eToro Review 2020 – Reviews, Tutorial, Pros and Cons, Comments

Filippo Last Updated: February 2019 20 min read
security 93
cost 64
trading 71
education 72
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eToro (full name was “eToro – Your Social Investment Network”),  is undoubtedly one of the most recognized names in the forex broker industry. As a forex trader, there is no doubt that it will pop on to your radar as a potential broker of choice.

This is particularly true if you want to engage in social trading by copying or replicating other people’s trades. Here, eToro is at the very top of the game. Beyond this, they are also known as a great broker for crypto assets trading and CFDs. They boast more than 7 million users around the world and some of the best top-tier regulation possible. In all, this makes them very trustworthy and a top, reliable broker.

Through this eToro review, you will learn everything you need to know to make the best choice about your forex trading future with eToro

eToro review
Security

It is true that there are many scam forex brokers in the industry. This means you need to be as careful as possible when choosing your broker. Luckily, eToro does not fall into this category and has top security measures and regulation in place.

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Foundation and Offices

Mentioning regulation, you should know that eToro are very well regulated and hold several licenses from the top-tier financial regulators. They also have a physical presence in many countries around the world. This includes hundreds of staff in a variety of offices in the following locations worldwide: Limassol, London, New Jersey, Sydney, Shanghai.

Regulations

eToro is comprised of four main companies that operate worldwide. These are as follows:

  • eToro (Europe) Ltd, a Cyprus based investment company, with registration number HE20058. eToro Europe is regulated by the Cyprus Securities & Exchange Commission (CySEC) with license number 109/10.
  • eToro (UK) Ltd is authorized and regulated by the Financial Conduct Authority (FCA) with company reference number 583263.
  • eToro AUS Capital Pty Ltd is authorised by the Australian Securities and Investments Commission (ASIC) to provide financial services under Australian Financial Services License  number 491139.
  • eToro USA is operated by eToro USA LLC, which is registered with FinCEN as a Money Services Business.

In addition to being well-regulated by some of these top-tier authorities in the sector, eToro is also ESMA compliant and regulated in almost every European country. Thanks to this wide-ranging regulation, eToro is available to traders in almost every country of the world including the United States.

In the United states there are some additional limitations when it comes to trading. If you are a US resident who wants to trade with eToro, then check out our post and tutorial for the brand new eToro USA.

Money Protection

One of the most important aspects of forex trading is making sure your funds are safe. This is understandably a top priority for all traders and something that eToro takes very seriously.

To that end, eToro offers two protective measures to help keep your funds as safe as possible when trading with them.

First of all, they keep your deposited funds in segregated accounts within top-tier banks such as Barclays and Goldman Sachs. This is a regulatory requirement in many areas to ensure that the funds of forex traders are kept safe. This helps ensure that your funds cannot and will not be used by the broker for any reason other than your trading decisions and that you will be protected if the broker encountered financial difficulty or bankruptcy.

The second protective measure in place is negative balance protection. This means that you can’t lose more than the balance of funds in your account. What typically happens to ensure this is that if you reach a point where you can’t finance your position anymore, then it will be automatically closed by the broker. This means your account balance can never go below $0.

Not Accepted Clients

eToro accepts customers from all over the world, except from:

    • Botswana
    • Burundi
    • Chad
    • Congo Republic
    • Democratic Republic of the Congo
    • Ethiopia
    • Guyana
    • Guinea
    • Guinea-Bissau
    • Libya
    • Mali
    • Namibia
    • Somalia
    • Sudan
    • Syria
    • Uganda
    • Afghanistan
    • Brunei
    • Iran
    • Japan
    • Laos
    • Myanmar
    • North Korea
    • Turkey
    • Yemen
    • Albania
    • Belarus
    • Bosnia and Herzegovina
    • Crimea Region
    • Serbia
    • Canada
    • Cuba
    • Nicaragua
    • Palau
    • Samoa
  • Pros
    • International broker
    • Top tier regulations
    • Your funds are safe
    Cons
    • Limited features in the US

    eToro review
    Costs and Accounts

    Another clear factor when determining your choice of broker is definitely the associated costs, fees, and availability of account types that fit your trading style.

    Here is a look at exactly what eToro provides in that regard.

