In the world of online trading, eToro stands as a prominent brokerage platform, renowned for its innovative features and an ever-expanding network of traders. Founded in 2007 with the primary aim of democratizing trading, eToro took a leap in 2010 with the introduction of its groundbreaking OpenBook platform, setting the stage for social trading. In this detailed review, we'll delve into the various aspects that make eToro a significant player in the online financial landscape.
The Foundation of eToro
eToro, with its Israeli roots, has rapidly evolved into a global trading powerhouse, serving over 20 million traders across 140 countries. Its crowning achievement, the OpenBook, was the world's first social trading platform. This innovation allowed traders to follow and replicate the strategies of leading traders, a feature known as CopyTrader. Over the years, eToro has continued to grow, receiving accolades like the "Best of Show" award at the 2011 Finovate Europe fair.
Key Features of eToro
Wide Range of Trading Assets
eToro offers access to an extensive selection of over 3,000 tradable assets across 140 countries. Whether you're interested in stocks, ETFs, or cryptocurrencies, eToro's user-friendly platform makes it easy to invest in a variety of assets.
One of the standout features of eToro is its commission-free trading for stocks and ETFs, as long as you maintain a non-leveraged, long position. This cost-effective approach sets it apart from many other brokerage platforms.
eToro prides itself on providing a seamless and intuitive trading experience. Whether you're a beginner or an experienced trader, the platform is designed to cater to your needs.
The CopyTrader feature allows you to follow and emulate the strategies of top traders on the platform. While it offers a unique advantage, it's important to note that this service comes at a premium.
Though eToro boasts zero commissions, the spreads can be slightly higher compared to some of its competitors. This is how they manage to maintain "zero commissions" while covering their costs.
eToro allows you to invest in cryptocurrencies with as little as 1% of the trade size. Notably, these are not CFDs, and you can go long without leverage.
User Ratings and Reviews
Public forums and app stores reveal a generally positive perception of eToro. With an average rating of 4.2 out of 5 on public debate forums, and over 134,000 reviews on the Google Play Store, eToro enjoys a strong reputation. Esteemed financial websites like El Economista and Brokerchooser rate it as a 5 out of 5.
Is eToro the Best Broker for 2023?
The question of whether eToro is the best broker for you in 2023 hinges on your specific needs and trading style. With its myriad trading options, eToro is a solid choice for investors who prefer a community-based approach and want to begin their trading journey. However, it's important to consider the following factors:
eToro is an ideal platform for those looking to engage in swing trading in the short to medium term. The ability to fund your account via virtual wallets like PayPal makes it particularly attractive for this style of trading.
If your goal is to build a long-term portfolio, eToro may not be the best choice. When you purchase stocks on eToro, they are held in the broker's name, not yours. Keep in mind that stocks can be inherited, so for long-term investment, other brokers like Interactive Brokers may be a better fit.
Forex and Cryptocurrency Trading
eToro is not the go-to platform for Forex or cryptocurrency trading. If you're interested in these assets, you should explore alternatives like Vantage, Admirals, or IC Markets for more specialized options.
Regulation and Reliability
eToro's international presence is bolstered by multiple regulatory bodies, ensuring a secure trading environment. Some of the key regulatory entities include:
eToro (Europe) Ltd., authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC).
eToro (UK) Ltd., supervised by the Financial Conduct Authority (FCA) in the UK.
eToro AUS Capital Limited, overseen by the Australian Securities and Exchange Commission (ASIC).
For European traders, eToro Europe acts as the provider, adhering to EU financial regulations. It also falls under the supervision of the Spanish National Securities Market Commission (CNMV).
eToro strictly adheres to European financial regulations, which include safeguards for client funds:
Segregation of Funds: Client funds are entirely segregated from the broker's assets and are held by a third-party entity. eToro cannot use these funds for its operations or cover its debts.
Protection Against Negative Balances: Clients using eToro Europe are protected from going into negative balances. You can't lose more money than you have in your account.
Compensation Scheme: eToro is part of the Cyprus Investor Compensation Fund (ICF), ensuring that client funds are protected up to a maximum of €20,000 per person.
Additional Regulatory Recognition
eToro's authorization by reputable global regulatory authorities like FCA and ASIC underscores its commitment to security and reliability. These authorities are known for their stringent oversight, ensuring that eToro complies with the highest industry standards.
In conclusion, eToro's journey from an innovative start-up to a global trading giant is marked by its dedication to user-friendly features, innovation, and a secure trading environment. While eToro excels in certain trading styles, it may not be the best fit for all investors. Therefore, choosing eToro as your brokerage depends on your specific requirements and preferences.
Risk Warning: Investing in eToro involves significant risks and should be approached with extreme caution.