Social Trading Broker & Platform Review – eToro
Eric Furstenberg • 6 min read
Have you ever tried social trading? This is a fantastic way to invest in multiple asset classes effortlessly, without having years of trading experience and knowledge of the markets. Let’s take a look at the world’s leading social trading broker, eToro.
Earn Money as a Popular Investor
Besides offering the perfect platform for investors to take advantage of, eToro also offers experienced traders the opportunity to become popular investors and earn a decent income in the form of commission and spread rebates based on the amount of money under management and the number of copiers.
An example of impressive returns by a popular investor.
You can view the different levels and rewards of the Popular Investor Program right here.
Easy and Effective Investing
Effortless and ultra-effective investing has never been so easy. In a few simple steps, you can start earning a steady return on your investment without having to stare at dozens of charts all day long, every day.
Does an island holiday sound better than staring at charts all the time?
Although there will always be risks associated with trading, these risks can be effectively mitigated in different ways on the eToro social trading platform, which include portfolio diversification between 5 asset classes and up to 100 different popular investors (simultaneously).
Smart Performance Analysis
The great thing about following popular investors on the eToro platform is that you can investigate each individual trader’s performance with the help of an advanced analytical algorithm which calculates and displays important statistics of every popular investor’s trading.
Besides calculating every trader’s profit or loss over different periods, this algorithm analyses the amount of risk taken during certain periods and combines this information to give every trader a risk rating.
This risk rating is incredible because it is derived from several trading aspects, which include the particular trader’s choice of instruments, choice of leverage, the percentage of equity invested in a single instrument, and hedged positions, just to mention a few.
This risk rating is expressed on a scale of 1-10 and indicates the percentage of equity that is risked in a single day. Here is a screenshot:
eToro Risk Score Scale.
For example, a risk score of 6 means that a trader risks on average between 3.9% and 5.4% of his account’s equity per day.
Of course, your own portfolio’s risk is also rated with this smart algorithm, to provide you with a good idea of how much risk you’re exposed to and how certain actions (like copying certain popular investors) affect your risk rating. What a great tool!
If you go into a popular investor’s profile to investigate his performance, one of the things you’ll see is the trader’s average risk score over the last 7 days.
When investigating popular investors’ profiles, you will find all the other important information you need to wisely select the best traders.
This includes statistics about how long this particular trader has been active on the eToro platform, his performance over this period, which instruments he mostly trades, the average holding time per trade, the amount of money under management, the number of copiers following him, and much other information.
Access to a Large Community of Traders
What I really like about eToro, is that you can interact with many other traders, investors, and of course, the popular investors. The efficiency with which the platform coordinates all its members’ interactions is absolutely phenomenal.
eToro even facilitates text translation on its platform when traders of different nationalities need to communicate.
This makes the whole trading experience easier, as well as educative. The interaction with the popular investors is really important because it promotes transparency and helps investors to evaluate the different popular investors before copying them.
Virtual Practice Account
eToro offers traders a fantastic demo account which doesn’t expire. Although trading or copying traders on the platform is really easy, their virtual account is a really helpful tool with which you can familiarize yourself before executing trades on a live account.
Open an eToro demo account now!
Wide Variety of Asset Classes
What I absolutely love about eToro, is that you can trade many more assets than which your typical forex broker offers.
On the eToro platform, you can trade no less than 1071 different financial instruments, which is just unbelievable!
If you prefer trading equities, you’ll be pleased to choose between 950 different shares listed on 8 of the major global exchanges.
Then you can also engage in different commodities (7) and exchange traded funds (53).
eToro’s Next Generation Investment Product – CopyFunds
eToro is a true pioneer in the social trading industry. Their latest CopyFunds innovation is really worth mentioning in this review.
I just watched a video by the CEO and founder, Mr. Yoni Assia.
The founder and CEO of eToro, Mr. Yoni Assia
To me, it was an eye-opening video which testifies of the professionalism and magnitude of eToro. In this video, Mr. Assia explains how their new product, CopyFunds, works: eToro CopyFunds Video.
