How does eToro make money? Here's the answer

Filippo Last Updated: July 2016 3 min read

Many people wonder how does eToro make money through the Social Trading service on its platform.

The reason is simple.

Before start investing with eToro, many want to know how this society (one of the best in the copy trades sector) generates its revenues in order to have a clear picture of the background and understand if they can trust it (to do that you have also our detailed eToro Review).

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65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

In reality, the way eToro produces its revenues is quite simple compared to other companies in the Social Trading panorama (eg ZuluTrade) that have a more complex model.

eToro is a financial broker in the most classic sense.

Every new user who wants to use the Copy Trading and Social Trading service has to simply open a trading account with the broker eToro.

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    So, how does eToro make money in practice?

    eToro simply earns through the spread it applies on each trading operation opened on each user’s account.

    To offer the Copy Trading service, eToro simply connects all its Live account users with one another.

    When a trader or Popular Investor opens a new position, a commission is also paid automatically in the form of “spread”.

    Similarly, on all the accounts of the other investors, that are replicating automatically the operations of that trader, the same operation will be open, and another commission (always in proportion of course) will be paid.

    So, in one fell swoop, eToro will gain both from the spreads of the trader or Popular Investor that generated the signals, and by all those who have replicated it.

    Now you should have figured out how eToro makes money, but you can check our review if you’re not yet convinced if eToro is legit or not.

    But above all, you should have guessed why all Social Trading company (not only eToro) slightly tend to give more visibility to those traders who usually open many positions on average.

    With this I just want to reiterate the concept that, in order to choose a good trader to copy, you must only rely on your own knowledge, and avoid to simply rely on the visibility or popularity of a trader.

    Better to understand by yourself, analyzing his data and his performances, whether a trader is truly deserving.

    And this is precisely why we have created all the material you can find on InvestinGoal.

    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

    eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

    Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% 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.

    Past performance is not an indication of future results.

    Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.


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    Trading CFDs, FX, and cryptocurrencies involves a high degree of risk. All providers have a percentage of retail investor accounts that lose money when trading CFDs with their company. You should consider whether you can afford to take the high risk of losing your money and whether you understand how CFDs, FX, and cryptocurrencies work. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. Your capital is at risk. The present page is intended for teaching purposes only. It shall not be intended as operational advice for investments, nor as an invitation to public savings raising. Any real or simulated result shall represent no warranty as to possible future performances. The speculative activity in forex market, as well as in other markets, implies considerable economic risks; anyone who carries out speculative activity does it on its own responsibility.
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