Many online platforms are now offering bitcoins as an asset of trade, using fiat currencies or cryptos as a trading pair. There are also many other companies that use unique services and platforms that offer similar yet very different services. eToro is one of those innovators, as the firm designed social trading marketplace that you should definitely check out.
We have made this review for that sole purpose – to check the attractiveness of the social trading and overall cryptocurrency trading platform that eToro offers for its clients. We go through eToro’s platforms, trading functions, deposit methods & fees, as well as security measures and regulations.
The goal of the investigation is to provide you with pros and cons. These you can use to compare the results with other exchanges that operate in the cryptocurrency market.
eToro is an online asset brokerage that was founded in 2006 by Yoni & Ronen Assia and David Ring in Israel. The original name of the platform was RetailFX interestingly enough and was established with a goal to provide a first-ever social trading environment for both experts and starters.
Currently, the company’s headquarters are located in Cyprus, while R&D department resides in Tel Aviv since the company’s foundation. Brokerage is also present in other countries, such as the UK, where the representative office was built and in Australia, due to the partnership signed with IC Markets.
Since its start, the company raised almost $60 million in funds in the period between 2006 and 2014, adding phone apps and the very first social trading platform in 2010. Its services are now globally available, with licensed regions being EU, Israel, and the UK.
The company offers a variety of financial instruments within its social platform, cryptocurrencies included. The coins that you can trade with are Bitcoin, Ethereum, Ethereum Classic, Ripple, Dash, and Litecoin.
Apart from cryptos, you have the ability to work with several other types of assets, such as stocks, commodities, fiat currencies, indices, ETFs, CopyFunds, and People.
Registration and Verification
Nothing special to report here, as you have to provide the usual details about your account, such as email, username, and password. The interesting thing about this platform is that you are not asked to verify your email at the registration stage.
On the verification side, the web trading provider is not exactly private, as you are asked to provide your personal details in order to raise your deposit limits towards €2.000 monthly. For this limit, you are not asked to provide scanned ID or proof of address.
You are required to provide a lot of personal information, like date of your birth, address, financial & employment status. The filled form goes out to even demand the level of your current savings and sources of funding. Not the exactly private way to trade, especially since it is done before you can even deposit funds in your account.
To lift your limits completely, you have to provide scanned ID and phone number verification. As for the identity check, you can choose between a passport and ID, as shown in the picture below. This is the last step towards 100% completed profile at eToro.
Deposit Methods and Fees
As for the deposit methods, you can choose several options to fund your eToro account’s balance. You have credit cards, PayPal, Wire Transfers, UnionPay, Skrill, Neteller, WebMoney, and Yandex. Most of these methods are instantly carried out, with an exception of wire transfers, since they can take up to five business days to complete. Most of the CFD platforms have similar deposit methods, such as IQ Option, Instaforex and Plus500.
The deposit limitations do exist for each method and these are available after you have completely verified your account. They range from $10.000 (Neteller, PayPal, and Skrill) to unlimited (wire transfers).
As for the deposit fees, the first thing that you should be aware of is that eToro uses USD as the currency of trade. You can deposit other fiats, such as EUR, RUB, JPY, CAD, GBP, AUD and many others, but at the end of the process, they will be converted to USD. It means that conversion rate will be applied, accounting for approximately 3% of conversion fee, as shown below.
Deposit themselves do not cost a thing, meaning that what you put in the fill out the form is what will end up in your balance. No matter what option you choose, the withdrawal fee will be charged to you in the value of $25.
eToro and Social Trading
This is the main meat course of this article – Social trading platform offered by eToro. To present it properly, we need to provide a bit of an explanation how the platform is organized and what is the main aim of it.
Social trading at eToro is a hybrid between social media platform and the financial trading center, where users are rated according to the return they managed to get while trading at eToro. The larger the rate, the stronger their ratings will be, as shown in the picture below.
