eToro is an online broker that has gained great popularity among investors around the world in recent years, due to the ease of use of its platform and offering 0% commissions on the purchase of shares, in addition to offering the possibility of investing in real cryptocurrencies.
However with the rise of its popularity many are wondering: Is eToro a good broker? Can I trust my money to this broker and sleep easy, knowing that my investments are safe?
In this article we will answer these questions, and also explain how to use some little-known features of this broker to increase your potential profits.
Security at eToro: is it a regulated broker that you can trust?
eToro operates in over 140 countries and currently serves an estimated 20 million users (17 million, according to the latest Wikipedia1 update). These figures place eToro as one of the largest brokers in the world, behind Fidelity (32 million users2) and Vanguard (some 30 million users3), both American brokers.
These figures alone tell us a lot about eToro: it is clear that achieving 20 million users is only possible by offering a great service to its customers.
At the regulatory level we find that eToro is based in London and is regulated internationally by CySEC, the FCA (the UK regulator) and ASIC (the Australian financial authority).
As we can see, eToro has all the necessary regulations at an international level so that, as investors, we can operate with absolute peace of mind and security. To the above we must add that eToro has 20 million users, a figure that would not have reached if it were not a broker committed to offering the best possible service to its users.
Usability and features of eToro: Is it easy to use and suitable for beginner traders?
One of the most remarkable aspects of eToro is precisely the ease of use of the platform. It has a clean, neat and intuitive interface. It is evident that eToro’s graphic design and usability experts have made a great effort to make it a platform suitable for any type of user, including novice investors or traders.
It is common for many “traditional” brokers to have antiquated and complex interfaces, which make trading very difficult and make the simplest of tasks complex. With eToro we find just the opposite case: even a beginner investor will know how to trade without having to study the documentation available, which, by the way, is abundant and very detailed.
On the other hand, the experienced trader will enjoy the ease and extreme simplicity of trading at eToro, probably wondering why other brokers complicate things unnecessarily.
A case study: How to trade Amazon stocks in 5 minutes with eToro?
Let’s take a quick example of how easy it is to trade with eToro: Let’s say you want to buy Amazon stocks and take advantage of the 0% commissions offered by eToro. In less than 5 minutes you can create an account and have your Amazon shares purchased:
1. First, we have to create the account at eToro.com
It’s completely free and for your convenience you can log in with your Google or Facebook account.
2. We deposit the funds to invest
As soon as you have your account created you will get to the main screen, where you will see a blue button in the bottom left corner: “Deposit funds”.
We click on that button and a dialog box will open where we have to specify the amount we want to deposit as well as the payment method:
With eToro we can deposit money instantly by credit card or Paypal. Deposits can also be made by wire transfer, among other available methods.
3. We invest in the asset of our choice
With the funds available, we have to enter “Amazon” in the top search bar and eToro will take us to the company’s page. Once there, we just need to click on “Trade”, and the following dialog will open up:
At this point, we just have to set the amount we want to invest in Amazon and click on “Set order”. In a few moments, we will see the shares in our account. As you can see in this example, the whole process is intuitive, fast, and very agile.
The products available: What can you invest in at eToro?
eToro offers a wide range of products you can invest in, including: stocks, ETF’s, cryptocurrencies, and forex, among others. Let’s take a look at the most popular products and the advantages they offer to the investor:
Shares with 0% commissions
Undoubtedly the star product of eToro: shares without commissions (0%) for the purchase and sale of securities. That is to say, at eToro, we can invest in American, European, Asian, Middle Eastern, and others – without paying any commissions.
The portfolio of companies eToro has to invest in is enormous. Even the most advanced investors will find hidden gems to maximize their profits: we can invest in innovative Asian companies (such as Xiaomi), in large European groups (Audi-Volkswagen, for example), in Middle Eastern oil companies, in all major American companies (Facebook, Google, Apple, Netflix….) and a long etcetera.
One of the reasons why eToro enjoys the current popularity is for offering real cryptocurrencies (not CFDs on cryptocurrencies, which are derivative products with higher commissions).
If we want to invest in cryptocurrencies we often find that the exchanges are located in tax havens or in China, in places that offer little or no regulatory guarantee to the investor.
With eToro, on the other hand, we can invest in Bitcoin or many other cryptocurrencies with a fully regulated and secure broker, which has the required guarantees and the necessary security measures.
ETFs (or exchange-traded funds, for short) are hybrids between traditional mutual funds and stocks. Think of them as a “basket of securities” made up of shares of various companies.
ETFs are generally thematic “baskets”. For example, we find ETFs that include shares of the main technology companies that drive the world economy, we find thematic ETFs containing innovative pharmaceutical or renewable energy companies, ETFs focused on emerging economies…
Thanks to ETFs we can get exposure to a sector or geography without having to buy dozens or hundreds of shares at a time. If you want to know more about them we have an article dedicated to ETFs.
Getting back to the matter at hand, eToro has more than 145 ETFs to invest in. It is worth mentioning that eToro currently offers ETFs via CFDs (contracts for difference) so the fees for investing long term in these products are significant.
By commodities, we mean all those goods and products that we obtain from nature: gold, oil, silver, palladium, sugar, coffee, natural gas, cotton…
These types of products are also available on eToro for you to invest or speculate, although it should be noted that these are complex products that are governed by their own dynamics and cycles.
Generally, investing in these products requires a considerable degree of expertise and a close eye on current events. For example, the price of natural gas can be greatly affected if Russia decides to halt the construction of the Nord Stream 2 pipeline, which will provide Russian natural gas to Europe.
