Last updated: 02nd Dec 2024
EToro and Plus500 are two brands that appear frequently in trading circles. eToro edges the user count with 33.4 million, but Plus500 has a solid 26 million of its own clients and has a market cap of $3.55 billion (latest available figures).
Despite this, their Product Review scores are both 1.4*, which seems antithetic. So, what’s the real story?
This article will attempt to separate fact from despairing investor rant fiction while offering insight into the best platform for your situation.
A quick heads-up in case this is a deal breaker: eToro is the only platform that allows you to invest in direct equities, ETFs, options or crypto (however, you can invest in these via CFD on Plus500).
| Key Takeaways: |
|---|
| eToro is a multi-asset platform with a unique social network aspect to trading that may appeal to less-experienced investors. |
| Plus500 is intended for a different type of user who is likely a more experienced investor. |
| eToro’s fees will be slightly higher for the average user, but it offers a more premium product on the whole. |
eToro Vs Plus500: My Quick & Dirty Verdict.
Are you relatively new to investing and intrigued by the idea of having a trading app that feels as easy to use as Instagram? eToro will most likely suit your needs best.
Have a reasonable amount of experience and plan to trade CFDs only? Plus500 is likely going to be a better fit for you.
Important!
Beyond this, it would be fair to say eToro and Plus500 should probably not sit in a side-by-side comparison. The features that suit an eToro user are likely not what a Plus500 user values.
eToro’s main differentiators are the CopyTrade and Smart Portfolio features, designed to take the guesswork and timesuck out of investing.
- These premium features make eToro’s brokerage fees more expensive than what you’ll get with the cheapest brokerages in Australia.
- However, they can pay for themselves over the long term if used wisely.
The user most suited to Plus500 will likely not use social trading features and have a more established investment strategy in mind.
Expert Tip.
The slight nuance is that an expert trader can profit from eToro’s Users Under Copy (UUC) feature, which works somewhat like how a fund manager profits from taking a percentage of assets under management (AUM). This feature might make eToro an attractive proposition to a professional investor.
| eToro Is Best For: | Plus500 Is Best For: |
|---|---|
| Beginner investors | High-volume / day traders |
| Investors interested in CopyTrading | More customer support channels |
| Investors wanting more education | Advanced risk management tools |
Selection Of Assets.
| eToro | 9/10 |
| Plus500 | 7/10 |
eToro offers a wider range of assets and the ability to directly own equities, ETFs and options.
Plus500 offers a slightly lower number of tradable options, but it offers the ability to trade bonds, futures, and spreads bets.
Neither platform offers the kind of variety offered by somewhere like Interactive Brokers, but that is neither platform’s target user.
Both platforms will likely satisfy the everyday Aussie beginner/intermediate investor, although let me reiterate: Plus500 targets a different user – one who wants to focus solely on CFD trading.
This makes eToro the better option for the typical beginner-to-intermediate buy-and-hold investor.
Trading Tools And Features.
| eToro | 8/10 |
| Plus500 | 7/10 |
eToro’s USP is the ability to CopyTrade, where you can select an expert investor from their platform and replicate their trades.
There is also the option to use their Smart Portfolios, created by eToro’s professional analysts and allow you to home in on a particular sector or theme, such as early-stage AI or healthcare.
The differentiating feature on the downside is the lack of a guaranteed stop-loss facility with eToro. But this may not be too much of a concern for a buy-and-hold investor.
However, this may be an important feature if you plan to day trade, particularly in more volatile markets.
(Related: Ultimate Guide To Day Trading In Australia).
But if you already know what your trading strategy will be and want to stick to only CFDs, Plus500’s tools will provide you with a powerful trading experience.
User Experience.
| eToro | 9/10 |
| Plus500 | 8/10 |
There is not much separating these two platforms in terms of user experience.
Both use proprietary interfaces, which can be accessed via their websites and Android/iOS apps. The apps contain almost all the same features as the desktop web platforms.
