eToro review and test (2023)
Once a haven for only cryptocurrency traders, eToro has expanded to include stocks, options and ETFs while still including digital currencies. The broker offers a few things not often seen in a brokerage, in particular its blend of trading and social media for crypto traders. You’ll be able to see what public traders are buying and selling and can even set up a feature that copies their trades instantly with no additional fees. Crypto trades are commission-free but carry a spread markup of 1 percent, while stock, ETF and options trades are free. So eToro meshes together some of the best features of a crypto exchange with those of a traditional broker.
Those looking to trade crypto alongside traditional investments should also have a look at Webull and Robinhood, which offer a solid combination of both. If you focus more on crypto, you can find overall cheaper trades at Bittrex and Binance.US and a wider selection of coins, too.
- Cryptocurrency trading
- Following other traders’ moves
- Social investing
eToro at a glance
|Minimum balance:||$0; $10 minimum trade size|
|Securities tradable:||Stocks, options, ETFs and 52 cryptocurrencies, including Bitcoin, Ethereum, Dogecoin, Bitcoin Cash and more|
|Cost per trade:||$0 for stocks, ETFs and options; Cryptocurrency is commission-free, but has a spread markup of 1 percent|
|Customer service:||Email, support tickets, chat|
|Account fees:||$10 per month inactivity fee after 12 months of not logging in|
|Mobile app:||The eToro mobile app is available on the Apple App Store and Google Play Store|
Pros: Where eToro stands out
Stocks, cryptocurrency, ETFs and options
While eToro was limited to cryptocurrency trading for American investors in the past, it’s now expanded to include stocks, ETFs and options, too – at favorable pricing. It’s a solid mix of the most popular kinds of trading vehicles, giving traders the kind of action they’re looking for.
Stocks and ETFs are all available now with no commission, a price that’s in line with major online brokerages. And eToro outdoes most rivals when it comes to options commissions, too. It charges no base commission or per-contract fee, in line with the best here, Webull and Robinhood. That compares to the industry standard fee of $0.65 per contract.
If there’s one downside at eToro compared to rivals, it’s that you won’t have trading access to every little stock on the major exchanges. The broker offers about 3,000 stocks, so you’ll find all the big names. However, you’re unlikely to have access to the market’s smallest stocks. If you need access to those small names, stick with a fully featured broker such as Charles Schwab.
Historically, the big draw at eToro has been cryptocurrency trading. The broker charges no commissions but makes money on a spread markup (more below). The broker gives you access to 52 different cryptocurrencies, including some of the most popular, such as Bitcoin, Ethereum, Dogecoin and dozens more. The trading layout is easy to use and navigate around on the website interface, and you’ll see all trading options presented cleanly.
One of the more innovative features at eToro is the ability to automatically copy the trades of some of the broker’s most popular crypto traders. With CopyTrader, you’ll select the traders you want to mimic, and then you’ll instantly replicate their trades. “When they trade, you trade,” as eToro says.
CopyTrader shows you fellow traders involved in the program and the returns they’ve stacked up over the past, so you can make your selection to copy their trades. If you’re not ready to go that far, you can follow along on the trader’s social feed, see their monthly performance stats and check out their holdings. It is social media meets crypto trading, helping traders connect with others.
CopyTrader doesn’t cost anything extra, and it actually offers income to top traders as part of eToro’s Popular Investor Program. Clients can sign up, attract followers and earn extra income as they trade. But you’ll need at least $200 in your account to copy traders. You can copy as many as 100 traders at a time.
If you’re new to crypto trading and looking to get your feet wet before you plunge in, eToro will allow you to set up a virtual account and start trading with $100,000 in virtual money. With a quick flip to virtual trading, you’ll be able to transact as if you were doing the real thing. It’s a solid add-on that should help newer investors get going and help them navigate the site.
eToro Club membership
Traders may also find the eToro Club benefits useful. You’ll receive special perks such as a dedicated account manager, a quarterly analyst newsletter, streaming webinars, a portfolio tracking app, priority customer service, digital subscriptions to the Wall Street Journal and Financial Times and more to come.
