eToro

Residents of India will be trading under the subsidiary, eToro (Seychelles) Ltd, which is authorised by the FSAS.

While eToro complies with all the rules set out by the regulators, in 2013 it was fined 50,000 EUR by CySEC for operational flaws. CySEC did not reveal the details of these operational weaknesses, and eToro has since taken steps to rectify the issues.  All the necessary documents are published on its website, and it is regularly evaluated by external auditors. 

eToro has collected multiple awards for its innovative platform and has received worldwide recognition as a financial technology industry leader.

eToro’s account-opening process is seamless and hassle-free compared to other market makers.

Indian residents are not eligible to open a trading account at eToro.

The account opening process is fully digital and fast – most traders will have an account open within one day. 

How to open an account at eToro:

1. On the front page of the website, traders can click on a button marked “Join Now” or “Trade Now.”
2. Traders will be directed to a page that requires them to enter all their personal data.
3. Before submitting this information, traders are required to agree with all eToro’s Terms and Conditions, and privacy policy.
4. As part of the Know Your Customer (KYC) process, newly registered user is required to provide confirmation of residence (e.g. a valid utility bill dated within the last 6 months), as well as proof of identity such as a valid passport, or another form of officially issued photo ID.
5. Lastly, as a final step of the KYC process, eToro requires that all traders fill in a questionnaire to ascertain the client’s level of trading knowledge.

Once all documents have been received, a trading account will be ready within one day.   

Compared to other brokers, eToro’s account opening process is fast, fully digital, and hassle-free.

The cost of trading 1 lot is 10 USD, which is relatively high, considering that some market makers offer trading fees of only 6 USD per lot.  However, eToro’s minimum deposit requirement is lower than average, making it accessible to most traders. 

Swap Fees

Positions that are held overnight incur a swap fee, relative to the value of the position.  Swap fees are the interest charged to cover the cost of the leverage (money) borrowed from eToro.  For example, clients will pay interest of 0.000057 USD per currency unit when holding a long position on one lot of EUR/USD overnight.  One standard lot equals 100,000 units.  Therefore, the interest paid for holding this position is 100,000 multiplied by 0.000057 USD, which equals 5.70 USD. 

Account Trading Costs:

We opened and tested several of eToro’s accounts:

• Standard Account: eToro offers a single live commission-free account with a minimum deposit requirement of 200 USD, spreads starting at 1.00 pip on the EUR/USD, and leverage of up to 400:1. eToro allows hedging and copy trading, but not scalping.
  
  
• Professional Account: Retail clients can elect to become professional traders by successfully passing a test to determine their suitability. This allows clients to access higher leverage, but which is associated with higher risk trading.  Be aware that professional clients waive certain ESMA protections such as the Investor Compensation Funds and recourse to the Financial Ombudsman Service.    
  
  
• Demo Account: After opening an account with eToro, you will automatically receive the unlimited demo account loaded with 100,000 USD – it is highly recommended that you use this extensively until you are comfortable with the platform.
  
  
• eToro Club and Tiers: Although there is only a single account type, with higher minimum deposits, traders gain access to the eToro Club – which operates a tier system: The higher the tier, the more rewards, and advantages you receive. These include free market analysis, access to the Trading Signals platform, free withdrawals, access to a dedicated Customer Success Agent, analyst consultations, and more.  The minimum equity needed to access each tier is as follows:

• • Silver: 5,000 AUD
  • Gold: 10,000 AUD
  • Platinum: 25,000 AUD
  • Platinum+: 50,000 AUD
  • Diamond: 250,000 AUD

• Islamic Account: eToro offers Islamic accounts for traders of the Muslim faith. Islamic accounts are subject to an increased spread on all Forex pairs.  Furthermore, traders have to invest a minimum of 1,000 AUD to open an Islamic swap-free account.

eToro’s mobile trading platform is well-designed and easy to use. 

Available on both Android and iOS, the mobile trading platform has the same functionality as the web platform.  It offers the same research and trading capabilities, and traders can easily set price alerts and notifications. 

Trading Platform Comparison:

eToro Platform

eToro created the first social trading system and remains the largest social online trading broker in the market.   It offers a wide variety of financial assets in which to trade and invest.  With a clean and intuitive design and excellent functionality, the platform is available in over 20 languages.  It is easy to search for various instruments, and traders have access to four order types, including market, limit, stop-loss, and trailing stop-loss orders.  Additionally, traders can easily set price alerts and notifications, and traders can decide how they want to view their portfolio reports.  Webtrader is available on both Android and iOS. 

To aid traders who commonly trade the same pairs, eToro’s platform gives traders a customisable dashboard overview of different currency pairs.

Its unique bespoke web trader platform offers full support for eToro’s CopyTrader, and CopyPortfolios, social trading systems at the core of eToro’s offerings (click here to see more info on eToro’s trading tools). Other features of the platform include:

• A Research Tab aggregates the cumulative knowledge of investors and experts from some of the world’s leading financial institutions.
• Procharts, a professional-grade technical analysis tool that enables traders to compare charts from different financial instruments and/or different time frames.
• Charting tools with 70 technical indicators.

