Understanding eToro Alternatives: An Investors’ Guide

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10 min read minutes read/Updated: 15.05.2020

Founded in 2006 under the name of RetailFX by the Assia brothers and David Ring, eToro emerged as one of the biggest platforms in 2010 facilitating social trading. With registered offices in Cyprus, Israel and the United Kingdom, the business has successfully created a marketplace enabling easy trading of stocks, commodities, currencies, exchange trade funds, cryptocurrencies and indices. The platform has been able to create a robust presence online with its social trading and investment linkage. But what is unique about the eToro business model? What are different eToro alternatives available in the market? This eToro review answers these questions.

  • eToro investments and social trading
  • eToro cost-effective trading fees
  • eToro alternatives
  • How secure are eToro investments?
  • eToro funding and awards
  • eToro app

eToro Investments and Social Trading

eToro allows users to trade different asset classes on its platform using their own strategies for investment.

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The asset classes involved are:

  • Stocks traded on the platform using the CFD trading form, commodities like oil, natural gas, precious metals, gold, platinum, etc.
  • Foreign exchange currencies such as EUR/USD and cryptocurrencies including Bitcoin
  • Exchange-traded funds like SPDR Gold, Proshares Ultra, formed by grouping assets which can be distributed to investors just like stocks and dividends
  • Indices such as NASDAQ, DOW Jones (DJ30) which reflect the performance of stocks in the market

Social Trading is one of the key features and differentiators of the platform that allows users to copy successful traders by leveraging the company’s patented CopyTraderTM feature. eToro ensures that the Social Trading network is simple, reliable, profitable and helps in the development of an ideal portfolio for the user. CopyFundsTM is another flagship program wherein investors can copy eToro’s top traders and/or a market copy fund which bands together CFD stocks, ETFs and commodities. On this front, eToro has taken social trading to another level and is at the vanguard of such investing. The Popular Investor Program is also carried out to allow top traders to enlighten other users about the keys to trading success.

eToro cost-effective trading fees

The fees framework for eToro has been structured in such a manner that eToro trading fees and non-trading fees are charged separately. The trading fees charged by eToro are economical when compared to other competitors in the market. Trading at eToro involves no commission. However, for those who do not have to change the positions of their investments by the day, an overnight fee is charged. The changing market positions and liquidity determine the spread and the fees are usually charged by eToro according to the closing position. There are no overnight or weekend fees charged for investing in cryptocurrencies. However, fees may be charged when cryptocurrencies are being sold or when the users are existing holders of Bitcoin or Ethereum positions. Apart from this, the non-trading fee structure has fees including withdrawal fees, inactivity fees and conversion fees which are charged separately. For example, a withdrawal fee of $5 is charged for withdrawal amounts of $50 or more. The conversion fees charged from the user varies depending on the region. For example, the conversion of Australian dollars to US dollars is 100 pips. If the currencies vary in the initial deposit the conversion fees would have to be paid at the time of deposit as well as withdrawal. eToro also charges an inactivity fee of $10 from those users who remain inactive for a period of 12 months in depositing accounts and four months in non-depositing accounts untill the account becomes active.

eToro alternatives

eToro may have emerged as an ideal fit for customers who wish to take up a different investing path via social trading and want to follow trading leaders in their investing strategies. Finding eToro alternatives is important to understand the different options available in the market and is required to bring out a true stock broker comparison of various brokers based on fee and performance. Zulutrade, which has over 500,000 users and a strong social investment network is considered an eToro alternative and is one of the biggest competitors in the market. The two differ in the way business is done as:

  • Zulutrade does not offer brokerage services, i.e. users are required to choose forex brokers on their own
  • Zulutrade uses very risky trading strategies which may either lead to extremely high profits or big losses

Another competitor is Tradeo which, as an alternative to eToro, has entered business much later but has still been successful in capturing an active customer base. Tradeo allows customers to use their expert advisory tools and also makes sure that there is no dealing desk functionality, and saves the customer from unnecessary inconvenience. MyDigiTrade, another eToro alternative, is no different and is another platform which supports users who do not have an inbuilt broker to help them analyse past performance of traders and perform a broker comparison.

eToro Market snapshot

eToro serves more than 170 countries and has a broad customer base of over 4.5 million. It has been successful in raising a total amount of $222.9m in 9 funding rounds. Out of these, the first one was carried out in January 2007 and the latest one was executed on 26 Apri 2018. In March 2018 there was news about eToro raising $100m to explore new markets and to work better on the aspect of digitalisation while going deeper into blockchain research. In such conditions, eToro face tough competition from its peers such as Wikifolio and Ayondo. Wikifolio is like an investment fund which comes with certificates that determine the performance of investment funds. Ayondo is an alternative to eToro that operates in over 195 countries and has over 210,000 users. It provides intuitive, secure and focused customer service to its customers. However, eToro has come out as the best stock broker platform as the extent of services offered by the platform cannot be matched by any other broker in this space. eToro also ensures that the trading activity is carried out in a dependable manner and has launched a responsible trading policy for smart investments. eToro advises their users to invest in what they know and to be conscious of their risk score, while diversifying their portfolio and learning from responsible traders.

