eToro

FCA Regulation: South African traders of eToro will be trading under the subsidiary, eToro (UK) Ltd, authorised and regulated by the FCA. Known as one of the strictest regulators in the world, the FCA has put in place a number of restrictions to protect traders.

Safety Features:  The FCA protects South African clients by ensuring that eToro:

• Segregates client funds from its operating capital.
• Restricts leverage to 30:1 for Forex trading.
• It provides all clients with negative balance protection, meaning that traders can never lose more money than they have in their trading accounts.
• Does not offer promotions, bonuses, or trading on cryptocurrency CFDs. 

In addition to complying with the FCA‘s rules, eToro has purchased an insurance policy from Lloyd’s of London, which covers up to 1 million EUR, GBP, or AUD.

We found that eToro’s account-opening process is seamless and hassle-free compared to other brokers, and we were pleased that our trading account was ready for trading within a day.

We tested the account opening process, which took approximately 10 minutes to complete, and once our documentation had been submitted, our accounts were ready for trading within a day. 

How to open an account at eToro:

1. On the front page of the website, we clicked on a button marked “Join Now” or “Trade Now.”
2. We were directed to a page that required us to enter all our personal data.
3. Before submitting this information, we were required to agree with all eToro’s Terms and Conditions, and privacy policy.
4. As part of the Know Your Customer (KYC) process, we were also required to provide confirmation of residence (e.g. a valid utility bill dated within the last 6 months), as well as proof of identity such as a valid passport, or another form of officially issued photo ID.
5. Lastly, as a final step of the KYC process, we were required to fill in a questionnaire to ascertain our level of trading knowledge.

Once our documentation had been submitted, our accounts were ready for trading within a day.

You can follow your verification status on the eToro platform. Verified accounts have a green tick next to the username on the user’s profile.

eToro offers a wide range of financial instruments but really stands out for its commodities and ETFs. 

eToro’s account has a minimum deposit requirement of only 100 USD, making it accessible to most traders. Although the CFD trading account is commission-free, spreads start at 1.0 pips on the EUR/USD, which is wider than other similar brokers. Most other good brokers have an average spread of 0.9 pips (EUR/USD). 

We opened and tested eToro‘s accounts:

Professional Account

Retail clients can elect to become professional traders by successfully passing a test to determine their suitability. This allows access to higher leverage but the waiving of certain ESMA protections such as the Investor Compensation Funds and recourse to the Financial Ombudsman Service. 

eToro Club and Tiers

Although there is only a single account type, with higher minimum deposits, traders gain access to the eToro Club – which operates a tier system: The higher the tier, the more rewards, and advantages you receive. These include free market analysis, access to the Trading Signals platform, free withdrawals, access to a dedicated Customer Success Agent, analyst consultations, and more.

eToro’s mobile trading platform is well-designed and easy to use. The mobile app is available on both Android and iOS. 

eToro created the first social trading system and is the largest social online trading broker in the market.  Its mobile app offers support for an easy-to-use and fun copy trading service and Copyportfolios, which bundles together all tradable assets under one chosen market strategy to minimise long-term risk and create diversified investments.

We liked that the mobile app is highly customisable and has great functionality. We could trade from the charts, transfer, withdraw and deposit funds, search for instruments and create watchlists. We were also impressed that we could choose the layout of our watchlists and charts and that the latest market research was easily accessible:

A serious downside of its platform is the lack of support for auto trading systems available on other platforms. And, unlike other brokers, eToro does not offer support for third-party platforms such as MT4.  A benefit of offering third-party platforms is that traders who decide to migrate to another broker will already be familiar with the platforms.  On the flip side, in-house platforms such as the one offered by eToro are often more beginner-friendly and easy to use. 

eToro Platform

We found that like the mobile app, the web trader platform has a clean and intuitive interface and excellent functionality – it is easy to search for various instruments, and there is access to four order types, including market, limit, stop-loss, and trailing stop-loss orders.  Additionally, we were able to easily set price alerts and notifications, and we could decide how we wanted to view our portfolio reports. 

