eToro is an online trading platform that launched in 2007. It caters for both experienced traders and beginners, long and short term investments. The platform runs across a website and app for both iOS and Android. The platform lists all markets in a clear, easily understood format, showing each asset’s price and movement.
Users receive updates on volatility and market events and free access to TipRanks, an expert stock analysis service. Real-time trading means investors can respond quickly to market fluctuations across the top exchanges instead of being tied to a national market. Video tutorials and helpful blog posts help demystify trading for beginners and withdrawals only cost a flat $5 (free for Platinum members).
eToro’s USP is as a Social Trading platform, allowing users to copy other investors’ trades and strategies. By picking who to copy based on their trading history and profile you use your own judgement to choose someone who is a good fit for you.
CopyPortfolios take this one step further; users choose between Top Traders or Market portfolios, a bundle of various stocks and positions traded under a predetermined strategy and make their investment. Their portfolio is then managed by eToro and automatically updated using AI to give long-term results, diversify holdings and minimise risk.
Making your own trades on eToro takes two main forms. You can purchase the underlying assets or you can use a Contract For Difference (CFD), which typically has a much cheaper entry point but also equates to a lower return, in the long term. Gains and losses in CFDs are based upon the movement of the price, not the actual value of the asset you’re dealing in.
Some jurisdictions ONLY allow CFDs, not buying the underlying asset. eToro stress these can be high risk for the inexperienced trader. Additionally, fiat currency and commodity trades are only available on eToro as CFDs.
When you invest in cryptocurrency there are two ways it can work; firstly, you can use your fiat currency (Sterling, Dollars, Euros etc) to buy tokens for your chosen coin. You then own that underlying asset and can trade or withdraw it for use as a payment method.
Alternatively, you can use a CFD and start trading in cryptocurrency immediately. You never own any coins, so you don’t need a cryptocurrency wallet – any profits come in the form of fiat currency.
Token purchases are unregulated and don’t fall under the various national financial protection schemes but CFDs are regulated as no assets change hands.
Stock trading is usually considered a more attractive option for medium to long term investments. If you purchase shares in a company you can sell them when you wish; no losses or gains are realised until you make a trade. eToro charges 0% commission on stock trades, making fractional stock purchases more accessible and practical to small investors.
eToro CFDs allow you to short-sell stocks and use leveraged positions.
But while the stock market is volatile, prices don’t tend to fluctuate as wildly as with cryptocurrency so short-term returns are typically smaller.
Fees quoted correct at the time of writing, March 2020.