eToro is a leading smartphone and web-based trading platform for stocks, oil, cryptocurrencies, and gold. The global nature of eToro’s platform allows users to trade CFDs of a broad spectrum of commodities, indices, shares, stocks, and many cryptocurrencies. eToro is one of the few multi-asset platforms that is fully regulated, operating as a broker with over 10 million individual users around the world. There are a number of key differences between eToro and other cryptocurrency exchanges — unlike other crypto exchanges, it’s not possible to withdraw your crypto assets from the platform without using dedicated eToro wallets. Despite the relatively limited nature of eToro’s cryptocurrency features, the platform is a leading online investment platform. Originally launched in 2007, eToro is one of the longest running brokers online and was one of the first to list Bitcoin in 2013. eToro’s feature set primarily focuses on a simple, easy to use interface, social trading features that allow users to copy other traders, and a unique paper trading tool kit.
eToro is a unique social trading platform designed primarily for new investors. The eToro platform supports a wide variety of assets, and holds a strong reputation as a highly credible broker. Individuals new to the cryptocurrency, securities, or commodities market are provided with a simplified trading interface that educates users as they invest. While eToro is heavily weighted to retail investors, the platform offers a margin trading service that provides access to a wide range of trading instruments with leverage. The main point of difference between eToro and other brokerage platforms, however, it’s eToro’s social trading feature. eToro social trading feature allows users to follow or copy highly experienced or successful traders and subscribe to insights, research, or commentary. The ability to learn from other traders is supported by a vast educational resource library that includes the ability to create a virtual portfolio and paper trade. In addition to buying and selling 16 different cryptocurrencies, eToro also provides educational materials that teach new traders how to invest in traditional markets, forex, ETFs, bonds, commodities, and many other markets. A major advantage of the eToro platform for new investors is the customer support services available. eToro provides customer support via live chat, phone tickets, and support, 24/7. The trading instruments listed and covered by eToro include: ● 47 different currency pairs, including AUD, EUR, USD, GBP, CAD, SGD, SEK, JPY, and PLN ● 13 stock indexes including AUS200, SPX 500, NSDQ100, UK100 ● Over 1300 stock CFDs ● 83 commodity CFDs, including gold, silver, copper, platinum, oil, and natural gas ● 16 cryptocurrencies and digital assets including BTC, ETH, BCH, XRP, DASH, ETC, LTC, ADA, XLM, and BNB
eToro handles fees in a manner that may be unfamiliar to individuals accustomed to the maker/taker fee models typically presented by cryptocurrency exchanges. eToro’s fee structure is relatively complex, and doesn’t charge trading fees in the same way as other popular stock or crypto trading platforms. The fee structure presented by eToro mirrors traditional brokerage fee structures. The eToro platform itself advertises zero commissions, and instead operates on a spread model. Spreads are defined as the fee collected by eToro based on the difference between the bid and offer price — in simple terms, this functions as a small percentage added to any transaction performed on the eToro platform. Unlike other brokers, eToro doesn’t charge a spread on both buys and sells — instead, the spread is only charged when the asset is first purchased, which is adjusted when the asset is sold. For example, a user may choose to sell one asset at a market price of $7,000. Should the spread for the asset be 0.75 percent, the trader will incur a $52.50 fee for the transaction. Margin trading on eToro also incurs overnight fees, which can also be referred to as “rollover fees.” Margin trading, in simple terms, represents borrowing capital from eToro in order to hold an open trading position — overnight fees function as interest for this service.
The spreads and overnight fees offered by eToro aren’t as competitive when it comes to cryptocurrencies. Taking the variable nature of eToro spreads into account and comparing them to the trading fees charged by cryptocurrency exchanges, trading cryptocurrency on eToro typically incurs a 20 to 25 percent higher trading cost. The higher spreads and overnight fees charged by eToro for crypto transactions is offset by a highly competitive forex fee structure, as well as a relatively standard fee structure for stocks and commodities. It’s worth noting, however, that eToro charges inactivity fees for accounts that have been inactive for between 4 to 12 months, which is typically set at $10 per month. While eToro’s fee structure is not the most competitive model available online, the platform represents one of the few options available to Australian traders for commission-free real US stock trading.
eToro is one of the most secure trading platforms online, and has not experienced a single major hack or security event in the 14 years it has operated. Until 2017, eToro did not hold any user cryptocurrency, instead allowing users to buy and sell Bitcoin CFD’s rather than “physical” Bitcoin or other crypto. This feature allowed eToro to avoid major custodial issues, eliminating the need for multi-sig wallets or cold storage. The relatively recent addition of “physical” BTC and crypto trading to the eToro platform, however, has seen the platform integrate a variety of custodial security features, with eToro now operating custodial wallets and cold storage solutions. It’s worth noting that eToro doesn’t provide access to cryptocurrency private keys, rendering any crypto purchased via eToro as hot wallet stored crypto. The traditional finance assets offered by eToro are backed by internationally recognized financial institutions such as Coutts and Barclays. In addition to operating a highly secure traditional financial ecosystem, eToro is also regulated by EU’s CySEC, FINCEN, and the FCA, making it one of the most regulated platforms online.
The core presentation of the eToro platform is designed to provide new and novice traders with a simple, easy to understand interface. New investors are provided with a virtual portfolio that allows them to “practice” investing with virtual capital. Navigating the eToro platform is easy and user-friendly. The interface presents users with a control panel on the left side of the interface, with charts, profiles, and data presented on the right side. Similarly to the web version, the eToro mobile app delivers a simple trading interface as well as the ability to set up alerts for price movements or other events.
eToro’s social trading function provides simplified access to copy trading, allowing users to follow traders, monitor their actions, or choose to copy every trade they make. The copy trading functionality of the eToro platform allows new traders to mirror overall market sentiment. Using the eToro CopyTrader system, it’s possible to copy the best-performing traders for any given marketplace, which are ranked by efficiency and profitability. CopyTrader allows users to select the amount of money they’d like to invest then set the trading process on autopilot, mirroring the actions of the trader they’d like to follow. It’s also possible to customize the actions of CopyTrader, such as mirroring new trades only rather than new trades and open positions.
eToro provides traders with a wide range of different deposit and withdrawal options. These options include: ● Credit and debit card ● PayPal ● Skrill ● Bank transfer ● Neteller ● Wire transfer It’s important to note that eToro requests a minimum deposit of $50 USD to get started. Additionally, all withdrawals from eToro are subject to a $5 withdrawal fee.
eToro is firmly positioned as one of the best social trading platforms for beginners, offering new investors a simple and easy to understand means of getting started with investing. The tools, educational resources, and virtual trading features of the platform allow new investors to learn how trading and investing works before investing real money. While eToro isn’t the best platform for crypto trading, the vast array of other assets supported by the platform and impressive fee structure makes eToro one of the most user-friendly and reliable starter broker platforms for new Australian traders.
If you’re considering investing through eToro or other investing apps, it’s important to establish an effective tax strategy. For information and guidance on the best tax strategies for your investment plan, reach out to Fullstack today.We may receive commission from affiliate links.
Stuart Reynolds is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech companies, crypto and entrepreneurs.
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