Are you fascinated by the world of online trading and investments but it all seems very complicated to you? Are you afraid of running into unreliable services with hidden costs and zero customer support? Then I think you should check out eToro. But first, let’s talk about what and how eToro works.
eToro works with over 23 million users from over 140 countries from all corners of the globe, eToro has been the world’s leading social trading network for years and is a CySEC authorized broker for Europe. It is a platform born in Israel in 2007 which has the main objectives of simplifying and making the world of online investments more “social”, so that anyone can trade, invest in stocks, commodities, crypto, ETFs and still more with extreme ease – but also with the right security and awareness -, also having the possibility to see trends, sentiments and detailed analyzes on each asset and market and to interact with other traders, in order to gain experience from each other.
Another fundamental pillar of eToro is transparency, given that there are no hidden commissions and that all costs to be incurred are always clearly indicated. Opening an account takes just a few minutes and you can proceed directly from your PC or mobile. Plus, you can try the service with a demo account without making real deposits, so you can start practicing without taking any risks. How do you say? Is this exactly the kind of solution you were looking for? Then read on and find out more closely how eToro works: you will find everything explained below.
eToro: how it works
To start, I would say to see in detail how eToro works by analyzing the many products and tools that the platform offers to the user.
Once you have opened an account through the eToro website or the app available for Android and iPhone / iPad (the operation takes a few minutes, you just need to have a valid identity document and proof of residence at hand, for example a bill in the name of the person who is opening the account), you access an intuitive and easy-to-use platform with over 2,500 assets on which you can trade or buy to hold in your portfolio (therefore to make traditional investments). Here they are in detail.
With the main companies listed on the stock exchange, broken down by category.
Such as gold, oil, wheat, coffee, etc.
ETF (Exchange-Traded Fund)
These are passively managed investment funds that comprise a basket of securities. They can be linked to specific sectors, such as technology, or certain geographical areas, eg. the China.
Stock market indices
Such as the Nasdaq, the S&P 500 and the FTSE. They contain the collective performance of a specific group of relevant equities.
to invest in digital currencies such as Bitcoin , Ethereum, Ripple, Bitcoin Cash, Dogecoin and many others.
The search for assets is very simple and always up-to-date information and charts are proposed with the changes in the current trading session, the sale and purchase prices, sentiment and detailed analyzes for each asset.
Another of eToro’s strengths is that it hosts talented and experienced investors, many of them with performance above market benchmarks, from which other users can draw inspiration. With Copy Trading it is even possible to automatically copy the portfolios of the most successful traders .
In this regard, I would like to point out the Popular Investors program , thanks to which traders with unique investment strategies earn a second income to be followed and copied by other clients on eToro. If you are an experienced trader, you can join the program and get paid when other people copy your trades. Read more here.
eToro also makes deposit, purchase and sale operations very simple. It is possible to deposit using various secure systems, including credit / debit card, PayPal, Rapid Transfer, Skrill, bank transfer, direct transfer and Neteller, with short credit times, in some cases immediate (but obviously variable depending on the system used).
The purchase of the shares without financial leverage does not involve any commission, while the trading operations with financial leverage take place via CFD (Contract for Difference) , with which the client engages in a contract with a broker (in this case eToro) rather than buying directly to the underlying asset, therefore they provide for commissions. Find more information here and in the rest of the article.
Opening an account on eToro is free
Investing in shares without leverage involves no commission and no management or ticket fees are charged. However, there may be commissions to be paid for other operations – here are all the details.
Stocks and ETFs
There are no management fees, no ticket or rollover fees, no additional brokerage fees.
When you buy cryptocurrencies on eToro you take ownership of the assets, therefore the only trading fees applied are the spreads (the difference between sell and buy prices).
With CFD trading (short for Contract for Difference) the client engages in a contract with a CFD broker rather than buying the underlying asset directly. It is used for leveraged trading, short selling and, more generally, to trade assets with ample flexibility. Not involving the acquisition of real assets, it is subject to the spread and overnight commissions (a small commission that is used to keep the position open on the next trading day; those for Saturday and Sunday are typically paid on a single day of the week , where you then pay a triple commission).
With eToro Copy Trading it is possible to copy traders with the best performances. There are no additional fees or hidden costs. Spreads and overnight commissions may apply based on copied open positions.
These are pre-packaged thematic portfolios without additional commissions (you only pay any commissions applied to the assets that make up each Portfolio). Equity Portfolios are commission free.
Deposit and Withdrawal
The deposit is free, while on withdrawals eToro charges a fixed $ 5 fee, necessary to cover some expenses for international money transfers. The minimum withdrawal amount is $ 30.
Starting at 50 pips (in foreign exchange markets, a pip, i.e. percentage in point, is a unit of change in the exchange rate of a currency pair). Withdrawals and deposits are made in USD, so any other currency must be converted.
After 12 months of no login activity, eToro charges a $ 10 / month inactivity fee on any remaining available balance. No open positions will be closed to cover the commission. However, you can easily close your account from eToro’s settings (making sure all open positions have been closed and any available funds over $ 25 have been withdrawn).
For more information on the commissions applied by eToro, you can consult the official website .