How Secure are eToro Investments?

Transparency is one of the key pillars of the eToro platform. It allows different users to have access to the profiles of others on the platform to facilitate sharing of important information among the trading parties. eToro wants to back its customers by offering them trustworthy investment options and by mitigating the risk factor. The platform is strictly regulated and adheres to the guidelines of CySEC and FCA. Special attention is devoted to beginner traders so that they are given the right guidelines as they move towards online trading. Experienced traders have access to risk management features so that they continue to trade responsibly. The eToro platform’s compliance with MiFID directives is specifically in place for areas where categorisation of clients is involved. For the purposes of the platform, individual clients of operation are regarded as retail clients which grants them the highest degree of protection.

Compensation schemes and asset-safeguarding options are made available for individual clients. eToro safeguards their users and makes sure that they are confident about the safety and security of their funds. The platform has incorporated and maintained high standards of cybersecurity in order to ensure the safety of the client’s funds. Also, anti money laundering policies are adhered to in order to safeguard client assets and therefore ensure secure deposits and withdrawals. This is a major reason why other alternatives to eToro have not been able to reach the position of eToro.

  • Regulated platform
  • CySEC and FCA compliant
  • Performs in line with MiFID directives

eToro Funding and Awards

eToro offers one of the most secure platforms available and has definitely been designed in a manner that calls for appreciation. Those in the industry have identified the same and have endeavoured to give the business its due credit. In the Fintech space, eToro’ s emergence as the leader has led to the platform being decorated with multiple awards. One of the major awards that eToro has received recently has been the Finovate Best of Show Award in 2015 & 2017. In the category of People and Culture, at Finovate Europe, eToro won the Third Consecutive Best of Show Award in 2012 and made its mark among the 35 competing companies present at the event. eToro was judged the Winner of Red Herring 100 Award for emerging as one of the most promising and innovative companies in Europe. eToro was also presented the Best of Show at Finovate Fall 2011 in NYC for its role as the largest investment network and the application CopyMe which allows expert traders to get in touch with beginner traders and earn more money as they tutor them through the process of building their investment skills. In 2010, eToro was awarded the World Finance Award for the Most Innovative Trading Platform. The platform’s graphic interfaces, which are easy to access for users, and the expert tools used by the platform also deserve due recognition.

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The eToro App

eToro has devised a responsive, all-encompassing web application that is supported both by Android and iOS mobile phones, tablets and other devices. The idea was to design a user-friendly app that would eliminate the bugs and glitches faced by users and work towards delivery of a top-quality experience for all traders.

The eToro platform can be put to use for:

  • Protected deposits and withdrawals
  • Entry to trading in global markets
  • Access to newsfeeds and charts in real-time
  • Management of user’s personal portfolio
  • Onboard popular investors
  • 24/7 engagement with social traders

eToro has also been working on the improvement of their app and development of a new app in order to develop a fool-proof platform as a Beta version of the app. eToro’s free mobile application also aims to optimise the user experience and take the trading space a notch higher by giving a website-like feel to the mobile application itself. Features like Trader Charts, Editor Choice, Mobile Mentions trading and Compare & Share have been added. Trader Charts provide analysis of the performance of copy trading which will provide users with a better idea of understanding the expectation of copying traders across different time periods. The Mobile Mentions Trading feature eases processes for traders as their activities will be guided by the news feed. The Compare and Share option enables members to draw a comparison of traders graphically and ascertain accordingly whose performance was better.

Alternative brokers to eToro – a breakdown

eToro has from time to time enjoyed its share of press coverage as it has been featured in a number of news articles in The Times, The Financial Times and CNBC News, among others. 2017 has helped eToro to expand its customer base of the business particularly because of the hype about cryptocurrency. With three major goals of innovating, reinventing and disrupting, eToro has made its mark in the fintech space. eToro has showcased the true image of being a leader in the industry because it has been working on bringing transformations to the money management industry and bringing the world closer. eToro’s personal touch and working on the pillars of simplicity, innovation, social trading, responsibility, security and transparency has helped in developing a collaborative trading space and education platform for traders. In its ten year history, eToro has already made its mark by onboarding the best traders in the industry. The business is continually striving to spread its wings globally, helping users to invest more transparently and in a much more simplified manner. There are alternatives to eToro out there, but very few have a candle to hold to eToro!