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    Account Types

    Before getting started with any broker, you should give careful consideration to the type of account that will be the best fit for you.

    Demo

    The eToro demo account is an ideal place to get started. They offer a completely unlimited demo account to try out. This can be opened with the most basic of personal information. All you will need is a username, email address, and telephone number to get started.

    This will allow you completely free access to a practice account with a virtual $100,000 balance to trade with that functions exactly like a live trading account but is risk-free. Once you have had enough practice to get to know the platform, you can then proceed to opening a live eToro account.

    Standard Account

    The first logical step for many forex traders who choose eToro is to open an eToro Standard Account. This is the only type of live trading account the broker offers to non-professional forex traders.

    To get started with this account type you will need some documents for the fast verification process. This includes the following to verify both your identity and your address:

    • ID/Passport
    • Proof of residence (utility bill, bank statement)

    You should also ensure the proof of residence shows your address as displayed on your account and is dated within 3 months to speed up the process. As standard you will also receive a follow-up call from an eToro operator to guide you on the next steps after signup and answer any questions you may have.

    The eToro minimum deposit on a standard account is $200 with a few exceptions:

    • USA: $50
    • Australia: $50
    • Israel: $10.000

    You should also note that until your account has been fully verified you cannot deposit more than $2,250 or the equivalent amount. Therefore, best practice is to make sure you complete the full eToro verification process as soon as you can.

    Islamic Account

    An eToro Islamic account is available although it needs to be requested if you are an Islamic trader. This account, as with all Islamic trading accounts, does not apply a swap fee as this is considered haram under Sharia law.

    If you do need this account type then you should make contact with the eToro customer support team. The eToro minimum deposit here will be $1,000.

    MAM/PAMM account

    An eToro MAM/PAMM account is not offered by the broker. However, due to the nature of the social trading platform and the fact that you can copy the trades of others, you could consider this to replicate some points of a PAMM account.

    Professional Account (eToro PRO)

    eToro, in accordance with ESMA regulations, classifies its traders into two types. These are retail, and professional.

    In order to qualify as a professional trader with eToro within the EU, you will need to satisfy at least two of the following requirements:

    • Large Trade Volume: you must have made at least 10 forex transactions with a minimum total value of $500.000
    • Financial Portfolio: This should exceed $500.000. Your private assets are not counted toward this value. Just the balance and open positions you have.
    • Professional Experience: You must have at least one year of working experience within the financial field.

    As an eToro professional trader, you  will be eligible to receive a variety of additional benefits including a dedicated account manager, higher leverage (up to 400:1), and more competitive spreads and fees on forex trading. As a professional eToro trader, you also retain your negative balance protection.

    eToro Club

    The eToro Club is a relatively new addition for the broker and is a premium program that gives you access to certain perks depending on your account level. These benefits can include a reduction in fees and spreads among other benefits.

    The five levels of the eToro club membership are:

    • Silver
    • Gold
    • Platinum
    • Platinum+
    • Diamond

    You can check our dedicated guide on the eToro club for more information.

    Account Base Currency

    The only base currency that is offered as of now by eToro is USD. This means that if you deposit or withdraw any other currency besides the USD, you will have to pay a conversion fee.

    Deposit

    eToro deposit methods will vary depending on your country, but typically you can fund your account through wire transfer, major credit/debit cards (Visa, MasterCard, Maestro), or eWallet methods including Neteller and PayPal.

    EUR, USD, GBP, AUD, and RUB are generally accepted currencies around the world with eToro but there may be some exceptions depending on your local area. A good example of this is that RMB deposits are accepted in China via UnionPay.

    As mentioned, your first eToro minimum deposit should be at least $200. After this, deposits of at least $50 are required.

    Deposit Fees

    eToro deposit fees are generally limited. This is particularly the case if you are depositing in USD. If you deposit in another currency then you may be liable for a conversion charge. This charge will also depend on the method of deposit you use.

    For wire transfer deposits in another currency, the commission is a flat 50 pips regardless of currency. For credit and debit cards and eWallets, the conversion commission is as follows:

    • EUR – Pips 250
    • GBP – Pips 50
    • AUD – Pips 100
    • RUB – Pips 50

    Keep in mind that your bank may also apply a commission fee. You should consult them about this to see their policy.

