The broker eToro could make an attractive choice for investors, but you’ll have to be bullish on the long-term future of cryptocurrency. That’s because this broker is “all crypto, all the time” for American traders, though non-Americans can also trade stocks commission-free. The broker melds a social feed to its trading platform and actually allows you to copy trades of some of the most popular traders on the platform. With reasonable spread pricing and a low minimum trade, it all lines up well for traders looking to start trading cryptocurrencies such as Bitcoin.
Those needing more tradable securities could also have a look at Robinhood, which offers stocks and options trades commission-free. Or if you need a full-service online broker, you can have a look at Interactive Brokers, which lets you trade almost anything listed on public markets.
- Cryptocurrency trading
- Following other traders moves
- Social investing
eToro at a glance
|Securities tradable:||Cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Bitcoin Cash and more|
|Cost per trade:||Spread mark-up starting at 0.75 percent up to 4.5 percent|
|Customer service:||24 hours, Monday-Friday, email, chat. May take up to 14 days to return your message|
|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|
|Promotion:||$50 referral bonus with code|
Top features you’ll love
One of the more innovative features at eToro is the ability to automatically copy the trades of some of the broker’s most popular 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 last year, so you can make your selection. If you’re not ready to copy their trades, you can follow along on the trader’s social feed, see their monthly performance stats and check out their holdings. It’s 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. So clients can sign up, attract followers and earn extra income as they trade.
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.
Pros: Where eToro stands out
The big draw at eToro is cryptocurrency trading, and it’s also the only draw if you’re an American trader. (Those outside the U.S. can also trade stocks commission-free.) The broker charges no commissions, but makes money on a spread makeup (more below).
The broker gives you access to 15 different cryptocurrencies, including some of the most popular, such as Bitcoin, Ethereum, Litecoin, Ripple, Bitcoin Cash and more. The trading layout is easy to use and navigate around on the website interface, and you’ll see all trading options presented cleanly.
Traders may also find the recently introduced 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 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 from silver to diamond.
Being an eToro Club member can also entitle you to increased staking rewards, allowing you to amass more cryptocurrency by just holding your position at eToro. Think of staking as earning interest on your ownership position in the cryptocurrency. Staking rewards are paid out to users each month in the cryptocurrency they hold. Bitcoin holders earn Bitcoin rewards, for instance.
Like other brokers — such as Robinhood — that advertise “commission-free trading,” eToro actually makes money on the spread between bid and ask prices. That is, it adds an extra layer of cost, so the bid-ask prices you see on your eToro screen may 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 starts at 0.75 percent for Bitcoin. But there’s a key difference between eToro and other crypto brokers: It charges the spread only on the purchase, not also on the sale, so you don’t get hit both ways on the trade.
That pricing actually compares favorably to pricing at some brokers such as Coinbase, 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, pricing at eToro rises from there, with common cryptos such as Litecoin, Bitcoin Cash and Ethereum charging at 1.9 percent. At the high end, one type of crypto at eToro costs 4.5 percent.
While eToro does charge relatively good spreads, in a larger context the spread markups on crypto trading are enormous, compared to the tight pricing on stocks, for example. Stock traders aren’t hit with a spread markup or commissions at major online brokers.
If you’re interested in trading crypto, it can be worthwhile to check out some of the best brokers.
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 $50. That’s what it takes to get you into the game, and from there you’ll need to trade at least $25 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.
Social media feed
The social media feed on eToro and each of its cryptocurrency portals 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.
Cons: Where eToro could improve
If you’re looking to trade anything besides cryptocurrency at eToro, you’re out of luck, at least if you’re an American. While traders outside the U.S. can access commission-free trading on stocks, Americans are restricted to cryptocurrencies, albeit 15 of them.
You’ll be able to access 15 of the most popular cryptos, including Bitcoin, Ripple, Bitcoin Cash, Litecoin, Ethereum and more. That compares favorably to rival Robinhood, where traders can access just seven cryptocurrencies, including of course Bitcoin, the most popular.
So if you’re looking for anything besides crypto, you’ll need to look elsewhere.
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 15 buttons (corresponding to each crypto) that you can mash when you’re ready to trade. You can quickly input your trade value in dollars and then your order is routed to the market. So it’s 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.
While eToro’s site says that customer service is available 24 hours a day from Monday to Friday, you probably shouldn’t be surprised if it takes longer (much longer) than that to actually receive an answer to your pressing question. For the most urgent questions, you do have access to live chat.
For others you may have to open a “service ticket,” and eToro says that “it may take up to 14 days for us to get back to you.” In an era of high-speed trading, that will feel like an eternity. A help page provides answers to frequent questions, while you wait for your official response.
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.
You’re trading cryptocurrency at eToro, not investing for the long term. So it shouldn’t be surprising that the broker offers only an individual taxable account. No IRAs, no joint accounts, no custodial accounts or any other kind, for that matter.
This won’t be a dealbreaker for those who are focused on exactly what eToro promises, but it also means that eToro is also not the right fit for many other kinds of investors.
If you’re an American trader, the broker eToro is fit for one purpose – trading some major cryptocurrencies.
- The ability to follow other traders and literally copy their trades is a useful feature since so much of trading is following the crowd.
- The all-in cost of trading may be lower than if you use other popular brokers for cryptocurrency.
- But anyone else will not find what they’re looking for at eToro.
If you don’t fit the mold for eToro, you still have many choices. If you want to trade crypto, stocks and options, then Robinhood or Webull may be good options. If cryptocurrency is not a priority, then you’ll have luck with some of Bankrate’s top-rated brokers, including Fidelity Investments, Charles Schwab or Interactive Brokers.
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