Meanwhile, Plus500 looks and feels more intimidating, but is still vastly better than the user experience you’ll find on “classic” third-party trading platforms (e.g., cTrader, MT4/5).
(Related: 15 Best Stock Trading Apps In Australia).
Fees And Commissions (How They Make Their Money).
| eToro | 8/10 |
| Plus500 | 8/10 |
For regular investors (you log in more than every three months), eToro and Plus500 will make most of their money on the spreads they offer.
Beyond that, eToro should be seen as a more premium offering as they have to build and support the social network side of trading that Plus500 does not offer.
As a result, eToro is likely to be the slightly more expensive option and be less suited to more experienced investors, particularly day traders (see table below for full details).
This is particularly true if you are likely to be a buy-and-hold investor gradually building a portfolio, as eToro offers good discounts on fees for larger portfolios.
Did You Know?
For example, you get a 50% discount on currency exchange fees once your portfolio balance reaches US$25,000.
Security Measures.
| eToro | 7/10 |
| Plus500 | 8/10 |
Both companies are registered with most major financial regulators, including Australia’s ASIC.
Plus500 is registered with a few more and is publicly traded on the London Stock Exchange, increasing the transparency around this company.
As a result, it edges this section on paper, but you should have no security concerns about either platform.
Customer Support.
| eToro | 7/10 |
| Plus500 | 8/10 |
Customer support is one area in which eToro could improve.
While it still offers email support and an FAQ section, there is no live chat feature like you get with Plus500 (via WhatsApp).
This could be suboptimal for higher-volume traders looking for quicker response times to issues.
Exploring The Negative Reviews.
Three main themes appear when looking into the reviews:
- Losing money.
- Being asked for a lot of personal information.
- Issues with deposits/withdrawals.
In terms of the first concern, complaints largely come from users who have had positions closed out and lost money, often citing a failed stop-loss.
Did You know?
Stop losses are not usually guaranteed, particularly in volatile markets.
This can seem very unfair in hindsight when your position gets closed out a greater loss than expected (particularly if that security then recovers and you would theoretically be back in profit – the injustice feels personal).
However, the broker is simply trying to fulfil the order, and it is sometimes not possible to do this at the price you have requested.
On the second point, financial regulators are taking an increasingly tough stance on their Know Your Client “KYC” regulation.
This means that, as a user, you will be asked to provide A LOT of data, some very personal.
This is designed to prevent money laundering and is simply the platform fulfilling its regulatory obligation.
Important!
As these obligations get tougher, you may be asked to provide further information in years to come, so this should not be a surprise. The platform may be obliged to freeze your account if you do not comply.
For a long-term buy-and-hold investor, the third point is likely a non-issue.
This investor will not care if Tesla trades at $800 today or $803 dollars in two days. For investors looking to trade intra-day and concerned over cash flow, this is a contingency you should probably build into your strategy.
These platforms are not banks, so do not be surprised when they do not function like your current account.
A good practice is always having cash inside and outside the platform you use should you need to access it.
Tom
[1] Latest available figures
[2] This is not to be taken as financial advice
[3] Plus500 does offer this service for a higher spread
[4] This is not financial advice
[TF1]I think this could be changed to the ‘quick and dirty’ para below?
Nelson says:
I attempted to use the “hack” to dodge conversion fees, but sadly after converting AUD to USD on a Wise account, there doesn’t seem to be a way to deposit that money into eToro; i.e. eToro recently disabled Wire transfers and Wise doesn’t support SWIFT transfers for sending USD to a bank in the US?
John Keys says:
CMC Invest are an abysmal in turning around new accounts.
Over 1 month to setup up an account with an investment trust, and still waiting. I was promised 5 business days.
Reg Watson says:
Given that China’s economy is going down the toilet how the heck do we expect an appreciation of the Aussie in 2024 ? We are tied to China.