This is a subjective review from a real trader´s perspective. eToro summary is a more objective list of all features and functions of the platform.
eToro is a financial broker specializing in social trading. They offer a wide range of financial instruments for traders, including stocks, indices, commodities, and cryptocurrencies such as Bitcoin, Ethereum, Ethereum Classic, Ripple, Dash, and Litecoin. They also offer some unique investment vehicles based on the social trading aspect of their business model. In this review, we’ll be looking at EToro’s social trading and their proprietary platforms.
2.eToro’s Social Trading
The Pros and Cons of Social Trading
3.Introducing EToro’s CopyFunds
4.The EToro Platform
Interactive Trading Courses
The eToro Blog
The Online Community
eToro’s Social Trading
eToro is a combination of a social network and a trading broker. This means that customers can access a large investment network and communicated with more experienced traders via the live chat messaging system or on various discussion boards. Thus, experienced traders can exchange ideas while new traders can learn from and emulate veteran traders.
So, what exactly is social trading? Is it just asking people how they’re trading and trying to learn from them? Well, that is part of it, which is why eToro offers a number of options for traders to communicate with each other.
However, the real benefit of social trading – it’s real essence – lies in traders being able to copy other, more successful traders. The goal is for traders to more easily make a profit and reduce the risk of losses, all without having to do extensive research.
Now, we really need to make a point here. Social trading is NOT an alternative to learning how to trade. Social trading is risky, just like any other form of trading, but it can be even more risky if you treat it as a passive investment and limit yourself to simply copying other traders. You need to follow up and keep an eye on your investment.
The Pros and Cons of Social Trading
Like everything, social trading has its shares of pros and cons. The pros are as follows:
- Newbies can learn to trade more easily. New traders can log onto the discussion boards, communicate with more experienced traders, and watch what veteran traders do. You can ask questions, learn to spot trends by watching what others do, and much more. From this point of view, social trading is invaluable.
- Less research time for more traders. We are specifying that this is for experienced traders because we firmly believe newbies should research because it’s the best way to learn. However, if you’re already experienced, saving a little time never hurt anyone.
- Interacting with other people. Let’s be honest, trading is a lonely occupation, especially if it’s your main source of income. So, it’s nice to be able to share with like-minded people. It also provides you with the opportunity to learn from other people’s trading styles and teach them yourself, too.
In terms of cons:
- Complacency is an issue. People start thinking they don’t need to do any research at all. For someone who is experienced and has already learned how to trade, it isn’t much of a problem. But for a new trader, this can be a trap that can cost you a lot of money.
You should use social trading as a complementary tool in your trading education. It’s incredibly helpful and useful in developing your trading skills. If you simply copy other traders without understanding why they’re making the moves they are, it will be difficult for you to make adjustments when the market corrects.
There are many variables to consider and even if a trader has a good average return, the size of their investment alone could determine how long they stay in the market. They might be able to take a large loss because they have the capital to do so, but you might not and could end up losing everything.
All in all, it’s safer to use social trading to trade once you know what you’re doing. Until then, use it as an educational tool.
Introducing eToro’s CopyFunds
eToro offers a series of unique investment opportunities to traders called CopyFunds. There are two types available, namely Market CopyFunds and Top Trader CopyFunds. Market CopyFunds are formed of bundles of commodities, CFD stocks, or ETFs and use a particular market strategy to trade. Top Trader CopyFunds are made up of the traders with the best and most sustainable performance on eToro.
The goal of CopyFunds is to help investors make more money with a lower level of risk by copying successful trades and helping them create a diversified portfolio.
A wide range of Market CopyFunds are available, and they tend to revolve around different themes. For example, there is a CopyFund for cryptocurrencies, another for all stocks, yet another for stocks solely from the gaming industry and so on.
The cryptocurrency CopyFund, or the CryptoFund, includes Bitcoin, Ethereum, Litecoin, Ethereum Classic, Dash, and Ripple. To invest in the fund, all you have to do is locate it on the platform, which is quite easy to do, click the big invest button and decide on how much of your portfolio you want to allocate to said investment.