    Withdrawals

    eToro withdrawals can be made through the same methods as deposits. As mentioned, this includes wire transfer, credit/debit cards, and eWallets.

    It is important to note that due to anti-money laundering regulation, your withdrawal method must match your deposit method.

    Withdrawal Fees

    eToro withdrawal fees are a flat $5 fee or the equivalent amount in your currency and you can only withdraw amounts that are greater than $50.

    Spreads & Commissions

    eToro spreads are offered as variable only. There are no fixed spread options with this broker. Spreads through eToro you may feel are marginally higher than those of their competitors. This is due to the presence of a very strong copy trading infrastructure that you as a trader can also benefit from.

    The forex spread generally starts from around 1 pip on major currency pairs. With that said, spreads between 2-4 pips are quite common. eToro does not charge any commission on trades.

    To give you a clearer picture, here are some sample spreads on eToros most traded markets:

    • EUR/USD – 3 pips
    • Gold – 45 pips
    • S&P500 – 75 pips
    • Bitcoin – 0,75% of the crypto value
    • US Stocks – 0.08% of the asset value

    Stocks and ETFs real trading commissions

    One important aspect to note when trading with eToro is that you have the chance to trade both stocks and ETFs as real. This means trading without leverage and you own the underlying asset. In this case, eToro applies no commission on these trades. They may however, keep a percentage of the dividend.

    This depends on the country the company is based in and as an example, for US companies and ETFs, this amount would be 30% of the dividend. eToro customer support should have more information on the different percentages for each country if needed.

    eToro Fees

    Another major consideration for any forex trader, new or experienced, is fees. Let’s see how eToro shapes up in this respect:

    Overnight fee

    There is an eToro overnight fee as there is with almost every other broker. This is also known as a swap or rollover fee and is an interest to be paid depending on the assets and how long the position has been kept open. This fee applies on leveraged trading only and short positions. So, if you are trading 1:1 on stocks, ETFs, and crypto, it can be avoided.

    Since it is not Sharia compliant, it can also be avoided if you have requested and been approved for an eToro Islamic account.

    Inactivity fee

    eToro does charge an inactivity fee. This fee currently stands at $10. The eToro inactivity fee only comes into play though if you have not logged into your account for 12 consecutive months.

    If there are not enough funds in your account to pay the inactivity fee, then the account may be closed.

    Pros
    • Unlimited demo account
    • Low minimum deposit in most cases
    • 0% commissions on Stocks and ETFs when traded as real
    Cons
    • Relatively high spreads
    • Relatively high eToro Tax on dividends
    • Very high minimum deposit for Islamic account

    eToro review
    Trading

    eToro is considered kind of an unconventional broker when it comes to trading features. Let’s take a closer look at exactly how these operate.

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    Trading Features

    Most assets are traded as regular CFDs and you also have the option of trading real 1:1 on cryptos, stocks, and ETFs.

    Combined with this, the major trading feature and focus of eToro is on copy and social trading. This serves to make it a very dynamic choice as a forex broker.

    Executions

    eToro is an STP/NDD broker. This straight through processing order method with No Dealing Desk appeals to many traders who are more experienced and can provide a range of positives when trading forex and other markets.

    Sizing

    The minimum lot size permitted by eToro when trading with CFDs is 1 micro lot. This is equal to 0.01 standard lots, or 1,000 currency units and makes trading accessible for all including new forex traders who are trying to manage risk levels effectively.

    This minimum lot size can change the minimum investment you need depending on the asset involved. Here is an example:

    • Forex: $33 (30:1 leverage)
    • Indices: $200 (20:1 leverage)
    • Commodities: $200 (10:1 leverage)
    • ETFs: $50 (real 1:1)
    • Shares: $50 (real 1:1)
    • Crypto: $25 (real 1:1)

    Techniques

    There are of course many specific trading techniques applied by experienced traders. These include hedging and scalping, both of which are not permitted by eToro.

    There is also no spread betting allowed with the broker dues to regulation though you can implement APIs with the eToro platform. These are considered a type of algorithmic trading and may help you to identify patterns or trends in the market.