With regard to tax regulations , Italian citizens are required to declare the eToro account to the tax authorities in part RW (as a foreign account) and to attach the relative account statement (which can be downloaded directly from eToro) to the Single Tax Debt Certificate. The taxes to be paid are those of 26% on any capital gains and 2 per thousand for IVAFE (which is equivalent to stamp duty). However, I recommend that you consult your tax advisor to get a more precise picture of the situation. Read more here .
How to use eToro
At this point I would say to enter the practical part of the guide and find out more closely how to use eToro . Here, then, is how to open an account, how to deposit and how to carry out the main operations. I will use the eToro website for the procedure , but it is also possible to use eToro on the move thanks to the handy app for Android and iPhone / iPad .
Open your account
Once you have access to eToro, you can choose whether to use the demo trading account with $ 100,000 of virtual funds made available by the platform, to practice, or to start investing with your money. In the latter case you must first verify your account .
To verify your eToro account, click on the Verify button on the main dashboard page and click on the Continue button . Now fill out the form that is proposed to you with the personal information requested (name, surname, gender and date of birth); then go ahead , enter your address and your tax code ; go ahead and specify your degree of investment experience , indicating how many stocks and how many crypto you have invested in over the last year.
Once this step has been passed, it also indicates if and how many leveraged investments you have made in the last year; go ahead and tick the option related to your current knowledge about leverage products: you can choose between Professional certificate or financial work experience relevant trading , Degree in financial disciplines , I have attended courses in trading or I have no knowledge in financial matters . Please note that based on your knowledge of the subject, some of the tools available in your eToro account will also change. If you have specified that you have experience in trading, you will be offered a brief quiz to verify your actual competence on the subject.
Next, you will need to indicate in which instruments you plan to invest between stocks, crypto, currencies, commodities and index; so go ahead , indicate how long you plan to keep your positions open (a few seconds up to 24 hours, a few weeks up to several months, or more than a few months / year), then specify the main purpose for which you have decided to invest: short-term returns , additional income , plans for the future or home savings.
The next step is your risk attitude: indicate how much you plan to deposit into your account over the course of the year and which risk / reward scenario would best describe your annual investment expectations with eToro based on the graphs shown to you. Next, indicate whether you or a family member are a director or holder of 10% of the shares in a publicly traded company; employee of a brokerage firm or stock exchange; or elected or appointed senior government official in office or out of office .
Click once again on the button to go ahead and provide information regarding your financial status : what are your sources of income; what work do you do; name and address of the employer and your role; your net annual income (in USD) and your total cash and cash equivalents (in USD).
Also enter this information (which is strictly confidential and is used by eToro to ensure that its customers invest based on their actual availability), you can start using the service, but with a deposit limit of 2,000 euros. To get rid of this limitation, get your verified account badge and enjoy faster withdrawals, you need to go to profile verification.
Verify your account
To verify your profile, press the appropriate keys and enter your mobile number , in order to receive a verification code via SMS to be entered in the appropriate field on the screen.
Once the number has been verified, upload photos of your identity card or passport making sure that all information is clearly visible; then upload proof of your address, such as a utility bill or bank statement in your name; enter your tax identification number (which should match your tax identification number) and move on . Mission accomplished! Your profile is now verified.
Note: on eToro it is also possible to create professional accounts, intended only for those who have passed tests to determine their eligibility to qualify as Professional Clients. Such accounts waive certain ESMA protections, such as the Investor Compensation Fund and the use of the Financial Ombudsman Service, but have no restrictions on the use of leverage.
Deposit and withdraw funds
To deposit funds and start investing on eToro, all you have to do is press the Deposit funds button in the menu and choose the amount and payment method to be used between credit / debit card, PayPal, Rapid Transfer, Skrill, bank transfer, wire transfer direct and Neteller.
At this point, enter the data relating to the payment method chosen and complete the transaction by following the instructions on the screen. The minimum deposit is 50 euros ($ 44). After the first approved deposit by credit or debit card, it is also possible to set up periodic deposits by going to the Settings> Payments menu .
As for the withdrawal of funds , you can do it by selecting the appropriate item from the eToro menu and specifying the amount you want to withdraw in the box that is proposed to you (the minimum is $ 30 and there is a fixed commission of $ 5).
Trading and investing
As widely pointed out above, eToro’s interface is extremely intuitive. In the Home section there is a search bar , at the top, to quickly find assets of all kinds (securities, commodities, crypto, etc.); followed by a panel in which the trends of the main assets are scrolled and a box with the value of your portfolio, the trend of your investments and the count of available cash , total invested and profit / loss . Further down is the bulletin board which, in full social style, contains posts from popular investors, saved posts, etc. You can also post your own content using the fieldWhat are you thinking about? .
To search for assets, you can use the aforementioned search bar or move to the Search section , which allows you to quickly identify the main investment opportunities in global markets with a selection of stocks (e.g. Chip-Tech sector stocks ), cryptocurrencies (eg Bitcoin) and other assets to invest in. There are also suggestions in relation to Copy Trading , with the most popular traders having the best performance and whose portfolios can be automatically copied. Additionally there are Smart Wallets with thematic collections of assets curated by eToro.
