In this review I will go through the pros and cons of using eToro for your online trading of shares, ETF, and more. The purpose of writing this review is to help others understand when it may or may not be the right choice for you.
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What is eToro?
eToro is an online brokerage platform known for its commission-free pricing structure and copy trading scheme that allows people to copy the portfolio of other investors using eToro.
What can I buy or sell on the eToro platform?
The platform offers a wide range of instruments:
I cannot find the instrument I want to trade on eToro
If you are in the unfortunate situation that you cannot find the instrument you are interested in do not lose hope as eToro has a form where you can request them to add the share, ETF, or Crypto you want to trade.
In my experience eToro was quick to add instruments that I requested to have available for trading, so this has been positive overall.
Are you impressed by the trading success or performance by someone on the eToro platform? Then you may be happy to hear that eToro provides the option to join in on the success with little to no effort from your side.
You can copy trades made by anyone on the eToro platform. Select copy trader, select the amount you want to invest and confirm – voila! After these steps your account will open and close positions in the same instruments as the person you have decided to copy. Beware that this is not without risk! Any time you invest money you risk losing or winning money. Only invest what you can afford.
Is eToro free?
Stock trading is commission free with eToro. Plus, eToro does not charge annual fee and there is no inactivity fee either. This is one of the main advantages of using eToro as your online trading platform because other major competitors e.g. HSBC, Saxo Bank, Hargreaves & Lansdown and more, typically charge at least £10 per month just for having an account with them. Etoro is a win for this criteria.
Withdrawals are subject to a $5 fee but you may enjoy a $0 withdrawal fee if you qualify for a certain level of membership. The tier is based on the total balance you have in your eToro account. Depending on the currency used to fund your eToro account exchange fee may apply – USD currency does not have exchange fee.
There is no fee on deposits but exchange rates are applied on deposits made in non-USD currency. The exchange rate will become more advantageous for account holders with a certain membership tier resulting in a better rate or exemption from the exchange fee.Stocks are commission-free. However, a spread fee is applied on all trades. The spread fee varies for each type of instrument and is determined by the bid and ask price. The buying and selling prices you see will include the spread fee.
For illustration purposes I have provided below example using Apple Inc (AAPL) share:
Amount available for investment: $1,000
Stock Bid Price: 125.00
Stock Ask Price: 125.02
Units Purchased: $1,000 / 125.02 = 7.99872
revaluation at Bid Price: 7.99872 * 125.00 = 999.84
Market Spread Cost: $0.16 ($1,000 – $999.84)
How do I fund my eToro account?
You can fund your eToro account using the following methods:
- Bank transfer
- Credit/debit card
The recommended way to fund your account is via bank transfer. If you are transferring from an account denomited in non-USD currency you may experience an exchange fee depending on your membership tier.
You can only withdraw money from your eToro account to the same bank account used for deposit.
Note – You cannot use Revolut to fund your eToro account.
There are effectively 6 tiers of eToro membership. As your total balance increases eToro will automatically add you to the relevant tier you qualify for:
|Tier||Starting (US$)||Upper Boundary (US$)|
|Diamond||250,000||Sky is the limit|
Each tier comes with added perks and benefits ranging from free online magazine subscriptions (e.g. Wall Street Journal, The Economist, and Financial Times), reduced or zero withdrawal fee, better exchange fee rates, dedicated account manager, and more.
For more details about eToro Club and its membership tiers please read the eToro Membership Tiers article covering the tiers and their benefits.
Compared to other online trading platforms eToro is cheaper to use as there is no monthly fee or inactivity fee. The only fees you will experience are associated to the type of instrument you are trading. Stocks are commission-free the price will include the spread fee.
Ready to open account with eToro?