There are quite a few Trader CopyFunds available as well, though the criteria vary widely in regards to how these funds were created. For example, the CopiersPlusR4 CopyFund is made up of a group of traders that have gained more copiers over the previous month and have a risk score of 4 or below. On the other hand, the Active Traders Fund is comprised of frequent traders that have achieved solid returns and tend to offer the most advantages risk/reward ratio.
The eToro Platform
The new eToro platform is entirely web-based. Once upon a time, they had two platforms – one known as WebTrader and the other was OpenBook – but they were deactivated with the launch of this new platform.
The eToro platform is extremely simple to use, from all points of view. But let’s take a look on a point by point basis.
If you’re planning on trading traditionally, eToro is extremely easy to use. You can quickly find whatever asset you want, from cryptocurrencies to metals and everything in between. What we really liked is that you can create your very own lists of assets, making it easier to keep an eye on only those you are interested in. Since we mainly focus on cryptocurrencies, we of course made our own list that consists of all the cryptocurrencies eToro offers, namely Bitcoin, Ethereum, Ethereum Classic, Ripple, Dash, and Litecoin.
The platform, of course, includes a charting feature. It was a little difficult to find at first, but once you know where you can launch the charting software from, it’s not that much of an issue. There’s really not much to say about the charting software, other than it’s simple, intuitive and offers more than enough indicators, studies, and tools for even the most discerning trader.
Placing an order couldn’t be easier. Simply click on the buy or sell button and a window will pop up asking how much you want to trade, what your stop loss is, leverage, and take profit. You can edit all these parameters. In all honesty, it’s the first time we’ve seen a platform that allows you to change leverage for each trade.
The platform also makes social trading extremely easy. All you have to do is click on “Copy People” in the menu on the left and a page with a list of traders appears. You can sort them by their average returns, average risk, and even by the change percentage in copiers. Once you’ve found some traders you like, add them to your watchlist. From there, you can choose to copy their trades.
And eToro makes things even easier because you assign a particular percentage of your portfolio but can also include stop losses so that if a trader you’re following starts losing big time, you are protected by the stop losses in place.
The eToro platform also makes the other aspect of social trading very easy because on every page, you have the option of sharing your trades, writing posts, and more.
Since we trade mainly cryptocurrencies, we first looked for traders focusing on either Bitcoin, Ethereum, Ethereum Classic, Ripple, Dash, or Litecoin. The goal was to see how much information the platform gave us about each trader. And it was quite a bit.
Initially, you will see cards with each trader’s name, a profile picture, their average returns over the previous 12 months, and a risk rating issued by eToro. The lower the number, the lower the risk.
You’ll also see how many people are currently copying that person as well as the percentage of change in copiers over the previous 7 days. In other words, if more people have started copying that trader over the past week, you’ll see a positive percentage.
If you mouse over the card, you will see a quick description of the trader in question.
Once you click on their name, though, you will be taken to their profile where you will gain access to much more information. There are four tabs, namely their main feed, stats, portfolio, and chart.
The Feed Tab
The feed tab essentially shows a snapshot of who they are, where they’re from, as well as a chart with their current year’s performance. The page also shows how many people are following them and how many people are copying them.
The main part of the page is dedicated to a feed that’s similar to a Facebook wall. In other words, the trader can post on the feed but other people can also share their views and interact with him or her. This is where the social aspect of social trading comes in.
The Stats Tab
Under the Stats tab, you will find a lot of information on a trader’s historical performance. Some of the information you can find includes:
- Monthly and annual returns for as long as they’ve been trading on eToro;
- Average risk score for the past week;
- Average monthly risk score;
- Current number of copiers and a graph of their change over time;
- Daily, weekly, and annual max drawdown;
- Assets under management range;
- Trading frequency;
- Average profit and loss;
- How often they are profitable;
- The assets they trade and their performance on each asset…
- And more.
So, if someone trades cryptocurrencies, you’ll be able to see whether they trade Bitcoin, Ethereum, Ethereum Classic, Ripple, Dash, or Litecoin and what their returns are on each of these.