A serious downside of its platform is the lack of support for auto trading systems.  Furthermore, unlike other brokers, eToro does not offer support for third-party platforms such as MT4.  A benefit of offering third-party platforms is that traders who decide to migrate to another broker will already be familiar with said platforms.  On the flip side, proprietary platforms such as the one offered by eToro are often more beginner-friendly and easy to use. 

A well-regulated broker, eToro ensures that all Anti-Money Laundering rules and regulations are followed, and as such, all non-profit withdrawals are returned to the deposit source. It is important to note that traders must withdraw up to 100% of the deposit to a credit or debit card. After this, funds may be withdrawn by another method, but they must be in the trader’s name.  Additionally, while no fees are charged for depositing money, a 5 USD fee is charged on all withdrawals, no matter the amount.

Although eToro does not charge fees for depositing money, it charges currency conversion fees for deposits in currencies other than USD.  For example, if a trader deposits in EUR via bank transfer, a 50 pip fee will be applied (which is around 0.46% of the deposit amount).  The same fee is also charged when withdrawing by GBP.   See the website for more information on currency conversion charges.

Withdrawals are available via all the above-mentioned methods, but a 5 USD flat fee will be charged.  In addition, traders cannot withdraw less than 30 USD from their trading accounts, and withdrawals take around 2 business days to be processed, which is longer than other similar brokers. 

See below for a list of funding methods, charges, and processing times:

eToro only offers trading in USD, which is very limited compared to other similar brokers. 

eToro only allows clients to open trading accounts denominated in USD.  Furthermore, for accounts denominated in other currencies, eToro charges a currency conversion fee of 50 pips on deposit and 50 pips on withdrawal, which is extremely high. 

Having accounts denominated only in USD is a disadvantage for Indian residents who will likely have bank accounts denominated in INR. While this may not affect occasional traders, high volume traders (who trade more than 10 lots a month) should consider opening an account denominated in USD, because a conversion fee will be charged for every trade made on a USD quoted currency pair.  This can be done by opening a multi-currency bank account at a digital bank.

CopyTrader

Copytraders is eToro’s social trading feature. Traders can browse through the profiles of other eToro traders, checking their monthly and annual performance. eToro also applies a risk score to each trader in addition to other stats available for each profile. Users can then allocate a portion of their capital to copy other traders.  Each user remains in full control of their trading and may exit positions at their discretion, however, traders cannot close part of their position, only the full amount.

CopyPortfolios

CopyPortfolios provides a similar service, but bundles together all tradable assets under one chosen market strategy to minimise long-term risk and create diversified investments.  A popular investor tool, CopyPortfolios are built around eToro’s algorithms or by eToro external partners. Copied portfolios are professionally managed by eToro’s investment committee.  Traders should note that the minimum investment amount for CopyPortfolios is 5,000 USD.

Clients should be aware that the quality of the investment advice coming from the eToro community varies and should be considered unreliable until it has been well vetted.

Trading Tools Comparison:

eToro provides a limited selection of research and markets analysis materials compared to other similar brokers. 

eToro provides a newsfeed with relevant market movements that is updated daily by its team of in-house market analysts.  Most other analytical content comes from the members of the eToro community. The news feed is a central component of eToro’s trading platform and is an unfiltered list of trading ideas and accompanying graphs. Be aware that this analysis is community-created content and should be viewed with deep skepticism.

One drawback is that there is a limited selection of fundamental data available on the platform.

Overall, eToro’s market analysis materials are poor compared to those of other large international brokers. 

Although eToro offers a unique social trading platform to help beginner traders get started, its educational materials are limited compared to other similar-sized market makers. 

eToro hosts a short course titled The Complete Guide to FinTech that teaches traders the basics of trading – especially trading on the eToro platform. It is more of an overview than an in-depth course, and much of the content covers asset classes other than Forex.

eToro also hosts a blog that is updated daily with various trading tips, though these mainly focus on eToro’s platform. Webinars are held infrequently and tend to be more focused on the financial markets than the rest of the educational material.

Overall, the education section could be improved with a greater variety of materials in addition to providing sections for beginner and more experienced traders.  Beginner traders would also benefit greatly from being able to attend webinars on CFD trading basics and risk management. 

Educational Materials Comparison:

Available 24/5 eToro’s customer support is available in 21 languages.  Since 2017, it has used a ticketing system for all client support requests. Be aware that there is no phone or chat support available, and the response times are known to be painfully long, often exceeding 48 hours and even up to 14 days.  However, customers who deposit more than 5,000 USD will receive the services of a dedicated Customer Success Agent.

Overall, customer service is unresponsive, but eToro provides a comprehensive FAQ section.