You are also given the opportunity to browse stocks, cryptocurrencies, indices, ETFs, commodities and currencies by category. Browsing by categories it is possible, for example, to search for stocks based on Industry (ie the sector to which they belong, eg Consumer goods, Industrial goods, Basic materials, Healthcare, etc.) or on the exchange market . From the search results you can see a graph with the performance of each asset and sell or buy it with a simple click.
Finally, from the Search section it is possible to view the daily movers (i.e. who has gained and lost the most in the current day), the trending assets and those recently added.
Once an asset has been selected, a screen is shown, divided into tabs, with lots of information about it: in the Feed tab there are the latest posts dedicated to the asset published by eToro traders; in Statistics you can find an overview with balance sheet items and market price, 1-year yield, dividends, cash flow statement, financial summary and other useful data for fundamental analysis.
In the Portfolio tab (available for the thematic portfolios proposed by eToro) it is possible to view the composition of the selected portfolios, while in the Chart tab it is possible to access the ProCharts function through which to create a professional chart to which numerous technical indicators can be applied (e.g. studies, comparison , chart type, time zone, etc.). Finally, the Research tab contains a technical and fundamental analysis that shows trends and forecasts from various analysts, Hedge Fund assets and internal transactions.
To invest in an asset, just click on the Invest button . In the box that opens, indicate the amount to invest (respecting the minimum required for the selected asset) and choose whether to buy the asset directly without commissions, by selecting option X1 , or whether to buy with financial leverage , by selecting a another option among those available (for example X2 or X5 ).
Here is an important clarification to make, as by buying with leverage you are trading CFDs (contract for difference) and then paying spreads and commissions overnight . In a nutshell, you can invest money that you do not have at the moment, so you have the opportunity to invest in assets that have a very high minimum amount, but you face potentially high commissions (the higher the leverage, the higher it is. the Commission). Furthermore, if the asset falls on the market and runs out of real capital, the position is automatically closed: if you are not very experienced, I recommend that you buy real assets without using leverage.
Other options that can be set for the investment are the Stop loss , i.e. the maximum amount to lose (which closes the position automatically if the loss reaches that limit), and the Take profit , i.e. the profit target (which closes the position automatically when the set profit is reached). In the Stop loss it is also possible to activate the Trailing stop loss , which adjusts the Stop loss to the market trend in order to safeguard the profit obtained.
I also point out that through the Invest / Order menu (top right) you can open a pending order to be converted into an effective position only when the market reaches the price you have indicated. The allowable range varies by instrument.
Once you have set all your preferences, click on the Set Order button and that’s it.
For the sale the same goes: just select an asset, click on the button to invest and select the Sell tab . Then you have to enter the amount and adjust the leverage , stop loss and take profit settings .
Remember that in this way you are carrying out a short selling with CFDs (short selling) and, therefore, you are speculating that the value of the underlying asset decreases. This is a fairly risky operation on which you pay spreads and overnight commissions.
You will find all your investments in the eToro Portfolio section , which also contains the history of all the operations carried out and provides advanced filters to immediately view only the desired information.
From the Portfolio section you can also close a position or cancel an order . To do this, just click on the line of the instrument you want to close, then on the red X and select the item relating to closing or cancellation. You can also close part of the transaction by selecting the amount in USD or units you want to close.
All operations, as can be guessed, are carried out during market opening hours, which vary according to the assets and reference markets.
How eToro works?
In addition to buying and selling assets, you can add them to your favorite list , which contains some of the most popular assets by default. The latter also allows you to quickly view the trend of the various assets followed (with numerous filtering options) and to buy or sell them with a simple click.
How do you say? Are you new to trading and investing and don’t know which assets to invest in? Then you could copy the portfolios of the best performing traders on eToro: to do so, access the CopyTrader section and browse all the main traders registered on the platform, then analyzing their results “in the field”. You can filter your search based on where the trader comes from, the markets they have invested in and the earnings they have made over time .
Once you have found a potentially interesting trader, select him, consult his personal page (containing feeds, statistics, charts etc. such as assets) and, if you are convinced, click on the Copy button to start copying his portfolio. You can choose whether to copy the open trades or only those that will open (by removing the appropriate tick). There is also the function to stop copying if the copy value falls below a threshold . You will then find the copied wallet in the Portfolio section of your eToro profile.
For more information
Obviously, what I just gave you is just a “smattering” of how eToro works. Therefore, I invite you to delve further into everything related to the platform by reading my tutorials on how to buy shares on eToro , how to buy Bitcoin on eToro and how to trade online using eToro and practicing. I remind you that there is a demo trading account available with $ 100,000 of virtual funds which you can access by clicking on the Switch to virtual button in the menu.
If you need more information about eToro, do not hesitate to visit the official help center , where you can find informative articles and answers to the most frequently asked questions relating to all the functions and features of the service.
If you need to get in direct contact with an operator, you can also open a ticket on this page or use the live chat service , both available 24 hours a day, from Monday to Friday.
Please note: the information in this article is for educational and informational purposes only. Therefore, they do not represent investment advice, personal suggestions or an invitation to buy or sell financial instruments.