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What is eToro?
eToro is an investing tool that allows traders to trade cryptocurrencies, stocks, commodities, and other products on its platform. It is popular as a social trading platform, where traders interact and share information with other investors, while copying the trades of the top-performing traders.
Since it was established in 2007, eToro has grown to over 18 million customers and 140 countries. Although it started as a forex trading platform, eToro has expanded its list of products to include cryptocurrencies, stocks, commodities, and other securities. Currently, US investors can only trade cryptocurrencies on the platform, and do not have access to stocks, EFTS, commodities, and other types of investments.
If you are looking for a legit platform for cryptocurrency trading, eToro is a great tool for traders to learn trading and diversify their portfolio. eToro currently has 15 cryptocurrencies that US investors can trade, including Bitcoin, Ethereum, Ripple, and Litecoin. Depending on the currency you are trading, you can expect to pay a spread of 0.75% to 5% of the currency value and a 0.1% fee for converting between cryptocurrencies.
On eToro Secure Website
How Does Etoro Work?
eToro allows investors to trade in pre-selected portfolios. It takes a unique approach through its CopyTrader tool that allows traders to follow top-performing traders on the platform, and automatically copy their moves. You can also set a stop loss to limit your losses.
Apart from CopyTrader, you also get access to CopyPortfolio, which allows you to copy the entire portfolio of another trader. You can copy the entire portfolio of a top-performing trader, or go for portfolios with multiple investments. This function allows you to analyze other traders’ portfolios to find the most promising products that you can add to your portfolio.
Here are the top features you will find in eToro:
- Virtual trading
Before getting into the actual trade, eToro gives you $100,000 virtual money to practice your trades and test strategies that you plan to use.
- Multiple Cryptocurrencies
US investors can trade up to 15 cryptocurrencies on eToro. Some of the coins available include Bitcoin, XRP, Litecoin, TRON, Dash, Ethereum, and Bitcoin Cash. eToro offers a higher number of cryptocurrencies than other brokerages like Robinhood that has 7 coins and TradeStation Crypto that has 5 coins.
- Social trading
You can view and copy the trades on top traders on eToro with a click of a button. You can mirror their moves, and set a stop loss to limit losses in case the tides go against the prediction. You can copy up to 100 trades at a go.
- No commissions
eToro does not charge per-trade commissions when you trade cryptocurrencies. However, eToro makes money from bid/ask spreads for closed positions. The spread varies across the different trading products.
- Desktop and Mobile Platforms
You can access and manage your eToro trading account from the mobile app or eToro’s website. Both platforms mirror each other, and you can access all services from either of the platforms.
- Mobile wallet
There is a free eToro wallet that you can use to keep your cryptocurrencies safe and secure. The eToro wallet is available for Apple and Android devices, and you can link the wallet to your trading account to store your coins. You can transact any amount from $125 to $10,000.
There are different products that you can trade on eToro, depending on your location. Here are the main products you can trade on eToro:
- Stocks & ETFs
eToro offers zero-commission stock investing, with a large pool of stocks and ETFs. You can buy fractional shares of companies you love, and create a diversified portfolio. Only non-US customers can access this product on eToro.
Customers can trade popular cryptos such as Bitcoin, XRP, Ethereum, and other currencies in their eToro accounts. You can also monitor your favorite crypto trend using the inbuilt analysis tools and charts.
eToro allows you to trade Contracts-For-Differences (CFDs) on different types of assets such as stocks, commodities, EFTs, and indices. In this case, the trader profits in the difference in value of specific assets without owning the underlying asset.
Commissions and fee models
eToro does not charge management fees or commissions on its trading products. However, it uses a pricing model known as spread pricing, which charges a percentage fee for closed trades.
When trading cryptos, you see the coin’s bid price and ask price. The spread can be wider or narrower depending on the difference between the sell rate and buy rate of a cryptocurrency.
Here are the fees you are likely to find when trading on eToro:
- A 75% to 5% spread for trading cryptocurrencies. As of this writing, the Bitcoin spread is 0.75%, while the spread for Ethereum is 1.90%.
- $0 withdrawal fee for US traders, with a minimum withdrawal of $30. The withdrawal fee for EU and other non-US traders is $5.
- $10 inactivity fee for accounts that remain inactive for at least 12 months.
- There are currency conversion fees for non-US customers trading assets in currencies other than their home currency.
- There is a fee for crypto-to-crypto and fiat-to-crypto conversion.
Pros and cons
eToro is one of the oldest brokerages in the market, and there are various benefits and limitations that customers are likely to experience when they use its services. Some of the pros and cons of eToro include:
eToro does not charge commissions or fees on a per-trade basis. However, it earns a spread when you trade sell financial products on its platform.
As a pioneer of social trading, eToro allows traders to be part of a strong community where they can learn from other traders, and match the moves of the top traders. The traders being copied also earn a commission in the process.
eToro requires traders to have a minimum deposit of at least $50. The minimum deposit amount for U.S. users using online banking is $50, both for first-time deposits and redeposits. For deposits made by wire transfer, the minimum required for first-time deposits and redeposits is $500.
If your account balance is below $50, you must accumulate the required minimum to start trading. Also, to copy trades of top traders, you must have a minimum balance of $200.
If you want to learn cryptocurrency trading fast, eToro is a good place to start. This account gives new users $100,000 of dummy money to practice trading and test strategies, without risking their money.
eToro has a straightforward signup process, and customers can monitor their trades on the mobile app or web-based platform. Both platforms have a simple and clean layout that customers find easy to use.
Although eToro does not charge commissions on trades, there is a high spread of up to 5% when you sell a cryptocurrency. The spread is relatively high; it reduces the returns an investor earns from a trade.
US traders do not have a variety of investments to choose from. They can only trade cryptocurrencies on the platform, and do not have access to stocks, EFTS, commodities, and other types of investments.
eToro Application process
Getting a trading account on eToro is a simple process that takes less than 10 minutes. However, the verification can take longer, usually 1 to 4 days. Follow these steps to open an account on eToro:
1. Sign up
To get started, go to eToro’s website and sign up. You will be required to enter your username, email, legal names, address, etc.
2. Identify verification
Once you've provided your basic information, you will need to verify your identity using your passport, driver's license, or other government-issued ID, and proof of address.
3. Fund your account
Add your bank account through Plaid, a third-party provider, to connect your bank to eToro. You can deposit funds through an electronic transfer or domestic wire transfer. In other countries outside the US, eToro allows customers to deposit funds via PayPal, Neteller, iDEAL, Skrill, or credit card.
You must make a minimum $50 deposit to start trading. For a wire transfer, the minimum amount you can deposit is $500 per transfer. eToro has a daily transfer limit of $10,000 per day.
4. Start trading
After completing the verification and adding funds to the accounts, start trading cryptos. You can place a trade by clicking the “Trade” button in your account to buy the coin in your watch list.
If your account has at least $50 available for withdrawal, you can withdraw the funds using your preferred payment method. Funds can take 3 to 7 days from the date of withdrawal to reflect in your bank account.