Apart from user’s profiles, you also have the instant messaging forum, where you can see what people post. These posts regard the questions, answers and general communication between traders, something that eToro pushes for the hardest. Here, you can ask for help or explanation if you are a starter, as the main goal of the platform is to push people to make higher returns and earn a profit in the end.
Once you have gotten the hang of communication and profiles, you can now move to the main product of the company – trade copying. The trade settings of other people can be used to make orders at eToro. You simply head over to their profile, check their reliability and success within last few months and use the “Copy trade” function to issue the order specified by the experienced trader.
This is a very neat function in our opinion if you know what you are doing. The only other exchange that offers this kind of service is InstaForex, making eToro quite unique within the financial industry.
Does that mean that you have guaranteed success? Absolutely not, as the trader himself made the function at the spur of the moment and based on the analysis he/she made at that particular moment. You yourself have to do your homework first, as these successful traders do not tweak the orders meant for copying all the time.
Research about the cryptocurrency trading industry, ask yourself questions like:
- What has been the general price trend for the particular digital coin in last few days?
- Have there been any major events in the market concerning cryptocurrencies?
- What kind of an effect they have now and what will happen in the immediate future?
- How strong influence can bitcoin trading trends have on the selected altcoins?
It is your job to figure out what type of order is the best at the current moment. You should also do a background analysis of the trader himself/herself, as many are bent on making a profit for themselves.
In the picture above, you can see the “Feed” this particular trader received from others. This is a crucial pool of information, as past experiences of traders using the orders from the investor are usually found here.
The chat itself might be misleading sometimes, as people tend to follow the general trends and not their own analysis when it comes to social interaction. Blindly following orders from other people is a great way to lose money in the process, thus caution is advised.
We cannot stress enough the importance of your own learning, as those that only wish to coy will ultimately lose. The social trading at this platform is not made for you to make money without a single ounce of effort from your side. It is merely a tool of education, by which you get the props of the market and push yourself above faster than at other online marketplaces.
If you follow the safety steps and do your own analysis, this platform would be a great learning experience for you. The social interaction at the beginning should be used to get the hang of the trading functions and market. At later stages, you yourself can provide advice for starters who are serious, earning additional small revenues, as you get rewarded for copies other made of your proposed trade orders.
As for the trade itself, you have the usual “Buy” and “Sell” orders when it comes to cryptocurrencies. All coins are paired with USD, with the leverage rates going up to 1x400. T means that you can use $25 as if you have $10.000, earning a large profit from the trade but also risk large loss as well, as shown below.
Next in line, are trade support functions, which are stop loss and take profit. These act as value limiters, with take profit being the upper-value lit where the order would be executed once the value is reached. It allows you to choose the target profit and close the position automatically to reach higher profit margin. Stop loss ensures you have the bottom line at which the loss is acceptable.
You can also choose between order and market value trade. Market value takes into account the current price of the coin used for trade, while orders allow you to specify the price at which the trade would commence.
Be sure to use trading tools available to you, such as price charts, community posts, news feeds and numerous indicators found at price charts, as shown below.
Apart from web platform, you can also download free apps for your phone, no matter if you possess Android or Apple products. The only disadvantage of eToro when it comes to trade platforms is that Meta Trader is not available. Many others, InstaForex, Plus500 and IQ option included, offer the desktop version, while at eToro, you are stuck with mobile and web browsing environments.
Nothing really special to say the least, as all other platforms offer similar trade functions. InstaForex uses limiters and type of orders and so do SimpleFX, AvaTrade and IQ Option.
CopyFunds is a new hot tool in the eToro world, as you can now invest in other trader’s financial endeavors. How does it work? It is very simple – you put your money and bet on most reputable trader and he uses the said funds to pen positions in the trade market.
Part of his profit goes to you, as an investor. The best part is that you choose the number of returns you wish to get when funding others.
There are several types of CopyFund markets that you can enter:
- Top Trader CopyFunds: here you choose a specific trader you want to work with, and they invest the money in different markets, according to their own wishes. You do not have the control over what assets are traded, as you left that decision to the trader.
