eToro specializes in social trading and investments. You can follow a trader or traders of your choice or choose to invest in any number of pre-determined portfolios. The firm is aiming more for investors than for short-term traders or scalpers. It offers an unusually wide range of stocks (around 3,000) from markets around the world, both in CFDs and cash. Trading in stocks and ETFs is free, while fees for trading FX and CFDs are slightly higher than the market average, although given the expected longer holding period this is probably not significant. You can only access eToro through its proprietary platform, which is available in both web and mobile form. It’s intuitive and relatively easy to use. The company has been in business for 15 years and has some serious regulation in the US, UK, Europe, and Australia, making it a safe choice.
Note: clients in the US can only trade stocks, ETFs, and cryptos through eToro.
eToro is probably the pre-eminent broker for social trading and a good choice for those who want to invest rather than trade. If you want to follow someone else’s trading (or find people to follow you!), or put your money into stocks or funds for a period of time, it’s top-notch. The platform is intuitive and simple and the company is as safe as any broker around.
The broker is not the best choice for those who want to trade aggressively, e.g. buy now and sell in 10 minutes for a 5-pip gain.
eToro is different from most other brokers. Rather than aiming at the go-it-alone crowd, it specializes in social trading and investments. Its motto is “Empowering a global community of investors.” Note they say “investors,” not “traders.” Its target audience is a) people who want to follow other people’s trading and conversely b) those who want to make some extra money by having others copy their trades. You can follow a trader or traders of your choice. Or you can let eToro and its partners manage your money by putting it into one of their professionally managed portfolios of stocks, bonds, commodities, FX, cryptos, or some combination of them.
On the other hand, scalping is expressly forbidden and there’s no capacity for automated trading (robots).
eToro sometimes acts as a market-maker, sometimes as an agency broker, depending on which entity your account is with. For example, the UK and European entities are both market-makers but can also act as agency brokers if the firm decides it’s necessary for risk management
Pros:
Cons
The company has been in business for 15 years. Although it isn’t publicly listed and doesn’t have a bank parent, it has some serious regulation in the US, UK, Europe, and Australia, although people onboarded from elsewhere may be under the Seychelles entity. So I’d say it’s as safe as an online broker can be.
Certain premium clients who are trading with the European or Australian entities are automatically covered by eToro’s private insurance policy. This is a 1 million EUR/GBP/AUD per client insurance policy provided by the legendary Lloyd’s of London in the unlikely chance that eToro goes bust. Moreover, clients’ funds in their eToro account are held in US banks and are FDIC-insured up to $250,000 per account.
As far as I can tell, the company’s only run-in with the authorities was a relatively minor incident in 2013, when CySec fined eToro a small amount for unspecified “weaknesses” in “the organization/operation structure.” These flaws have since been rectified and there’s been no trouble since then.
Can I trust eToro? Yes, as far as we can tell. (Remember though that there are no guarantees in life except death & taxes.)
Yes, eToro is regulated in several countries by some of the world’s strictest regulators. The regulator you’ll be covered by depends on where you live:
Regardless of how or what you trade, the broker you choose should be safe to use, affordable, and offer everything you need to trade at your best. That’s why we’re highly selective. We only feature brokers regulated by a trusted authority and we make it easy to compare their fees & features, so that you can make an informed choice.
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