shouldn’t be a big problem.
- Bad UX for charting: It is true that eToro is a trading platform, but the charting tools that they offer has very bad UX. Other than it being “ugly”, it most of the times lags, doesn’t save chart setting and can be annoying for multi-screen traders. It is advisable to chart and do technical analysis elsewhere, and then come to the platform to place trade setups.
- Slippage: Like most CFD brokers, eToro suffers sometimes from slippage. For those who don’t know, slippage is the event where a trader tries to open/close a position, but the order fails to be placed. This is most of the times due to abnormal volatility on the market. Although understandable from the broker’s side, traders can lose BIG TIME when they decide to close a profitable position, but the market starts falling against their setup and the broker doesn’t take their orders.
- Limited leverage: If you are someone who day trades and rely on short-term trades, you will barely find any opportunities with eToro. Because of their low leverage offerings, most trades should aim for the medium to long term. Stocks can maximum be at 20x leverage, while FX are set to 200x for some, and even less for others. For Cryptos, it is around 10-20x at best. On top of that, this is all subject to change overnight with no further notice in times of high volatility in the market.
Conclusion – Should I use eToro to Trade?
If you are looking for an easy-to-use platform where you can trade hassle-free, eToro might be a good start for you. Their community is always active and is incentivized to regularly publish good trade ideas. This is thanks to their Copy-trade system that rewards good traders and community influencers with a percentage of the profits from their following, from eToro’s profit share. Additionally, their low barriers to entry make it attractive for first-time traders to tap into the investment world.
If you are looking to start your trading journey with eToro, click here!
Disclaimer: 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.