eToro is one of the leading social trading platforms that allows users to trade stocks, currencies, indexes, cryptocurrencies, and commodities on one mobile and web-based platform. The platform was first designed to function as an online trading platform for the Forex market and was later expanded to other financial instruments. Therefore, it is natural for one to wonder how suitable this platform is for Forex trading?
eToro is good for Forex trading if your trading strategy isn’t giving you profitable results, you don’t have time to analyze the market daily, and when you need to copy trades of other Forex traders. However, eToro has the highest spread and commissions, which may not work for active day traders.
Read on to learn some of the pros and cons of eToro, an overview of the platform, and its account requirements. Also discussed are some of its benefits and drawbacks and some frequently asked questions.
Pros of eToro
Listed below are some of the most prominent advantages of trading Forex on the eToro platform –
- eToro has a quick and seamless registration process
- The platform has a transparent fee structure
- eToro is a reputable and reliable company
Cons of eToro
Listed below are some of the most prominent disadvantages of trading Forex on the eToro platform –
- Traders get charged an inactivity fee of $5 after 12 months
- eToro charges high trading fees
- Withdrawing money is slow.
- eToro allows only one account base currency
eToro Platform Overview
eToro is a social trading platform with different financial products like Forex pairs, stocks, ETFs, cryptocurrencies, and more. Some are traded as assets, and others via CFDs. The platform is one of the first to have a social trading feature, which combines a social-media environment to eToro’s trading platform.
The platform enables traders to connect with other traders, discuss trade ideas, and copy other traders’ successful trading strategies, thanks to the CopyTrading feature. eToro lets traders buy CFDs or Contracts for Difference on Forex. Users can trade on 47 currency pairs. The broker has also recently reduced its spreads on its Forex line.
eToro Account Requirements
eToro has a simple sign up process, whether you’re looking to open an Islamic account, a standard trading account, or a demo account. All you need is a Government IS, phone number, and proof of address before you start trading with eToro.
The proof of address can be an item issued by a judicial authority, utility company, or a financial institution. An ID needs to show your full name, date of birth, photograph, and valid expiry date.
To fund an eToro account, you can use deposit methods like Visa, Paypal, MasterCard, Maestro, Neteller, Skrill, or Wire Transfer. There’s an initial minimum deposit for an eToro account, depending on where you live. Those in the U.S. and Australia need a minimum deposit of $50, while those in Israel require $10,000. People in other countries need a minimum deposit of $200.
Why Is eToro Good for Forex Trading?
eToro is not your ordinary trading platform. Trading on eToro exposes you to certain unique features that you won’t find on other platforms. The all-inclusive trading platform gives the trader access to different types of services on multiple devices. Here are some reasons why eToro is suitable for Forex trading.
User-Friendly Trading Platform
eToro has one of the most straightforward and user-friendly trading platforms available as a browser browser-based web trader or downloadable program on your smartphone. You can download the eToro app on both iOS and Android, making this platform straightforward when you want to execute your trades on the move.
eToro has a minimum of $25 when executing a trade, but this depends on the account you open. The platform also has a maximum trade limit of 20% of equity. Unlike other platforms, eToro offers STP execution, which means tighter spreads over the price paid when executing your trades.
Fully Managed Trading Options
eToro provides an option for those looking for a managed portfolio option or those interested in day trading. The platform has a CopyFunds program that provides managed portfolios on different themes at various risk levels.
Comes With a Demo Account
eToro is one platform that comes with a practice account that allows a trader to test the trading platform without parting with any amount. The demo account comes with an initial deposit of $100,000 in virtual currency.
No Commission on Trades
Market makers like eToro have low entry requirements and small minimum trade requirements. eToro, like other Forex brokers online, doesn’t charge commissions on trades. The company depends on quoting their customers a comprehensive dealer spread as a compensation method. eToro starts at two pips for USD/JPY pair and three pips for USD/CAD, EUR/USD. And USD/CHF.
AUD/USD and GBP/USD pairs have four pips, while NZD/USD spreads stand at five pips wide.
eToro provides social media like the trading platform for Forex traders. That means traders can chat, connect, and replicate others’ trading activities with the CopyTrader feature. The platform allows investors to mimic what others are doing, including the amount of money in a portfolio. eToro has a function that stops the losses if the copied portfolio begins to lose money. However, this option is only available for non-US markets.
eToro, as a trading platform, provides a variety of language and support options. Some of the languages available are English, French, German, Italian, and Spanish.
The Downsides of Using eToro for Forex Trading
Despite eToro having some excellent perks, it also has its shortcomings. Some of the platform’s drawbacks include:
Slow Customer Support Response Time
One of the major complaints about eToro is that some people find customer support wanting. Some people found the support team slows in their response time, while others found the team less helpful in handling technical issues. The option available to connect with eToro is through the online support forum, where you submit a ticket in different matters. There’s also the option of calling the customer support line.
The Interface May Freeze When Least Unexpected
A few users found the platform not up to par as it can freeze without any reason. Although this may be attributed to server maintenance or technical difficulties, it can still be a problem for daily traders looking to access this platform.
Withdrawing Money Takes Time
eToro allows you to withdraw any amount that is at least $50 to your bank account after your account is verified. You can close any funds invested in open positions to ensure you have money available for withdrawal. Unfortunately, the platform takes three to seven business days for the funds to get into your bank account. That’s a long time considering some platforms that take a few hours to a day to transfer the funds.
Frequently Asked Questions
Some of the frequently asked questions about eToro include:
What Time Does eToro Trade?
eToro platform is open for day trading 24 hours a day for five days. The platform is available from Monday to Friday, with the running hours starting from 9 pm GMT and closing at 9 pm GMT on Friday.
Does eToro Have Risk Control Features?
Although eToro gives traders the chance to adjust leverage, the company has introduced leverage limitations and reduced the market total exposure to 50%. An excellent example of major currency pairs like EUR/USD has a leverage limitation of 30:1.
Does eToro Charge a Commission?
eToro doesn’t charge a commission on trading. What they do is markup the spread to compensate for this amount. For example, you get six pips for GBP/JPY and three pips for EUR/USD.
Is eToro Safe?
eToro is regulated by CySEC or the Cyprus Securities and Exchange Commission. The trading platform also complies with the European Securities and Markets Authority rules for risk disclosure. eToro has a rule that stops losses for currencies that exceed 25% of exposure. The platform has transparent pricing, meaning you won’t have to deal with any hidden fees.
eToro is a safe online trading platform that comes with a demo account for beginner traders. Its zero-commission stock trading and social trading platform add to its advantages. However, you may have to wait for customer service to respond to any queries you may have. Overall, it’s an excellent place to learn the basics of trading and connect with other traders.