    Risk Management

    Managing risk in forex trading is another very important area for all traders. There are many ways you can implement through eToro in order to help minimize your risk levels.

    These include orders like stop losses, take profit, limit orders, and trailing stops. The broker will also initiate margin calls to alert you when your equity is at a certain level against your open positions. In all, there are plenty of features to assist you with effective risk management through eToro.

    Leverage

    The eToro leverage available depends which regulation you fall under and which country you are from.

    The following limitations are defined by the European Securities and Markets Authority (ESMA), and apply to retail clients of eToro (Europe) Ltd (CySEC regulated) and eToro (UK) Ltd (FCA regulated):

    • 30:1 for major currency pairs (such as EUR/USD)
    • 20:1 for non-major currency pairs (such as EUR/NZD), Gold and major indices
    • 10:1 for commodities other than Gold and non-major equity indices
    • 5:1 for CFD stocks and ETFs
    • 2:1 for cryptocurrency

    The following limitations apply to Professional clients and clients of eToro Australia Capital Ltd (ASIC regulated):

    • 400:1 for currency pairs
    • 100:1 for commodities and indices
    • 20:1 for selected CFD stocks
    • 10:1 for other CFD stocks and ETFs
    • 2:1 for cryptocurrency CFDs

    If you are a US-based forex trader, the only available leverage available to you is 1:1 since CFDs are banned in the US and you can only trade Cryptocurrencies.

    You can check our guide where we can help you gain a better understanding of eToro margin and leverage.

    Platforms & Mobile

    The next important area we will look into is the available trading platforms and how you can trade through mobile or other devices with eToro.

    Charting and Trading tools

    The eToro platform provides a range of charting indicators and tools you can use to help with trading. These include a total of 13 chart drawing tools and more than 60 other tools and indicators.

    There is also a very useful comparison tool that you can use to compare two or more assets.

    Proprietary (Desktop platform)

    Trading with eToro you will find that they offer only one type of platform. This is their own proprietary trading platform that has built a reputation over the years for being extremely intuitive and user-friendly. You will find this platform to be well organized and with less of a learning curve than some others.

    Within the platform itself, one of the most important areas is the “feeds” section. This will allow you to fully engage in the social side of the platform with other traders. Here you can share information, predictions, news, images, and more to help each other.

    Mobile

    Mobile forex trading is essential in today’s market. This area is again well provided for by the proprietary eToro mobile trading platform which can be used through your mobile or smart device on Android or iOS although not through a smart watch.

    There are a variety of language available including English, German, Spanish, French, and Italian and the layout is similar to that of the desktop platform and it also has a dedicated feed and favorite assets section as well as a customizable watch list and the ability to send push notification alerts to your device depending on your need.

    The two platforms are in fact very similar with the only difference being a reduction in drawing and charting tools on mobile. There is however, still plenty available to keep you very up to date and able to trade on the go with eToro mobile.

    Markets

    What would a top forex broker be without markets to trade? Here is everything that eToro has available:

    Forex

    eToro offers 47 Forex Pairs including major, minor, and exotic choices.

    Spreads start from 1 pip on major forex pairs.

    Commodities

    eToro offers 13 Commodities:

    • 7 metals (Gold, Silver, Copper, Platinum, Palladium, Nickel, Aluminum)
    • 4 Soft Commodities (Wheat, Cocoa, Cotton, Sugar)
    • 2 Energies (Oil, Natural Gas)

    Indices

    13  major global indices are available to trade including:

    • Asia: China, Hong Kong, Japan
    • EU: UK, France, Germany, Spain, Europe
    • USA: US Dollar Index, DJ30, NASDAQ, S&P500

    Crypto and eToro Wallet

    eToro offers:

    • 17 Cryptocurrencies (including the most famous like Bitcoin, Bitcoin Cash, Ethereum, Ripple, Dash, etc.)
    • 1 Crypto-Metal (GOLD/BTC)
    • 16 Crypto-Crypto
    • 64 Crypto-fiat pairs

    On the crypto trading, eToro owns and recently launched the eToroX crypto wallet. As an eToro trader you can transfer your cryptos to your eToro wallet if you want to store them.

    If you are a US-Based trader with eToro, then this is currently the only category available for you to trade in.

