Etoro Review | Our Opinion
eToro, a social trading platform, has been around since 2008 and has grown to become one of the biggest Copy Trading platforms in the world. The simple and easy to use platform is perfect for new investors that want to get into Copy Trading.
Unfortunately, USA Residents and Citizens are not accepted on this platform, but check out our Best eToro Alternative article.
eToro currently offers a great variety of assets to invest in, their Contract for Difference (CFD) system, allows you to trade: Cryptocurrencies, Stocks, Forex, Funds and more. Their newest investment product CopyFunds enables you to copy a fund portfolio compiled of top performing assets or traders. This article will help you understand these investments, as well as:
- Traders available to follow and copy
- How to find the best traders
- Trade by yourself
- Access among multiple devices
- Minimum Deposit
- Cost and Fees
- Pros and Cons
1. Traders available to follow and copy
eToro has hundreds of traders available to interact and copy; you are sure to find some that you enjoy. Traders available to copy are known as “Popular Traders,” and it is common for the Traders to have returns higher than 30%. eToro “Popular Traders” also have a verified icon when they submit a profile picture and their real name, for more credibility.
As well as, on the trader’s profile you can find their performance stats, portfolio exposure, and their feed wall. Using the feed wall, like Facebook, you can communicate with Traders directly, and the traders share any investment information they deem important.
Are they real? Track Record? Info about Traders?
eToro is very simple. There is a list of traders with various filters to choose from including: which market, profit percentage, trading duration, and location. All of the traders are real and verified by eToro; most include a track record of 3 years or more. eToro also provides necessary information on Traders including risk level, returns, portfolio composition, amount of copiers, time trading, and a self-summary written by the trader explaining experience and strategy.
2. How to find the best traders
Finding Traders to copy is simple and you can evaluate each trader based on their portfolio. The best Traders are separated by the following categories:
- Top Investors
- Most copied
- Lower Risk Score
- Medium Risk Score
On the trader preview box, you can see their past 12 month and 7-day performance, risk score, and the number of copiers. In the profile, you can view the 1-year risk score given by eToro, a graph showing ROI, total amount of trades, and the three most traded instruments. You also have access to the current open trades and portfolio distribution of the trader.
To help you visualize the past performance of a trader you can perform a what if simulation.
You can compare the traders performance against other trader or assets. (remember copying a trader is essentially like buying a stock)
E.g. “what if I started copying Trader ABC with $10,000 6 months ago?”.
E.g. “how did this trader compare against the performance of AMZN amazon or the GER30 index over the past year.”
You can perform unlimited what if simulations just creating a demo account in eToro. Is the best way to learn deeply.
How much money can I give a trader?
Once you have chosen the traders to copy, you must decide how much to invest and risk. Different traders recommend a different minimum amount to invest for best results, but you can only invest 40% of your realized equity in a single trader. A stop-loss option ( the maximum amount you are willing to lose) can be implemented to limit risk.
Your trades are also copied proportionally, meaning that if the trader risks $1,000 of their $10,000 account (1%) on a trade, only $1 will be risked in your account if you allocated $100.
eToro recently revolutionized copy trading through the introduction of CopyFunds. It is similar to any other fund, except some funds are compiled of traders! Both the Top Trader and Market funds are managed by eToro and a monthly rebalancing of assets/traders and capital are done to ensure maximum return. As well as every trader in a fund has a strict stop-loss set to limit risk.
The 3 types of funds are:
- Top Trader CopyFunds
- Market CopyFunds
- Partner CopyFunds
Top Trader CopyFunds
Top Trader funds are great if you want to invest in multiple profitable traders and have your capital automatically invested and maintained. The Top Trader Funds are compiled of traders that are available to copy on eToro and subsequently separated by investing strategy. Such as stable, trending, and active traders. This allows you to invest in multiple traders and diversify your investment.
The Market Funds are a combination of assets that are separated by an idea, performance metric, or an algorithm that picks top performing assets. This is a great option if you believe an industry or sector is going to perform well, yet you still want to diversify with multiple investments. Fund portfolios vary from Indices, Big Tech stocks, and Cryptocurrency.
