eToro Review – Must Read Before Investing
Founded in 2007, eToro is making its name in the fast paced world of CFD/Forex trading. From its origins in Cyprus, eToro is now available in the United Kingdom and United States. eToro attracts a variety of traders: day traders, news traders, shorts/commodities/FX traders, and various speculators with high risk appetites. The Forex brokerage market is crowded, and it is difficult to find quality, but there are certain characteristics that distinguish eToro from the rest of the herd.
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Social Trading – Openbook
The key to eToro’s success is their innovative social trading model. Using their proprietary Openbook platform, users can freely discuss trades and strategies. They can also directly copy the trading strategies of well-known and successful users. This isn’t cheating; in fact, it’s encouraged. Copying is central to eToro’s brand identity. It lets users allocate certain portions of their portfolio to mirror the trading behaviors of certain “gurus” and Popular Traders.
It’s easy to see the success of these Popular Traders over time so you get a good idea about who you are getting involved with. This is just one of the ways that eToro encourages transparency in their fast-paced trading format. eToro goes a step further in verifying their Popular Investors. Many of these users have verified accounts. Other users see their real names and pictures, building an important level of trust into this social trading platform.
In late 2015, eToro merged their Openbook and WebTrader platforms to create one seamless experience. They launched this as “The New eToro”, and the results have been excellent, especially for people who were already fans of the service. Their new suite of mobile apps for phones and tablets work well and sync perfectly with your regular desktop account. In July 2016, eToro added CRM (customer relationship management ) for their Popular Investors. These investors now have a lot of ways to communicate with their copiers. Some of these investors have more than $300,000 that they manage, and eToro makes it worth their while with 2% the annual value of the funds they manage.
The eToro Trading Academy
One thing I like to see in any novel trading platform is learning tools aimed at beginners. Forex trading is fast-paced and can be downright befuddling to newbies. If you don’t know what you’re doing, it’s easy to lose a lot of money quickly. This doesn’t mean that the format is bad – it’s not. You’ll see lots of complaints about eToro from people who lost money because they didn’t know what they were doing. If only they had spent a little time in eToro’s Trading Academy.
The Academy has lots of helpful videos that break down every aspect of Forex/CFD Trading into easy, digestible steps. There are even courses and webinars to elucidate some of the more difficult techniques and philosophies of Forex trading. These are organized by trader skill level, so that no matter how much experience you have in Forex trading, there’s always something new to learn. Finally, eToroPedia is an exhaustive resource that contains answers to any question you can dream up. Suffice to say, eToro makes it easy to learn everything you need to know about Forex trading and their own proprietary format, even if you have never done anything like this before.
Risk Management Automation
There are plenty of Forex brokers who enable one-click trading, for eToro ups the ante with risk management settings that are built into each trade. Risk management options like stop levels and the amount of money committed to each trade can be built into your one-click trading. Trading Academy can help users learn to max out the possibilities for risk management in automated trading, which can give a lot of peace of mind.
Perks for New Users
When you fund your first account with eToro, you can have a choice of several gift cards (amount and company depend on what’s available with the current promotion, but Apple, Amazon, and Google have been past examples). eToro also hooks you up with $100 every time one of your friends joins the service, another perk in their social trading platform.
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Limitations
eToro’s spreads are undeniably wider than those seen by other prominent Forex brokers. We’re talking 2 and 3 pip spreads, meaning that there’s less meat on the bone when a trade has been completed, and less room for error when making a trading decision. Lots of users find that copy trading and community insights available through eToro offset the large spreads, but it’s worth noting in advance before getting involved.
Other critics complain that eToro isn’t as complex as some of its competitors. In many ways this is true, but it is in keeping with eToro’s strategy. Though eToro might have fewer currency pairs than a competitor, for example, they’re not in the business of providing every pair option under the sun. In general, eToro is about taking Forex trading to the masses – many of whom would not get into a platform that was completely exhaustive in its trading options and offerings.
Costs and Trading Details
eToro requires only a tiny deposit to open your account. With just $200 you can start trading today. Forex trades are $60 and stock trades are $0.01. International users have a 400:01:00 possible leverage; United States users have 50:01:00.
Final Thoughts
If you are interested in getting into Forex trading, eToro is a great way to start. You can get right into their all-important Copytrading format, even with a free demo account. We recommend that new users really make use of that free account, and of eToro’s generous educational resources as well. Once you’ve funded your account, it can take a little time to find the best traders to copy. If you don’t want to copy, there are plenty of ways to trade and grow on your own.
eToro’s interface is simple, and they’re always adding great new features. The options users can trade are diverse: Currencies, Indices, Commodities, Shares, and ETFs. Risk Management is fully integrated at every step. eToro’s social aspect is truly helpful, and there is plenty of guidance from experienced traders available every step of the way. With time, you may even be able to get your own trader following! If you’re into Forex or are interested in getting started, eToro is a great way to get started.
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