eToro, the Social Trading broker, keeps on innovating and improving its services for its customers.
Starting from May 1st, 2018, as announced by eToro itself: “Every PURCHASE trade without using a leverage, of any asset, will result in the actual purchase of the underlying asset by eToro. This is exciting news, as for the first time, it will be possible to invest in assets of the main global markets, crypto currencies, ETF, CopyFund, and many other financial activities, all from one account.”
Trading on market assets through eToro has now been available for several years, but it was all carried out through CFD, Contract For Difference, i.e. when buying an asset, the trader didn’t actually own the asset, but just a derivative contract, which simulated the price of the underlying asset, and would only profit from the price difference when the operation was closed.
eToro was still ahead in this field, as despite using CFDs rather than real assets, any eventual dividing generated by the assets was paid as if the asset had been real (you can easily test out eToro’s CFD features and dividends opening a simple unlimited demo account)
Being derivatives however, trades opened as CFDs had to pay several small commission fees, mostly the Rollover fee, on operations open for several days, or even months (which is very commong for asset investments), and could negatively influence the profitability of the operation.
Today, purchasing an asset without margin limit (i.e. Without using financial leverage), eToro will purchase the actual asset for its client, which will pay only an initial spread commission.
To clarify, only buy operations, only with X1 leverage, will result in the actual purchase of the underlying asset with this new mode. All Short trades, or trades using leverage, will imply the CFD mode, as it has been until now.
For Copy Trading enthusiasts, this new feature works in Copy Trading as well. A trade copied by someone else, as long as it’s purchased with a X1 leverage, will result in the actual purchase of the underlying asset.
For further informartion read here.