eToro – The Next Big Thing in Social Trading
eToro is a leading social trading company which was founded in Israel by brothers Ronen and Yoni Assia in 2007. Although the company spent its first two years offering an online trading platform, it was not until 2009 that the platform gained worldwide users by launching Webtrader, a trading platform designed for traders of all levels. In 2011 the success was repeated with the launch of OpenBook – the first social trading platform in the world. It enables users to exchange trading ideas, share trade information and learn from each other.
The initial goal of the founders was to make trading accessible to everyone, as well as to reduce the dependency on conventional financial institutions. It has, in the meanwhile, evolved into one of the leading platforms for cryptocurrency trading as eToro was one of the first companies to jump on the cryptocurrency bandwagon.
The main element that differentiates eToro from other trading platforms is the focus on socializing the process of trading. In this regard, the CopyTrader platform allows users to replicate trades automatically, hence allowing each and every user to become either a leader or a follower. The news feed sets up a platform for the exchange of ideas and trading information, thus equipping users with more knowledge to make informed decisions. The Copytrader is fully transparent i.e. one has the ability to see the portfolio of each user, as well as risk rate, success/fail ratio, trades etc.
The CopyFunds is another platform developed by eToro. It is designed to team up traders around one common theme. The goal is to assist investors in the process of minimizing risk and creating a diverse portfolio. The platform has three types: Top trader CopyFunds – gathering the most consistent traders; Market CopyFunds – grouping several similar assets together and Partner CopyFunds, which devises traders based on their area of expertise. Within Copyfund, Crypto CopyFund is a diversified portfolio consisting of crypto coins with a market cap above $1B and a minimum monthly volume of $20M e.g. Bitcoin, Ethererum, Ripple, Litecoin and Dash.
eToro invests a great amount of resources into the education area. Its education center offers webinars, training courses, guides, blogs in different languages, etc. The videos start at the basic level, teaching everything from how to open an account and deposit and withdraw funds to learning about trading. Live webinars are hosted by experienced traders where they discuss trading strategies and recent developments in the trading world.
Requirements and fees
As of April 2017, the size of a minimum trade depends on the exposure in the context of applied leverage. Specifically speaking, for cryptocurrencies the required minimum is $200. For example, if you choose a 1:1 leverage, you must invest at least 200$. If, however, you choose 1:5, then you can deposit as little as 40$. The amount of $5,000 is a minimum investment required to use the CopyFunds platform. In order to use the CopyTrader, a patented product, the user must deposit a minimum of $200 in order to participate, while at least $25 is a minimum quantity needed for manual positions in cryptocurrencies.
Type of broker: Market Maker
Minimum deposit: $200
Maximum leverage: 1:400
Account types: Standard, Premium, Islamic, Segregated, Managed, Institutional.
Deposit and withdrawal options: Bank transfer, credit cards, PayPal, WireTransfer, Skrill, Netteler, WebMoney etc.
Mobile apps: Available for IOS and Android
By going long (buy) a cryptocurrency, users enjoys no investor protection as the buy position is not a regulated product. On the other hand, the short (sell) position is executed using CFDs (Contract For Difference), therefore operating under the regulations of CySec (Cyprus Security) and the FCA (Financial Conduct Authority). Withdrawals are simple to complete as one has to fill out the electronic withdrawal form in the “cashier” section. It takes one business day to complete a withdrawal and the minimum withdrawal amount is set at $50. There is no limit when it comes to depositing funds.
In order to further improve business sustainability, eToro introduced no-leveraged trading in 2015. By opting for this route, the company wants to offer a chance to its customers to reduce the risk associated with trading. While leverage can be beneficial, it is also one of the main reasons for catastrophic demise of numerous retail traders, mostly inexperienced ones.
BitCoin was added to the trading list as early as January 2014 by eToro. Currently, one can trade Bitcoin, Bitcoin Cash, Bitcoin/Euro, Ethereum, Ethereum Classic, Ethereum/Euro, Ripple, Litecoin, Dash, Stellar, EOS and NEO. Moreover, only non-leveraged crypto trading is currently possible at eToro. The company went through a difficult spell at the end of 2017 as the number of new users was a bit too large to cope with on their trading platform. This caused certain limitations as some users could not log in or open/close trades.
The eToro’s crypto exchange platform is to be launched in Q4 2018 while the eToro mobile wallet is expected to be finalized by August 2018. Both the crypto exchange and a mobile wallet are a result of a fundraising campaign conducted in March 2018 during which eToro raised around $100m. The eToro’s competitive advantage lies in the rich experience and knowledge in the trading realm; therefore the launching of a crypto exchange and mobile wallet will further diversify its services.
Accessibility and support
eToro has a great worldwide reach. The platform is available globally in more than 140 countries. It is banned for operation in such countries as North Korea, Syria, Iran, Myanmar, Cuba and Sudan. As of May 2018, the US-based customers can join the eToro waiting list and perform mock trades because the company has started the process of obtaining a license. The company’s decision to enter the US market is a result of an analysis showing the US as the hub for the trading of crypto assets. The company’s crypto exchange platform will be operated from Gibraltar. Furthermore, eToro is also working on opening a cryptocurrency trading desk in London, which is scheduled for the end of 2018.
eToro offers online customer support via telephone and email for 24/5, Monday to Friday. The company was under fire for failing to support its users during the crypto frenzy in the late 2017, but has since enhanced and upgraded its customer support unit.
For the cryptocurrency traders, eToro is a leading trading platform. Although its limited range of offered products is somewhat disappointing, the platform’s features such as the CopyTrader and CopyFunds provide the company with added value compared to their competitors. Hence, for crypto investors trading Bitcoin and major altcoins, eToro is a brilliant choice. Others, looking for a more diversified range of products, may want to look elsewhere.