It’s really great because someone who is successful in trading metals and oils won’t necessarily be as adept at trading cryptocurrencies. Using this feature, you can find those traders specializing in Bitcoin, Ethereum, Ethereum Classic, Ripple, Dash, or Litecoin, whichever you prefer.
It’ll also help you eliminate the traders off your list that don’t trade cryptocurrencies at all. Remember, when you copy their trades, you’ll be trading the same assets. So, if you want to focus on cryptocurrencies like Bitcoin, Ethereum, Ethereum Classic, Ripple, Dash, and Litecoin, then copying someone who mainly trades gold and GBP/USD is going to be a waste of time.
The Portfolio Tab
The portfolio tab features a list of the open position the trader currently has. The list includes:
- the asset being traded
- whether it’s a long or short position
- the percentage of their capital they invested
- their current profit or loss percentage
- the value
- the current ask and bid prices, along with buttons to be able to open positions directly from that screen.
If you click on a particular trade, you will see even more information, including the most recent actions, the amount of leverage, the open and current prices of the trade, the stop loss, the take profit, the profit and loss percentage and more.
There is also a history option, allowing you to see individual historical trades that have already been closed. This is especially useful if you want to get a better feel for a trader’s particular style.
The Chart Tab
The chart tab simply shows a visual representation of that trader’s performance over time, since they’ve been trading on eToro. You can easily zoom in and out to see a specific period or the whole duration.
In terms of education, eToro offers a Trading Academy where they offer live webinars, a trading course, and trading videos.
When we went to register for a live webinar, none were available. There were some pre-recorded ones in different languages, though. Their main focus is on using the CopyTrader feature but on their OpenBook platform, which is no longer available.
When we went to check out the trading videos, we found a series of videos teaching us how to trade with their platform and how social trading works. Unfortunately, quite a few of the videos are out of date seeing as some of them present the old platforms.
Interactive Trading Courses
EToro offers a course for traders and investors consisting of a series of videos. These include:
- Forex Advantage – an introduction to the Forex market;
- Basic Forex Terms
- Types of Orders – teaches traders all about orders and how to use smart orders to maximize profits and reduce risk
- Effective strategies – tips and advice on being profitable and reducing losses
- Glossary of Concepts
- The World of Global Trading – looks at the global trading market, including the presentation of different financial assets
- Trading Psychology – explains trading psychology and its importance to successful trading
- Capital Management – reducing risk through effective capital management
- Market Analysis – a presentation of technical and fundamental analysis
- Basic Technical Analysis
- Advanced Technical Analysis
The course is great for beginners and it does provide a good foundation but it only really scratches the surface of trading. For example, in the Advanced Technical Analysis video, the main focus is on candlestick patterns, which is still a pretty basic area of technical analysis.
So, while the course certainly isn’t for advanced traders, and you will have to supplement with lots of further education, it is definitely a good starting point.
The eToro Blog
The eToro blog offers lots of information, including market analysis, guides to various types of trading and investing, educational articles and much more. Though not organized quite as efficiently as a course would it, it still offers a lot of pertinent information newbie traders will benefit from.
Where eToro really shines though is their online community. Courses are great but the online community is even better because you can ask questions when you don’t understand something. And after going through the theory, watching other people apply it is an even better way to cement the concepts you learned.
However, it should be noted that there isn’t a forum as such. Instead, communication happens via people’s walls, which you can find when you click on their names. It’s quite similar to Facebook in that regard so most people shouldn’t have a problem.
From all points of view, we really like eToro. We love the social trading aspect as it makes learning to trade much easier. We have come across other brokers that offer something similar, but we have to admit the eToro platform makes it so much easier to actually pull off copying other people’s trades without the hassle of fiddling with a gazillion settings.
All in all, we really liked the platform, but what really kicked eToro to the top of the list for us was how well the social trading aspect has been done, from the easy of copying other people’s trades to the simplicity and convenience of communicating with other traders. When you’re trading on eToro, you don’t feel like you’re in a glass bubble, isolated from the world, like with most other platforms.