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Updated on Tuesday, February 5, 2019
eToro is a well-known social trading platform that’s been around since 2007, pioneering the idea of following other traders and copying their trades. However, eToro’s availability in the United States has been limited, and is still limited.
In addition to focusing on copying trades automatically, eToro is also well-known as a cryptocurrency trading platform. eToro recently expanded its operations to the United States — at least for cryptocurrencies. This eToro review will take a look at some of the basics of this platform.
Who should consider eToro
eToro’s U.S. platform focuses on cryptocurrencies, so it’s designed for those with a knowledge of how to buy and sell cryptocurrencies, and who have some understanding of the market. It’s better for intermediate to advanced traders with some trading experience, as well as money they can afford to lose.
Beginning cryptocurrency investors can benefit from the virtual portfolio and the online community, however. If you have some experience with other types of investing and want to learn about trading cryptos, eToro makes it easy to practice and learn from the community before risking your own money.
eToro fees and features
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Strengths of eToro
eToro is known for its ease of use, and this is one of its major strengths. You can easily buy and sell some of the most popular cryptocurrencies — once you’ve funded your account and provided identifying information, including your Social Security number, as required by the U.S. government. Some of the other strengths of eToro include:
- Transparent pricing: eToro is known for its transparent pricing, so what you pay is the price listed. This makes it easy to see exactly what you’re going to pay when you purchase a cryptocurrency. eToro makes money on the spread between the bid and ask prices, so you don’t have to worry about additional transaction fees.
- Customized notifications: Choose to get customized notifications about what’s on your watchlist so you can keep track of when might be the best time to buy. You can also see market data and news in real time so you can make decisions quickly.
- Access to a cryptocurrency community: You can get access to a community of cryptocurrency traders who can help you learn more about what you’re doing. It’s a good place to engage with other traders and learn more about what’s next in cryptocurrency.
- Practice account: Learn how to use the platform and get used to trading with the help of a $100,000 virtual portfolio. You can practice buying and selling different cryptos, and see what works best for you — without risking your own money first.
- CopyTrader: You can also copy other traders. You must use at least $200 to do this, however. All you have to do is choose a trader you want to copy, and indicate the amount. You’ll copy their trades proportionally and in real time.
With eToro, it’s easy to buy and sell cryptocurrencies using their wallet. However, it’s important to be careful, since there are risks as well.
Drawbacks of eToro
While eToro is easy to use, it’s important to note that trading cryptocurrencies comes with its own risk. Any eToro review must acknowledge the realities of cryptocurrency trading. Cryptos are relatively new, and you could easily lose money trading them. Before you move forward, make sure you know what you’re getting into.
- Minimum deposit of $500: To start trading using eToro in the United States, you need to deposit $500 by wire transfer. Additionally, anytime you want to add funds for trading, it must be in increments of $500. You can only add money after you finish setting up your profile.
- High spreads: One of the complaints about eToro is the high bid-ask spread, which translates into fees. For example, as of this writing, the spread on Bitcoin (BTC) at eToro is 0.75, while the seven-day average for Coinbase is 0.0046, with a maximum 0.1200, according to crypto data site Bitcoinity.org. To be fair, Coinbase also charges other transaction fees that might boost its price.
- Fees: Be aware that you’ll pay a $25 fee when you withdraw money from eToro. There’s a minimum withdrawal amount of $50, so if you only withdraw that amount, you’ll be stuck paying 50 percent of your amount in fees. Additionally, if you don’t log in regularly, you could end up paying a monthly fee of $10.
Any eToro review should also note that not all services are available to U.S. users. For example, if you use CopyTrader, as a U.S. resident, you can only copy other U.S. traders. There are also limits to the types of trades, assets and features you can access while in the United States.
Is eToro safe?
eToro uses SSL technology to secure its site and your personal information. Additionally, it’s an internationally renowned broker that has been around for more than a decade. eToro is a registered Cypriot Investment Firm (CIF), as well as being regulated by the Cyprus Securities & Exchange Commission. It’s regulated by the Financial Conduct Authority in the U.K.
However, eToro isn’t currently licensed with any U.S. regulatory agencies, nor is it SIPC-insured. That means that if the company were to fail, there’s no guarantee your money would be safe. And because you’ll be trading cryptocurrencies, it’s important to understand how volatile the crypto market is, and only risk money you can afford to lose.
For many cryptocurrency traders, having a social trading platform like eToro available in the U.S. is exciting news. eToro is easy to use, and its transparency makes it an easy choice to buy cryptocurrency quickly.
However, it’s important to be careful when trading with eToro. You don’t have access to some of the same protections you might be used to when trading stocks and bonds. Additionally, because the cryptocurrency market is so new and volatile right now, it’s vital that you be careful about the capital you risk.