The level of benefit depends on what eToro calls your “realized equity,” which is basically the amount of money you’ve deposited or traded into a realized profit. The more you hold with eToro, the higher your level in the program, ranging across five levels from silver to diamond.
Social media feed
The social media feed on eToro and each of its stock, ETF and cryptocurrency pages could be a useful way for traders to communicate with other traders. It’s a natural complement to the “copy trade” feature. Not only will you be able to follow specific cryptocurrencies, but you’ll also be able to track the moves of the site’s most popular traders, those who participate in its Popular Investor Program.
This melding of crypto trading and social media makes eToro feel like an innovative choice.
If you’re into buying fractional shares, eToro allows you to do that. In fact, it’s one of the easier brokerages to buy fractional shares on, in part because of how eToro sets up its trade interface. By default, you’re set up to invest a specific dollar amount. If you want to buy a specific number of shares, you can click a tab and you’ll be buying in units. Either way, you can buy a portion of a share as long as you’re investing at least $10 per trade.
However, eToro does not offer dividend reinvestment into fractional shares. Of course, you can just buy fractional shares yourself, since the trade commission is zero anyway.
If you’re just starting out trading cryptocurrency, it won’t take much to get started at eToro. Your first deposit must be a minimum of $10. That’s what it takes to get you into the game, and from there you’ll need to trade at least $10 per transaction.
So eToro is accessible to any size trader looking to get started in cryptocurrency trading. That said, if you don’t at least log in to your account once every 12 months, the broker will start hitting you with a $10-per-month inactivity fee. So if you have money in it, don’t forget your account.
Cons: Where eToro could improve
Like other brokers — such as Robinhood — that advertise “commission-free trading” for crypto trading, eToro actually makes money on the spread between the bid and ask prices. That is, it adds an extra layer of cost, so the bid-ask prices you see on your eToro screen will differ from prices that you see in the actual market itself. This is a fairly common way to price currency trades and now many crypto brokers are using it as well. So, while brokers may honestly tout that they’re commission-free, they’re ultimately taking a cut somewhere else.
The broker does a good job clearly laying out its spread pricing, which is 1 percent for all cryptocurrencies. That pricing actually compares favorably to pricing at some brokers such as Coinbase’s entry-level service, which takes a minimum of 1.99 percent on each trade, and the fees can take an even higher percentage bite on trades at smaller dollar volumes.
However, eToro’s fees are much higher than what traders would pay at crypto exchanges, where the commissions could start at 0.35 – 0.40 percent and fall with higher volumes. In fact, low-volume traders may find Bitstamp to be an attractive option, as it offers the first $1,000 in trades over any 30-day period at no cost.
If you’re interested in trading crypto, it can be worthwhile to check out some of the best brokers.
A typical broker might have an extensively developed trading platform with tons of tools and charts to analyze the pricing action and help predict where the security might trade. Or you might have order entry right off the platform that gets your trade into the market immediately. But that’s not the case with eToro, where it’s all stripped down and perhaps a bit too gamified.
The trading “platform” at eToro consists largely of buy buttons (corresponding to each crypto, stock or ETF) that you can mash when you’re ready to trade. You can quickly input your trade value in dollars (or units/shares, if you prefer) and then your order is routed to the market — making it tremendously simplistic at this level.
But click elsewhere on each crypto’s tab and you’re taken to the social media feed for each, and you can access charts and other research that may help you figure out how you want to trade.
This trading platform is far from those of other full-service brokers such as Interactive Brokers and even other brokers that do allow crypto trading such as Webull.
Like other finance app start-ups, customer service is not the highest priority here. But it’s important to know that coming in so you don’t expect the full-service experience.
Here you’ll get customer support via support tickets, email and chat. A help page provides answers to frequent questions, while you wait for your official response.
You’re more likely to be trading at eToro, rather than investing for the long term. Therefore, it shouldn’t be surprising that the broker only offers an individual taxable account. No IRAs, no joint accounts, no custodial accounts or any other kind, for that matter.
This won’t be a deal-breaker for those who are focused on exactly what eToro promises, but it also means that eToro may not be the right fit for many other kinds of investors.
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