    Stocks

    • 17 Stock indices with over 950 stocks in total
    • 13 european stock indices
    • 2 US stock indices
    • Saudi stock index
    • Hong Kong stock index
    • penny stocks

    With eToro you can filter these stocks by Country or by sector. This can help you narrow down the specific areas and markets that you want to target for trading.

    ETFs

    eToro offers 145 ETFs.

    eToro ETFs are provided mostly by iShares, Vanguard and SPDR

    Products

    There are a number of specific products provided by the eToro company. Most are integrated within your standard eToro trading account while some may be slightly spun off from that, but still available for you to use as an eToro trader.

    Let’s take a look:

    CopyTrader

    With the eToro CopyTrader, this forms an integral part of the eToro brand offering. Here you can start copying the trades of others with a minimum investment of $200 for each trader.

    If you would like others to copy your trades, you will need to contact eToro and they will make the final decision on whether your profile is eligible to become a signal provider. If this does happen, you will be eligible to earn a commission from your followers.

    We will take a more in-depth look at eToro Copytrader a little later in this review.

    CopyPortfolios

    eToro CopyPortfolios are basically baskets of common assets or instruments almost like ETFs or even indices on a smaller scale. Commonly known as “blends” or “Sectors” outside eToro, they are typically groups of traders, shares, or certain assets that you can invest in and by doing so, you are investing in the overall growth of that portfolio. There are some different types of CopyPortfolio that you can invest in as follows:

    Top Trader: These are different pools of the best traders. Here you may find traders that use Algorithmic Robots, traders that had particularly strong growth in the past quarter, or others with something in common.

    Market Portfolios: Market portfolios focus on shares. When choosing the CopyPortfolio “Cryptos”, you are investing into the whole Cryptocurrency world which includes both cryptocurrencies and companies that invest in them.
    Considering other miscellaneous investments here,  there’s the Copyportfolio “Panicmode” which invests in assets such as Gold, S&P500, and more low-risk instruments. In total there is a selection of 19 market portfolios available at present.

    Partner Portfolios: These are basically Market Portfolios created by third parties collaborating with eToro. They often try to replicate the portfolios of successful investors and mutual funds.

    Investing in eToro CopyPortfolios can be an excellent way to provide yourself with a more diverse portfolio of investments and also help to balance risk in your forex trading or within other markets.

    Real Stocks and ETF

    As mentioned previously, eToro in most countries allows you to invest in CFDs trading on leverage, or in some cases to trade without leverage and own the underlying asset in the case of ETFs and Stocks.

    There are a few key differences here in that, if you trade CFDs, you may incur interest in the form of overnight fees that you will not incur if buying 1:1 on stocks and ETFs. This can be a great tool for longer term investment and also allows for you to earn a dividend if this is provided by the company or ETF (eToro takes a percentage of this).

    Investing in fraction of stocks is also an option that eToro provides to you as a trader. Here for example, if an Amazon share costs $1800, you can still invest as little as $50, and you will earn or lose money according to the fraction of the share you own. The same goes with dividends: if you invest $100 in Amazon share that costs $1800, you will earn 1/18 of the actual dividend.

    This can be an excellent way to lower your investment risk and still diversify your trading portfolio, a great addition particularly for newer or less experienced traders.

    Real Cryptos and eToroX

    As mentioned earlier, trading in real cryptocurrency is also available from eToro. The minimum investment here starts from just $25 and fractional ownership with the profits and losses in proportion is also available.

    As an eToro trader, your real crypto holdings can also be transferred to the eToroX crypto wallet service. This transfer will be permitted only if you are holding a significant enough balance in real cryptocurrency that you can check with the eToroX support team.

    Social Trading – Copy Trading

    As a new trader with eToro you may at this point be wondering, what is the difference between social trading and copy trading?

    The answer is quite simple:

    Social Trading is interactive in the sense that traders can share their thoughts with other traders. Not only that, but you can also follow and interact with them in most cases, very much like a social network.

    Copy Trading is more operational in the sense that you can directly copy the trades of others (signal provider) and you will make or lose money based on this performance.

    eToro provides both of these services, and it’s considered one of the best social-copy trading brokers

    For more info check our etoro guide.

