eToro has established itself as one of the leading names in the world of social investment and sees itself as revolutionising the way people invest. The social trading network has managed to differentiate itself from many of it’s competitors and offers multi asset social and copy trading.
eToro aims to connect investors with experienced traders allowing users to share information and ideas with one another. Thus creating an environment which is very much like a Facebook but focused towards investors and traders. At the heart of the eToro social trading network is the ability to automatically copy other traders and investors using the platform. This allows for less experienced traders to profit from the successful trading decisions of other more experienced investors.
eToro runs a program which rewards successful traders who build a following on the platform, this attracts those with investment expertise and knowledge to share their trades with users of the platform. As this allows them to make an impressive second income in addition what they already make from their trading activity. Thus eToro has been able to attract a significant number of very impressive traders to their social trading network.
Those with social networking accounts will be able to get grips with the eToro platform very quickly. Each trader has their own page where they can post status updates and where the information from their latest trades is displayed. It is also possible to view their trading history and get a detailed statistical breakdown on their past performance. This allows users of the platform to get a good feeling of which traders on the network are worth copying.
The discover people tool also allows for users of the platform to filter eToro’s users according to a number of criteria making it very easy to identify traders who are worth researching further. eToro makes the whole copying process very simple making the platform ideally suited to less experienced investors. Users simply have to press the copy button and allocate a certain percentage of their capital to the particular trader in question. eToro doesn’t allow users of the platform to allocate more than 20% of their total capital to any one trader on the platform, this to help minimise users overall risk by forcing them to hedge their investments with a number of different users.
What sets eToro apart from many of it’s competitors is the range of instruments available to trade on the platform. While the majority of social trading networks are heavily focused on Forex, eToro offers a much more comprehensive range of trading instruments. Though eToro itself offers an impressive range of currency pairings. Additionally, users of the platform can trade a wide range of CFD’s, with eToro offering Indices, Commodities and a range of popular Stocks. The offering of Stock trading is something which really sets eToro apart from it’s competitors who are typically solely focused on currency pairings. This is will also be attractive to a whole range of people who are not interested in trading Forex or Commodities.
Unlike with broker independent services, traders do not have a choice of brokers to trade with. All trades are entered into with eToro itself rather than placed with a supported brokerage. This has both advantages and disadvantages. Those using the eToro service do not have to pay any commission due to eToro making it’s money from the spread charged to traders. On the other hand traders are not able to trade with the brokerage service of their choosing, with eToro’s spreads being marginally wider than what’s on offer with competing brokers. Once you factor in that you do not have to pay any commission in order to use eToro’s social trading service, the difference is negligible.
eToro is based and regulated in Cyprus meaning that those opening accounts with the social trading network can feel at ease. European wide directives on financial regulation ensure that those dealing with the company are afforded a certain level of protection should the company come into trouble and also receive piece of mind knowing that the firm is watched over by Cyprus’ financial services regulator CySEC. Cypriot financial regulation goes above and beyond the minimum’s demanded by the European Union in a number of ways. This is yet another way in which eToro has been able to differentiate itself from a number of competitors who operate without being required to obey EU regulatory standards.
Does eToro represent a good preposition for investors? Etoro’s social trading network boasts a number of traders who have consistently posted impressive returns and users who correctly identified and copied these traders are likely to have made some impressive returns. This cannot be said of all of the users on the network. Some traders who have built impressive followings on the platform have much more questionable records, posting large drawndowns and significant equity swings. This means that those using the eToro platform should take care when choosing who to copy and should make carefully considered decisions.
The only other drawback is that eToro is risk management settings are not as sophisticated as those offered by rival services. While this makes it easy for newcomers those who are more experienced may wish they had more control. Careful consideration in regards to copying users on the platform and active monitoring of your trading account will allow you to get the most out of your eToro experience.
- Simple to use platform, reminiscent of social networks but with a trading twist.
- Wide range of available instruments outstripping many of eToro’s competitors.
- Large and active community with a number of highly skilled traders.
- No commission for using the eToro social trading service.
- EU Regulated social trading service.
- Varying quality of traders, requiring users to actively monitor their accounts and make careful decisions regarding who to copy.
- Relatively simply risk management settings.
Etoro’s offering stands out in a number of way and will certainly appeal to those who want to try their hand at copy trading. The ability to trade a wide range of asset classes is a real plus and the platforms ease of use makes it a great choice for those taking their first steps into the world of social trading.