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Etoro Review – Get Social With Your Investing

What is Etoro?

Etoro was first founded in 2007 in Israel, and in 2010 they launched the first version of Etoro. The key feature of the app was what they term ‘social trading’. This refers to the ability within the app for you to copy the trades of other successful traders on the platform using their ‘Copytrader’ function. This function is still one of their key selling points.

They launched in the UK in 2013, and now have a UK subsidiary that is regulated by the Financial Conduct Authority (FCA).

The key functions of the Etoro app are to trade stocks, shares, ETFs, forex and cryptocurrency. Etoro also allow customers to trade CFDs.

Etoro state that customers in over 140 countries can use Etoro, and in late 2021, claimed that nearly 25 million accounts had been set up on their app.

What is a CFD?

CFD stands for ‘Contract For Differences’ and refer to a customer being able to profit from the price change of a particular security. Essentially the trader will ‘bet’ whether the price of something will go up or down, and it is possible to win or lose significantly more than the initial investment. CFD trading is prohibited in the USA, but allowed in other territories such as the UK.

Etoro state on their website that 68% of retail investor accounts lose money when trading with their platform.

Etoro Review
Etoro Review – Photo by Daniel Lloyd Blunk-Fernández on Unsplash

Contents

How does Etoro work?

The main function of the Etoro app is trading various financial instruments. In addition to the standard stocks, share, and ETFs, customers can also trade CFDs, cryptocurrency and Forex.

Etoro Features:

  • Copytrader: A key part of the Etoro advertising is the term ‘social trading’. This refers to their Copytrader function, which allows you to copy the trades of successful traders on their platform. If you are good at trading, then you can also earn from other people copying your trades.
  • Trade stocks, shares, ETFs and Forex.
  • CFD & Cryptocurrency trading
  • Virtual portfolio: Make practice trades with a virtual $100,000.
  • Extensive educational and research resources and tools.

Etoro Money:

Etoro Money is a completely separate app and product from the Etoro investment platform, that Etoro launched in the UK in 2021 after an acquisition. It is an e-money wallet where you can store cash and cryptocurrency, and you also get a Visa debit card.

An Etoro Money account may be attractive to users of the Etoro investment platform, as you can transfer funds from your Etoro Money account into your Etoro investment account without any currency transfer fee. As the base currency of Etoro is USD, if you transfer funds from your UK GBP bank account direct to your Etoro investment account, you will be charged 0.50% of the amount transferred as a fee.

How much does Etoro cost?

Whilst Etoro allows the basic trading of stocks, ETFs and CFDs etc for free, there are costs for certain functions within the app, so it is important to be aware of these.

Depositing Funds:

The base currency of Etoro is USD. Therefore, any time funds are put into Etoro from a UK GBP account, you will be charged their standard fee, which is 0.50% of the amount deposited.

Withdrawing Funds:

Etoro charge a flat fee of $5 for withdrawing funds, with a minimum withdrawal amount of $30.

Inactivity Fee:

If your account is inactive for over 1 year, Etoro will start charging $10 per month.

CFDs:

With CFDs Etoro will make a percentage profit from the ‘spread’ i.e. the difference between the sell and buy price.

In addition, Etoro charge for holding positions on CFDs overnight or over the weekend.

Some investment apps use Open Banking to take savings directly from your bank account. Check out our reviews of Plum, Chip and Moneybox.

Who is Etoro for?

As with many of the app based trading platforms, Etoro is appealing to inexperienced or beginner investors, as they offer a simple entry to investing. In addition, with older trading platforms the costs can be rather complex. Although there are some costs on the Etoro platform that need to be understood, in general it is easy to navigate.

Etoro have a large amount of investment and trading educational material and research tools. Somewhat oddly, certain of these resources are only available to users who have a larger amount of funds in their account.

Etoro is available in over 140 countries. Users must be over 18 to create an account.

Is Etoro safe?

As a financial entity where you may put your money, Etoro has a variety of safeguards in place

  • Etoro is regulated in the UK by the Financial Conduct Authority
  • Funds in your standard Etoro account are covered by the Financial Services Compensation Scheme (FSCS), which means that funds are covered up to a maximum of £85,000 per customer.

Etoro Money: Be aware that it is only the funds within a standard Etoro investment account that are covered by the FSCS. Funds within an Etoro Money account are NOT covered by the FSCS.

  • Etoro also has investment insurance which covers all customers in case of Etoro going into insolvency.

In general in regard to safety, all customers need to be aware that Etoro is an investment app, and investments are inherently risky. It is always possible for any money you invest in stocks, shares, ETFs etc could be lost completely.

Etoro also offer certain investments, such as CFDs, Forex and cryptocurrency, that are significantly more risky than standard stock trading.

Therefore – it is crucial that when considering trading with Etoro (or any other trading app or broker), that you understand the risks you are taking with the type of investment you are making.

Etoro Reviews – what are people saying?

Etoro has a score of 4.2 out of 5 on Trustpilot, with nearly 15,000 reviews. 55% of reviewers gave the app the maximum score of 5 out of 5. These happy customers generally praise the ease of use of the app, and the help they receive from the customer service team. 26% of the reviews give the lowest score – 1 out of 5. Of the bad reviews, many people appear to complain about specific trading issues they have had. To Etoro’s credit, they are very active on replying on Trustpilot and seem to be keen to resolve any issues.

There is an unofficial subreddit on Reddit that currently has over 27,000 members. This is a goldmine of useful information for existing Etoro customers or anyone considering becoming one.

Etoro Alternatives

Etoro Pros & Cons

Pros

The Copytrader function is a great way to watch other successful traders and learn from their strategies.

Large selection of cryptocurrencies to trade.

Easy to use app.

A good option for beginner investors.

Cons

Do not currently offer a stocks and shares ISA.

If putting funds into the app in GBP, then you will be charged 0.5% fee for currency conversion.

$5 charge for withdrawing from the app.

Initial deposit of $50 higher than some competitors.

Conclusions

Etoro is part of a market space that gets ever more crowded i.e. app based trading platforms with a simple and low cost trading offer. Etoro differentiates itself with its ‘social trading’ concept, with its Copytrader function – which can be a great resource for beginner traders to see what trades more experienced and successful traders are making.