    Pros
    • Very low low minimum trade size with stocks, etfs and cryptos when you buy them as real
    • Large choice of cryptos
    • Dividends
    • High quality copy/social trading
    • User-friendly platform
    Cons
    • Hedging-scalping not allowed
    • The US traders are heavily restricted in terms of assets available

    eToro review
    Education and Support

    Education and support within a broker is vital. This applies not only to new traders but also those with more experience who may be in need of assistance and can always benefit from learning more. Here are some of the ways in which this is facilitated by eToro.

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    Languages

    The eToro website and support is available in as many as 19 different languages. These global options include English, Italian, Spanish, French, Russian, Arabic, and Chinese. There are several more and it is likely that no matter where you are from, eToro speaks your language.

    Research

    The eToro team works to provide comprehensive market research and daily updates. These are brought to you by the in-house analyst team and are freely available for download. Added to this there is the eToro blog updated daily and an extensive economic calendar available to keep you in the know about all the current events that may impact trading.

    eToro 5 stars
    etoro logo
    • Regulated: CySec, FCA, ASIC
    • Platforms: Proprietary
    • Min. Deposit: $200
    etoro logo
    • Regulated: CySec, FCA, ASIC
    • Platforms: Proprietary
    • Min. Deposit: $200

    62% of retail CFD accounts lose money

    Customer Service

    eToro customer support is comprehensive and available through three mediums. These are the email support, telephone support which has a call back service, and the web-based live chat. The first two of these methods are available in almost all of the 19 serviced languages, and the live chat is also available in a few including English, German, and Chinese.

    To assist you, once you have created an account, you will be assigned an account manager who will reach out to you and whom you can contact if needed.

    Education

    eToro, like many other top forex brokers work hard to offer an extensive range of educational opportunities. This includes access to a range of live webinars and trading videos as well as access to a detailed fintech guide.

    This guide comprises a range of blog articles covering every level of trading concept from basic to advanced.

    This kind of material can be very helpful in improving your skills as a forex trader at any level and can be another reason why eToro is often chosen as a top broker for new traders.

    Pros
    • A lot of languages available
    • Free education
    • Webinars and lessons
    Cons
    • All the educational content may not be available in every language
    • The live chat support is available with only a few languages

    eToro review
    Our Opinion

    Overall, having carried out an extensive eToro review it is our opinion that eToro has a strong reputation as a very well trusted and reliable broker for very good reason. They are extensively regulated by the top-tier bodies in financial regulation and have built a strong rapport among customers.

    Their offering of social trading in combination with one of the most user-friendly trading platforms in the industry has attracted many loyal traders and been something of a first for the sector. The low minimum deposit of $200 is very positive for new traders looking to get involved in the industry and the steady customer support makes it a great place for all levels of forex traders.

    The offering of real asset trading on a 1:1 basis is something that is also not often seen and this may offset the fact that some CFDs trading through eToro can be highly priced along with some high fees.

    The only slight drawbacks of the platform come from the fact that fees are generally higher, US trading options are limited to crypto trading only, and some trading techniques like hedging and scalping are not allowed. Besides this, eToro does a lot to justify its position as a top forex broker in the industry.

    eToro Pros and Cons

    Pros

    • Great social and copy trading features
    • Broker regulated by 3 top-tier regulatory bodies
    • Low minimum deposit
    • Unlimited demo account
    • Commission-free Fractional stocks are available
    • Wide choice of cryptoassets
    • User friendly trading platform

    Cons

    • Limited trading features in the USA
    • Spreads are relatively high
    • Limited amount of languages for customer support and educational features

    Can you make money on eToro?

    Yes, I know. You are looking for a magic formula for making money on eToro. Sorry to be direct but … there’s no magic formula.

    Earning and making money with eToro is certainly possible, and there are various testimonies to prove that.

    However, there is no secret formula that will make you earn money on eToro in one day.

    Do you know what the real problem is?

    On the internet there are many, too many “resources” trying to convince you of the contrary, that making money on eToro is a child’s play. Unfortunately, a lot of new investors have been convinced by these false promises and have followed the various “magic formulas” on how to earn money from eToro quickly.

    Lots of them regret that. But here’s the best part.