- Market CopyFunds: here, you choose the asset and seek traders that wish to trade int hat particular marketplace.
- Partner CopyFunds: if you wish more professional partners in the trade, you can choose this type of CopyFnds and ask for companies that would work with you. They are the ones to set the rules of the game, as well as the gains you might have when profit is generated.
- Crypto CopyFund: much like other CopyFunds program, this platform offers you a chance to invest in crypto coins, such as Bitcoin, Ethereum, Ripple, Ethereum Classic and Litecoin. The minimum amount of investment is $5.000 while fund rebalances every first trading day of each calendar day. You should take into consideration the risk rate, which stands at 7, which is high (10 is the highest asset trading risk rate).
- Crypto-currency CopyFund: this funding platform is similar with Crypto CopyFund, with the only real difference being that available coins are Bitcoin and Ethereum.
All in all, this platform benefits both investors and traders, as traders would get the “loan” necessary to make larger revenues, while investors would leave the trade in the hands of one more experienced in the industry.
This feature is not really new in the market, as InstaForex uses the same service within its platform. It definitely is rare in the industry, thus providing a competitive advantage for EToro over rivals.
The support function at eToro, apart from the trade tools and community posts, offers extensive FAQs relating to the platform and trade. You can also use the developed guide program, where software would lead you through each function and button you see on the dashboard page, as shown below.
You also have a ticket system, where you can communicate directly with the customer service whenever you encounter an issue. It generally takes 24 hours for a representative to contact you regarding the issue you might have in hand, while it is not uncommon for the department to engage you immediately.
Social Media and News Analysis
The social media that eToro uses to reach clients and users is extensive, including Facebook, Instagram, Twitter, LinkedIn, Google+ and YouTube. In most of these platforms, the company’s marketing teams are quite active, posting promotions, news, and events regarding the platform.
On the other hand, there is event calendar and news feeds as well that should check out (found below the paragraph). The event calendar concerns with the latest financial meetings and seminars that can be of great value for you. Traders can learn a lot of from them so keep an eye on the calendar as you might get a good deal to take.
In all honesty, the entire concept of eToro is based on the education for starters. The social platform offered by the company uses experienced traders to help the new people in the block and teach them financial trade functions.
Thus, although there are not company-made webinars, the entire idea can be considered as an education.
The company is divided into two distinctive subdivisions, one being eToro (Europe) Ltd and other eToro (UK) Ltd. The first is financial services firm that is licensed by the Cyprus Securities Exchange Commission (CySEC) under the license number 109/10. Second is also the same finance firm type, licensed by the Financial Conduct Authority (FCA) of United Kingdom under number FRN 583263.
These two licenses offer the firm to legally operate within EU and the UK, while a partnership with IC Markets allows the platform to penetrate the Australian markets. Other regions might use the services but they are not protected by the regulations of their own countries.
The security of your funds depends on the functions available to you at eToro, which there are not many, to begin with. The two-factor authentication (2FA) fortunately is there, as some other platforms, like Markets.com, do not even have. You should definitely set it up to add another layer of defense of your balances.
You should also use notifications available for you, as they would alarm you if someone were trying to enter your account without your permission. Contact support immediately if such situation comes to pass.
Pros and Cons
⬤ the platform offers one of the best community forums that is integrated directly with trade
⬤ unique trade function copy trader
⬤ funding of other traders is possible
⬤ very low transaction and deposit/withdrawal fees
⬤ service available globally
⬤ a large number of personal details needed for trade to be possible
⬤ not all community members’ posts and advice can be helpful
⬤ service legally backup only in EU, the UK and Australia
No matter if you are a starter or experienced player, you should definitely consider this platform for cryptocurrency trade (or for other instruments as well). The social community and the connection eToro succeeded in the making have made astounding results for those traders that are serious about the industry.
It is a legit marketplace, where you can learn a lot, earn more if you are expert and fund/get funded at.