To aid traders who commonly trade the same pairs, eToro’s platform gives traders a customisable dashboard overview of different currency pairs.

Its unique bespoke web trader platform also offers full support for eToro’s CopyTrader, and CopyPortfolios, two unique social trading tools.

Overall, eToro offers one of the best social trading experiences in the world, but its offering would be enhanced by support for third-party platforms such as MT4. 

A well-regulated broker, eToro ensures that all Anti-Money Laundering rules and regulations are followed, and as such, all non-profit withdrawals are returned to the deposit source. It is important to note that traders must withdraw up to 100% of the deposit to a credit or debit card. 

Accepted Deposit Currencies: Extraordinarily, the eToro client portal allows traders to deposit funds in 21 currencies, but this does not include ZAR. However, it charges currency conversion fees for deposits in currencies other than USD.  For example, if a trader deposits in ZAR via bank transfer, a 50 pip fee will be applied (which is around 0.46% of the deposit amount).  The same fee is also charged when withdrawing to a ZAR bank account.

High Non-trading Fees: While no fees are charged for depositing money, a 5 USD fee is charged on all withdrawals, no matter the amount. This is a much higher fee than is charged at other similar brokers. eToro also charges an inactivity fee of 10 USD per month after three months of inactivity, and as mentioned above, charges high currency conversion fees. Traders should be aware of these fees because they can significantly affect profitability.

Another downside to eToro’s withdrawals is that traders cannot withdraw less than 30 USD from their trading accounts, and withdrawals take around 2 business days to be processed, which is longer than other similar brokers. 

CopyTrader

CopyTrader is eToro’s social trading feature. Traders can browse through the profiles of other eToro traders, checking their monthly and annual performance. eToro also applies a risk score to each trader in addition to other stats available for each profile. Users can then allocate a portion of their capital to copy other traders.  Each user remains in full control of their trading and may exit positions at their discretion; however, traders cannot close part of their position, only the full amount.

CopyPortfolios

CopyPortfolios provides a similar service but bundles together all tradable assets under one chosen market strategy to minimise long-term risk and create diversified investments.  A type of investment platform, eToro’s investment committee professionally manages copied portfolios and creates investment strategies.  Traders should note that the minimum investment amount for CopyPortfolios is 5,000 USD.

Clients should be aware that the quality of the investment advice coming from the eToro community varies and should be considered unreliable until it has been well vetted.

eToro provides a limited selection of research and market analysis materials compared to other similar brokers. 

eToro provides a newsfeed with relevant market movements that is updated daily by its team of in-house market analysts.  Most other analytical content comes from the members of the eToro community. The news feed is a central component of eToro’s trading platform and is an unfiltered list of trading ideas and accompanying graphs. Be aware that this analysis is community-created content and should be viewed with deep skepticism.

One drawback is that there is a limited selection of fundamental data available on the platform.

Overall, eToro’s market analysis materials are poor compared to those of other large international brokers. 

Although eToro offers a unique social trading platform to help beginner traders get started, its educational materials are limited compared to other similar-sized market makers. 

eToro hosts a short course titled The Complete Guide to FinTech that teaches traders the basics of trading – especially trading on the eToro platform. It is more of an overview than an in-depth course, and much of the content covers asset classes other than Forex.

eToro also hosts a blog that is updated daily with various trading tips, though these mainly focus on eToro’s platform. Webinars are held infrequently and tend to be more focused on market conditions than the rest of the educational material.

Overall, the education section could be improved with a greater variety of materials in addition to providing sections for beginner and more experienced traders.  Beginner traders would also benefit greatly from being able to attend webinars on CFD trading basics and risk management. 

Available 24/5, eToro’s customer support is available in 21 languages.  Since 2017, it has used a ticketing system for all client support requests. Be aware that there is no phone or chat support available, and the response times are known to be painfully long, often exceeding 48 hours and even up to 14 days.  However, customers who deposit more than 5,000 USD will receive the services of a dedicated Customer Success Agent.

Overall, customer service is unresponsive, but eToro provides a comprehensive FAQ section.