    In this post, as first thing, we will discuss all the false promises, misleading information and magic formulas found on the Internet about investing money with eToro.

    The first step will be to get rid of all these false beliefs and give you a realistic picture of the true potential and opportunities that await you in eToro.

    Finally, for you to get the best chance to earn money with eToro, we will show you our formula. Not a magic or unrealistic one, but a real “professional investment formula” with eToro, replicable by anyone.

    The fake myths about making money with eToro

    “Investing with eToro is a child’s play”

    Let us immediately clarify that.

    Making money with eToro is possible, it can be very rewarding, and it is definitely easier than retail trading “by yourself” on the financial markets.

    After this, diminishing the matter and claiming it’s a child’s play cannot help but mislead potential investors.

    Why?

    Social Trading with eToro involves investing on very volatile financial markets (forex market, stocks, indices, commodities, bitcoin) with derivatives such as the eToro CFD (Contract For Difference, or Contracts for Difference), with the possibility to use financial leverage.

    As everyone should know, the financial leverage is an ally, because it allows you to invest in the financial markets even with small capitals, but it is also a possible enemy should it be used too much and without knowing how to manage and control it.

    It’s not difficult to learn how it works, provided it is done.

    “You can double your capital every 1/2/x months”

    Although it’s true that with Social Trading you can get very high yields, much higher than with any other investment instrument, to reason in terms of doubling cannot help but cause potential risks.

    Those who try or are convinced to be able to double their capital in a short time, then they should take into account the possibility of losing it completely, in the same short period.

    The reality?

    Making money with eToro is a marathon, not a sprint.

    Small yields, for example 5%, but obtained constantly, every month and with little risk, can bring, in something more than a year, a performance of 100%, the famous “doubling” of the capital indeed.

    The more you are good and prudent in the choices, the more you will increase the monthly percentage of return while maintaining the risk low. You can do it, it is possible, but it’s not an activity as simple as they want you to believe and it should not to be taken lightly.

    “Just pick the top traders in the rank and it’s done”

    Entrusting the choice of the traders to follow to the eToro automatic ranking, without knowing what you are doing and who you are choosing, it’s absolutely not a recommended choice.

    From our experience, we have seen too many times how eToro have highlighted traders who had achieved great performance but with an excessive risk, if not fatal.

    In addition to this, you should consider that the best time to begin replicating a trader is not when he has had a set of wins (the reason for which he probably climbed the rank), but rather when he is in a period of loss, the so-called Drawdown of eToro (always provided that has been verified the historical strength of the strategy applied by the trader).

    Think about that:

    It may seem an absurd concept, but you should consider the fact that in trading you cannot always win; other than winnings you also have losses, so it’s better to start after a losing streek in order to benefit of future winnings rather than doing the opposite.

    Furthermore, we must consider the fact that not all traders are good for all situations, but every investor lives his particular condition. The size of the account, the return target, the risk sensitivity, the presence of a certain number and type of traders or popular investors within your people-based portfolio are determining factors in the process that leads to the choice of a particular trader.

    “You do not trust the ranking? Trust the crowd. Choose traders with many followers”

    This way of thinking is born with the theory of the wisdom of the crowds in Social Trading.

    Although it is certainly valid (Wikipedia and Google are based on these assumptions), this theory is based on several principles, including that of independence. In short, the judge from the participants should be independent, not influenced by the choices of others.

    And here’s the problem:

    In eToro, as in all the Social Trading companies, users will self-influence each other, the crowd will self-manipulate itself. It’s enough that a trader get good performance in the short term, perhaps quite fortuitous, to get an increase of followers that automatically triggers a chain reaction in which many novice investors begin to follow him, for the simple fact that other are doing so.

    The number of followers can be a fact to be considered, but only at the end, after having assesed independently the trader.

    “You can start making money with eToro even with minimum capitals without risks”

    It is true that with eToro you can start making money with small amounts, but you need to know how the proportional replication system of the trading signals works, otherwise you may not earn but rather lose.

    The eToro system is based on a proportional replication of trades, but the proportions have a limit that eToro cannot exceed and in that case the operations cannot be replicated on the investor’s account.

