Forex and CFD Broker Recommendation: eToro

Pros

  • Good coverage of currencies, stocks, indices, commodities, and other asset classes with low fees in the retail segment
  • Industry-leading social trading offering, CopyTrading, CopyFunds
  • Easy to use, advanced trading platforms
  • Exposure to Bitcoin, Ethereum, Ripple, Litecoin, Ethereum Classic, and Dash through CFDs
  • Stable, fully regulated company with millions of users and a strong financial position
  • Only $100/$200 minimum deposit
  • Premium account above $20,000

Cons

  • Margin rates high for long-term positions
  • Minimum 2-pip spreads
  • Stock exposure only through CFDs
  • Steep withdrawal fees
  • No US clients accepted

Recommendation:

eToro has come a long way since 2007 to become a leader in the social- and copy-trading segment, while accumulating a user base of 5 million, and establishing the reputation of a stable and trustworthy broker. The company navigated through a challenging decade and kept on innovating and expanding its reach throughout the way, and now it offers one of the strongest selections in the major asset classes among retail brokers while also offering exposure to the major cryptocurrencies.

We recommend eToro for all beginner traders, especially those looking for the opportunity to learn from established traders and invest together with them while building their own strategies as well. Those looking for the lowest fees, margin rates, and spreads could find slightly better options, like our other pick Interactive Brokers.

Availability

One of the biggest drawbacks of the company is the lack of support for US residents, but to be fair, the whole retail broker industry has issues with the strict regulation of country. Other than that, the company accepts clients from all over the world, through it’s UK and Cyprus regulated branches, and opening and funding an account is easy and swift.

Funding options are plentiful, with support for the major e-wallets, credit and debit cards, as well as wire transfers.

Trading Platforms

The eToro trading platform is easy to use, and social trading is deeply integrated, with support up to 100 traders to copy. Trading is easy in all asset classes, with the help of an advanced search function and with no slippage whatsoever, although spreads are a bit wider than with some other brokers.

A fully functional mobile trading platform is available for iPhone and Android, with good charting capabilities and a reasonably quick operation.

CopyFunds Platform

The new CopyFunds option is also available now giving a comfortable and cheap alternative to managed funds. As the company website explains:

You can invest in two types of CopyFunds: Top Trader CopyFunds which comprise the best performing and most sustainable traders on eToro, and Market CopyFunds that bundle together CFD stocks, commodities or ETFs under one chosen market strategy.

CopyFunds™ aim to help investors minimise long-term risk, promote opportunities for growth, by taking copy trading to the next level and creating diversified investments.”

Other Tools

There is a wealth of valuable information the form of webinars, e-courses, and other educational materials readily available besides the millions of active traders. The Popular Investor program is great for experienced traders who can leverage they knowledge and earn a significant amount of extra income with very little effort—other than implementing their regular strategies.

Responsible Trading

Responsible trading settings are very useful, like pre-set leverage settings (with a 1:50 default maximum), and the 20% maximum exposure/trade limit are great to manage risk and let you control your emotions in volatile markets. We strongly urge traders not to use the maximum leverage allowance (not even close) with regular strategies, especially at the first period of one’s trading career. The practice account is also a great way to get ready for ‘real” trading to get to know the order types and the effects of leverage to your portfolio, and also the peculiarities of each asset

Final Words

Some of the general problems with retail brokers aside like dangerously high leverage options, user interfaces geared towards overtrading, and notoriously high fees, eToro is among the best options for beginners to get their feet wet in trading and start. With the responsible trading initiative and the social trading functions, most of the worries can be addressed, while the fees are not sky high, although they are above than in the case some of the discount brokers out there.

Featured image from Shutterstock. This post is not sponsored.

Tags:
Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.