Forex and foreign exchange market
Currency trading, also called forex, consists of buying and selling currency pairs with the intention of making an economic return. With forex, the trader takes advantage of the fluctuation of the different currencies of the world to achieve his profits. It is worth mentioning that it is also a type of financial product that requires a lot of specialization and knowledge.
eToro has about fifty different currency pairs, so forex traders can trade with complete flexibility.
eToro’s innovations: Social Trading, CopyTrader™ and CopyPortfolios
Over the past few years, eToro has put a great deal of effort and resources into creating innovations available to its customers; innovations with a clear goal: to make it easier and more convenient for all its customers to achieve higher potential profits.
Social Trading: What other investors say?
eToro is much more than a broker: it is an entire social network dedicated to investing. And while at first glance this may not seem like much use, in practice it is:
- Each company or product to invest in has “a wall” where users can share their feelings about that company, as well as relevant news or events. For example, when Amazon presents results it is common for users to discuss their expectations and share specialized articles so that as an investor it is very easy to know what the community thinks and keep up to date with relevant news that may affect your investment.
- Each user has their own profile, which can be either private or public. Many professional investors choose to have their profile open, so that all their trades and past performance are public. In other words, you can see live how the most profitable professional investors trade and learn from them. And what is even more interesting, you can copy the most profitable investors with a single click (we tell you more about that below).
CopyTrader™: Copy the most profitable investors
As we have been telling you, one of the great innovations introduced by eToro is the possibility of copying the most profitable investors of the entire platform (the so-called Popular Investors).
Popular Investors are generally professional investors who receive a bonus from eToro based on the “copiers” they have. When a Popular Investor maintains high returns their number of followers grows, so eToro remunerates them more.
In practice this great CopyTrader™ system is a win-win situation for everyone: the Popular Investors earn more the better their performance, the individual investor gets returns he would hardly get on his own, and eToro manages to attract many new customers and potentially much higher returns for them.
As a retail investor you can, for example, select the top 5 Popular Investors from all of eToro and allocate a budget of $1,000 to each of them. This way you will copy all the trades they make with $5,000 divided equally among the best investors on the platform.
It is important to mention that the CopyTrader™ system has no additional cost for the investor, it is completely free.
And what returns can you get by copying eToro’s Popular Investors?
As amazing as it may seem, eToro has a large number of Popular Investors that achieve returns in excess of 100% per year. We even find astonishing cases of Popular Investors exceeding 1,000% per annum, albeit at a higher risk than those achieving more moderate returns.
The most interesting thing is that we can see the performance history of each investor. That is, we can verify whether it is an investor who has had “a stroke of luck” or a professional who has spent years and years getting that great profitability.
In addition, at any time we can consult the current portfolio of the investor to see in which companies he is investing, as well as consult the risk score that eToro gives him to decide if he is the right investor to manage our money.
To find out more about the CopyTrader™ system, the Popular Investors and see the amazing returns they achieve you can visit: https://www.etoro.com/es/copytrader/
CopyPortfolios: The most promising investment portfolios
CopyPortfolios are another novelty that eToro introduced some time ago to enable its clients to diversify their portfolio, minimize risk and take advantage of opportunities presented by the market.
In practice, it is a product similar to a thematic investment fund, made up of several stocks or other financial products from a specific sector. But with CopyPortfolios we can not only invest thematically, they go much further:
- Top Traders CopyPortfolios: Can you imagine being able to invest in a “fund” dedicated to copying all the trades of the best investors on eToro? Well, this is exactly what this type of CopyPortfolios do. Forget about traditional investment funds, managed by mediocre managers who at best achieve mediocre returns: these CopyPortfolios are managed by the best (read, most profitable) investors in all of eToro. Meritocracy at its purest.
- Market CopyPortfolios: This type of CopyPortfolio are the thematic “funds” of which we had spoken to you a little above. With a single click you can invest in a “basket” of stocks in sectors that are experiencing high growth. For example, we have CopyPortfolios that give exposure to leading e-commerce companies (annual return of 205%), to the gaming industry (118% annual return), to renewable energy companies (101% annual return), etc.
- Partner CopyPortfolios: Finally, on eToro we also find portfolios managed by external management companies. In this case each management company freely decides how to manage each “fund”, as well as its composition. It is worth highlighting some innovative funds in this section, such as “The TIE Sentiment AI”, a fund that invests in cryptocurrencies through artificial intelligence with a 385% annual return; or the “Warren Buffett CF” portfolio, which is dedicated to copying all the operations of the great American investor, with an annual return of close to 21%.
To discover more about CopyPortfolios and see the great returns they are achieving you have at your disposal the page: https://www.etoro.com/es/investing/copyportfolios/
Conclusion: The advantages offered by eToro
As we have seen in this article, eToro is not just an intuitive, easy-to-use and regulated broker at European and international level: it goes much further.
eToro is a broker that has been striving for years to offer the best innovations in the fintech sector; innovations that have made it in a very short time become one of the largest brokers in the world with 20 million users.
With such results and such a drive for innovation, it is no wonder that Fortune magazine considers Yoni Assia, CEO and Co-Founder of eToro, one of the most relevant entrepreneurs of our times.
As long as eToro continues to innovate as it has done so far, giving its customers tools to invest more easily, more reliably and offering them the possibility to achieve higher potential returns, there is no doubt that it will continue to grow exponentially, leaving its competitors further and further behind.
After all, investors go where we are treated best, and where we make the most profit.
If you want to try this innovative broker, simply go to eToro.com, where you can create an account completely free and start using the innovative tools at your disposal.
REFERENCES CITED IN THE ARTICLE