Created by the partners of eToro these funds are a collection of a wide range of markets and assets. Led by expert investors known worldwide, that have many years of expertise and profitability. Each has their own values and strategy to invest in markets. The most reputable include: Warren Buffet, Edgar Wachenheim, and Carl Icahn.
You can check their performance and composition here. (eToro review).
4.Trade by yourself
eToro is platform designed for beginners and intermediate level traders. Making concepts such as stop loss, take profit, and leverage simple to understand and implement in your investments. The assets available to invest include:
Advantages of becoming a “popular trader”
The best part is if you become successful other investors will start to copy your strategy which allows you to focus on investing and not worry about becoming popular. The better your returns and risk level the more well known and copied you will become on the platform which has significant advantages. When a trader becomes popular among copiers, they get rewarded through a fixed monthly commission. The commission for most is based on the number of copiers, while the top “elite” traders get 2% of the funds under their management annually plus commission free trading.
5. Access among multiple devices
eToro gives users access to their platform and account through their computer or mobile. The mobile app is great to manage and check your investments on the go, while the computer allows you to do more complexes operations. The disadvantage is the lack of a mt4 or mt5 platforms, but even considering that point eToro platforms are very well made and user-friendly.
6. Minimum Deposit
The minimum Deposit for eToro has been increased in 2018 to 500 dollars. eToro believes in order to maintain and improve its platform the minimum deposit for their user base had to be changed. Also, their previous minimum of 50 dollars led to many investors failing due to lack of capital and diversification. However, if you do not have enough capital for a real account, the good news is they offer a free Demo Account. With the Demo account you get full access to the platforms features and 100,000 dollars of paper money to practice.
7. Costs and Fees
eToro is free to join and use ( no annual fees or commissions), the only costs are broker spreads and overnight rollover fees. The eToro spreads on each trade are arguably slightly higher than most brokers (e.g., 3 pips for EURUSD). However, when you automatically copy other traders you’ll notice that in most cases there’s no slippage, which makes up for the higher spread. (Slippage is the difference in price the trader you copy gets and you get, and with networks that use other brokers this is normally 1-2 pips per trade.) Before you execute a trade, eToro displays the rollover fees, be careful because many traders keep positions open for weeks or months. As well as, accounts can only be opened and funded using USD $, if that is not your native currency take into consideration the actual currency conversion rate.
8. Conclusion: eToro is the Facebook of Investing
Our final review is that eToro is an excellent platform for novice investors that want a safe and straightforward way to get in social and copy trading. eToro created an environment where you can share, learn, and copy other successful traders. Your news feed includes essential market news, trades being executed, and multiple opinions on any market that interests you.
eToro is also the social trading platform that offers the greatest variety of assets and markets available to invest in at any time. Most platforms only provide Forex and commodities, but eToro has Stocks, Funds, Indices, and much more. Thus allowing for much better diversification and risk limitation.
Getting started on eToro is very simple and takes only minutes. You can start practicing with $100,000 when you open a free Demo Account Here. (eToro review).
eToro Review: Pros
- Simple and user friendly interface
- Integrated social trading network, trade execution interface, and broker
- Free, fully functional $100,000 demo account
- Trades are copied proportionally
- Convenient display of historic performance figures
- Massive variety of types investments available
- Very active social network and excellent training materials
- Most “Popular Investors” you can copy are safe and verified by eToro
- Traders you copy risk their own money
- Compensation to the best traders (leads to more official traders)
- CopyFunds (copy a combination of other traders or financial instruments)
eToro Review: Cons
- Specific account balance of the “Popular Investors” is not shared
- for every good performing trader to choose from, there are still plenty of poor ones (most are also longer-term traders)
- higher eToro spreads compared to other brokers
- higher overnight rollover fees compared to other brokers
- currently only able to manage your account in $ USD
- Not available to USA Residents
Start for Free
If you want to experience the platform without risk and for free open a Demo Account. A Demo Account allows you to invest with $100,000 of paper money with no minimum deposit or fee. You also get to be a part of largest network of investors in the world.
If you need more information do not hesitate to contact us, it will be a pleasure to assist you.
Remember that you have all the information about copy trading in our sections:
- Platforms: Information of each of the platforms of copy trading. Go to Platforms
- Guides: The best guides on copy trading. Go to Guides
- Reviews: Best reviews on copy trading platforms. Go to Reviews
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