    Here’s another problem:

    If the Popular Investor already operates with very low percentages of his capital, and you replicate it with a minimum capital, you run the risk of replicating just a part of his signals, or to not replicate them at all.

    It is not absolutely necessary to have big capital.

    You can even begin with a few hundred Euros, the important thing is to understand the functioning of the minimum capital required by eToro for replicating signals, in order to not get into dangerous or counter-productive situations.

    “To diversify just increase the number of traders, select 5 or 10 and assign the capital in equal parts”

    Diversifying is certainly one of the most important thing in the investment practice.

    Far from contradicting this practice, it’s interesting to hear what a “quite experienced” investor like Warren Buffet have to say:

    Wide diversification is only required when investors do not understand what they are doing.”

    I can assure you, but you can image it by yourself, that diversifying by randomly choosing a dozen of traders, assigning to each equal parts of capital, means not knowing what you are doing.

    Why?

    Diversification is an important step, or better say essential, regarding the creation of a portfolio, in this case of a diversified people-based portfolio with eToro.

    To make money with eToro is necessary to apply a certain method at this stage, not difficult and certainly not complicated, but for sure not as easy as choosing at random and assigning parts equally to everyone.

    Choices have to be prudent, and it is not absolutely correct to increase the traders number without criterion and allocate equal parts to all, but everything needs to be primarily managed according the specific risk of each trader.

    “It is important that the trader makes always profit and never losses”

    False and nothing more risky.

    Losses in trading are more than normal. The good trader knows that the golden rule in trading is “cut losses and let your profits run“.

    In EToro is very common to come across traders with high winning percentages, even close to 100%. A figure like that does not mean talent, as you can check by yourself with an eToro demo account, but simply that the trader uses trading techniques such as averaging or martingale.

    Essentially, when an operation does not go as hoped, the trader does not close it, but he leaves it open waiting for it (eventually) to come back into profit, possibly opening other ones in the same direction trying to speed up the recovery process of the losses.

    And here’s the risk:

    Such techniques, since they can lead to having dozens of operations in loss at the same time, if not handled like a professional, are a perfect recipe for bankruptcy.

    The truth is that the winning percentage is not enough to declare whether a trader is good or not. First it must be plausible, and next we must consider the risk-return strategy and how many operations the trader opens simultaneously.

    “You do not need to look at all the data, just look at the performance of the last months”

    Why you should only study the trader’s performance of the last months, and ignore how he behaved in the past?

    The track record of a trader should be observed particularly at general level. The more the track record is long, the better it is, because you can see how the trader behaved in several occasions.

    eToro FAQs

    What is the minimum deposit for eToro?

    In most cases the minimum deposit with eToro is $200. This minimum deposit increases to  $1000 if you are trading through a rollover-free account since your fees are reduced on this account type. For more information, check our eToro Review.

    What happens if eToro goes bust?

    eToro is a very secure broker. If they did though, you are very well protected through the fact that your funds are always held in segregated accounts at top-tier banks. This means in the event of bankruptcy your funds would be safe and untouched.

    Is eToro trustworthy?

    Absolutely. eToro is a very trustworthy broker as you can see in our eToro Review. This trust can be showcased through the extensive top-tier regulation they have in place. They are very well-regulated through CySEC (109/10), FCA (583263) and ASIC (491139) for your protection.

    Is eToro good for beginners?

    eToro is excellent for beginners. They have a very user-friendly trading platform and also cater for social and copy trading which is very popular among new traders.

    Is eToro illegal?

    No. eToro is not illegal. In fact eToro accepts clients from over 190 countries. There are a few exceptions though and these can be found in the not accepted clients section of our review above.

    Is eToro legal in Australia?

    Yes. eToro is completely legal in Australia. In fact they are also regulated by ASIC in Australia under the number 491139 which you can check.

    Does eToro report to the IRS?

    eToro won’t file your taxes unless the broker is physically present in your country. You will be responsible for your own tax filing. If you need to, you can download the history of your trades for help from your professional tax advisor to file your taxes. We always recommend that you consult a tax professional on tax related issues.

    How does eToro pay dividends?

    Both shares and ETFs held through eToro can pay dividends into your account. These dividends can be paid if you are holding the assets as real shares or as CFDs.


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