The minimum investment amount in CopyFunds is $5000.
“CopyFunds operate like multiple traders, all working for you at the same time. As such, there are many underlying positions that are opened on your behalf. For that reason, the minimum amount needed to invest in CopyFunds is $5,000.” – eToro.
“You can invest in two types of CopyFunds: Top Trader Copy Funds which comprise the best performing and most sustainable traders on eToro, and Market CopyFunds that bundle together CFD stocks, commodities or ETFs under one chosen market strategy.
CopyFunds™ aim to help investors minimize long-term risk and promote opportunities for growth, by taking copy trading to the next level and creating diversified investments.’’ – eToro .
When it comes to customer support, eToro makes a really good impression. When I first opened an account with them, a friendly lady named Rachel Woods called me within a few hours to find out if I needed any assistance of any sort.
Of course, I had a ton of questions to ask her. I don’t think it was an average customer call for her, but she was really patient, professional, and helpful.
The eToro Trading Academy
The eToro Trading Academy
Whether you’re a beginner or a seasoned trader, eToro offers excellent training material to teach you how to maximize your trading profits and enhance your trading skills.
eToro’s live and recorded webinars hosted by its trading experts are a great way to accumulate valuable trading tips. Their financial trading eCourse and trading videos are also freely available to anyone interested in taking on the markets.
The only fees you’ll pay when trading is the spread and overnight fees.
eToro’s spread is typically a bit wider than some of the leading forex brokers. This is to compensate for the commissions paid to the popular investors for their services.
Of course, rollover can be earned on certain instruments, just like with your average forex broker, and there is no commission on any trades.
Minimum Position Sizes
The minimum amounts required (with maximum leverage used) to open trades on the platform are as follows:
Major currencies: $25.
Other Currencies: Between $25 and $500.
Bitcoin and ether: $250.
Indices: $200, with the exception of China 50 and USDollar which require $500.
The minimum lot size offered on currency pairs is 10,000 (one mini lot). That is ten times larger than what the average retail broker offers.
This is something I personally don’t like about the platform because it forces small traders to expose themselves to more risk than which is appropriate.
For example, if a small trader deposited $300, he or she would risk 25% of their entire account if they traded the minimum position size (10,000) on the GBP/USD with a stop loss of 75 pips.
This makes trading with a small account impractical and very risky.
However, when you’re copying a popular investor, the minimum trade amount is $1. Also, the minimum amount you can allocate to each popular investor is $100.
This is a brilliant feature of eToro and allows small investors to effectively copy popular investors without the limitation of the typical $25 (on certain instruments only) required per trade.
Naturally, I can’t cover each and every aspect of eToro in this article but I trust this information gives you a good idea of the features you can enjoy with this phenomenal broker.
If I needed to be as critical as possible, I would say that the trading platform lacks some of the advanced features of traditional forex trading platforms and is slightly less user-friendly in terms of order execution and management, and perhaps one or two other small functions. However, eToro has many state-of-the-art features which you won’t find with other brokers or their platforms.
Also, algorithmic trading is becoming increasingly popular. At the moment it doesn’t facilitate algo trading which may be perceived by some traders as a shortcoming.
Perhaps they will incorporate algo trading at some stage, which will add some flavor to its trading experience.
The numerous advantages offered by eToro definitely outweigh these minor shortcomings by far, however.
I’m really impressed with how easy and cheap it is to copy different traders across the globe. I also like the tools and information by which you can thoroughly analyze each trader’s performance before deciding whether you want to copy them or not. Ultra-effective investing has never been so easy!
All things considered, I have to compliment Mr. Yoni Assia and his team for developing an absolutely incredible social trading platform.
I’ve had a great experience in using it myself, and I can recommend eToro to anyone who would like to trade the markets, become a popular investor or copy some of these popular investors.
See you on the Etoro platform!