EToro is one of Australia’s most popular share trading platforms. You’ve probably seen them touting their copy trading features and zero-commission stock and ETF trading on billboards across Australia.
The company wants to be your go-to online broker. But is it good enough for your needs?
I had the same questions, so I did a tonne of research and shared my discoveries with you in this review.
You’re about to find out a hack that will save you a lot of money on currency conversion fees, learn about eToro’s main strengths and find out about weaknesses that a lot of other eToro reviewers have overlooked.
Who Is eToro For?
eToro isn’t for everyone. While it’s great for time-poor beginner and intermediate investors, it’s suboptimal for people who want to become serious day traders.
|Who Is eToro Best For?||Why?|
|Medium and long-term share and ETF investors||Because eToro doesn’t charge commissions on stocks and ETFs|
|Investors and traders wanting to build diversified multi-asset portfolios that include stocks and ETFs||Because eToro offers access to a huge range of assets and derivatives|
|People who want to get involved in the stock market but aren’t prepared to spend years learning fundamental and technical analysis.||Because eToro saves you time by offering best-in-class copy trading features|
|Who Should Avoid eToro?||Why?|
|Experienced high-frequency day traders and forex traders||Because you’ll find lower fees on dedicated platforms like Vantage and Fusion Markets|
|People who aren’t interested in copy trading||Because you’ll be paying for features you don’t need via eToro’s slightly higher-than-average fees|
Above: eToro’s mobile app is sleek, intuitive and user-friendly. It gives you access to all of the desktop app’s features.
eToro At A Glance.
|Low fees to take advantage of||$0 on stocks and ETFs|
|High fees to watch out for||1.5% currency conversion fee|
|Available share markets||17 exchanges, including ASX, NASDAQ, NYSE, LSE, HKEX|
|Available crypto markets||79 coins|
|Available forex markets||47 global currency pairs|
|Trading platforms||Proprietary web trading platform, mobile app for iOS and Android.|
Is eToro Good For Beginners?
Yes, for three reasons:
- Not intimidating. The intuitive interface and sleek account opening process mean novice investors can start trading quickly, and in a user-friendly environment.
- Social and copy trading features. While you won’t learn how to invest by copying others (more about this shortly), you will save time and reduce exposure to your most significant portfolio risk – you.
- A $100,000 virtual cash account helps beginners hone skills without risking real money. The only downside is that if you make a profit, you’ll regret not using real funds.
Above: eToro’s desktop interface is very 2023. Clean, friendly and uncomplicated.
Is eToro Good For Expert Traders?
Yes, but only if you plan to take advantage of eToro’s Popular Investor program. It’s an opportunity to run something that resembles your own mutual fund under the eToro brand.
You earn additional income (up to 1.5% of assets under copy) by allowing other users to copy your trades.
Above: Elite tier is where the returns can begin to add up.
Build a strong reputation and attract followers to make it worthwhile. For example, if you have 10 followers with a total of $500,000 of assets under management (AUM), eToro will pay you $625 per month.
It doesn’t seem like a lot, but it’s effectively free money – on top of your portfolio gains.
Just keep in mind that generating a consistent profit from trading is a skill that takes 2-3 years to hone.
If I decided to become part of the Popular Investor program, I’d treat it as a real side business, aiming to hit $5-10 million AUM. That would translate to about $6-12K in monthly commissions – enough to fully replace a lot of Australian salaries.
How Does eToro Stack Up?
eToro scores very well in copy trading features, ease of use and suitability for beginner traders. Meanwhile, its education and research tools have room for improvement.
|Range Of Assets & Instruments||4.5|
|Ease Of Use||5.0|
|Commissions & Fees||4.5|
|Suitability For Beginner Traders||5.0|
|Suitability For Sophisticated Traders||3.5|
|Social & Copy Trading||5.0|
eToro’s Strengths In Detail.
Here is why this trading platform is different.
1. Excellent Social And Copy Trading Features.
eToro’s social trading features are included in all retail investor accounts. They allow you to copy moves of other traders and professional fund managers.
Imagine an experienced investor pouring hours into company research and relying on their expert judgement to decide how much of their own money to invest.
Now imagine being a fly on the wall, watching each of this expert’s trades.
Above: Ming Lim has returned 11%, 13% and 25% for three consecutive years. But remember: past performance is not an indication of future results.
With eToro’s copy trading service, you can.
The best thing is you can find an expert investor whose strategy aligns with your risk tolerance and investment goals.
You get access to CopyTrader when you open your eToro trading account, and it’s free to use.
A lot of “trading gurus” believe that copy trading is a great way of “learning the ropes”. This is utter nonsense. Copy trading is a great time-saving tool – that’s all. You will not become a great trader by copying others because you won’t know 1) how the trader arrived at equity valuations and 2) the thinking behind their portfolio architecture.
B. Smart Portfolios.
eToro’s professional analysts create Smart Portfolios.
Targeted at medium to long-term investors rather than traders, they offer a diversified means of targeting major market trends or specific segments.
For example, you can target Big Tech, Fashion or Crypto.
2. Diverse Range Of Investments.
eToro offers Australian investors and traders a huge range of investment options.
Yes, other major players like Interactive Brokers offer even more trading instruments, but more variety – beyond a certain point – translates to noise and indecision rather than profit. The law of diminishing returns is real.
A. Stocks, Cryptocurrencies, ETFs & Forex.
You get access to the big Australian names (e.g., Big 4 Banks, Fortescue, Westfarmers), the usual international suspects (Apple, Uber), plus BTC, ETH, a considerable range of altcoins and currency pairs.
|Stocks||eToro gives you access to major exchanges (ASX, NYSE, NASDAQ, LSE) and across all major industries (e.g., finance, big tech).|
|Crypto||The trading platform gives you access to 52 different coins, including popular options like Bitcoin, Ethereum, Solana and the one I really want to survive – Cardano.|
|ETFs||Invest in ETFs that track the market, sector or industry, hybrid ETFs that mix asset classes, or even ETFs that hedge against indexes or industries.|
|Forex||eToro enables you to trade over 50 currency pairs, such as AUD/USD, GBP/USD, and AUD/JPY.|
Smallest stocks, altcoins and unusual currency pairs aren’t available, so if you’re yearning to invest in Pete’s Mining Co Pty Ltd, look elsewhere.
(Even better – don’t do it).
If precious metals, energy, agriculture, and livestock are your thing, eToro offers a wide range of commodities to trade.
Trading commodities on eToro has several advantages, such as:
- Around-the-clock trading.
- Portfolio diversification.
3. Low-ish Fees (If You Play Your Cards Right).
eToro fees aren’t the cheapest, but they are well-suited for a particular type of investor.
Your biggest upfront cost is the 1.5% currency conversion fee you’ll need to cough up for the privilege of having to convert your Australian dollars into eToro’s working currency – USD.
I’ll show you how to reduce that fee by 66% in the “eToro Fees In Detail” section below.
eToro’s Weaknesses In Detail.
Let’s discuss some of the less glamorous aspects of eToro.
1. Customer Support.
While eToro provides an impressive Help Centre with FAQs plus a support ticket system, I would have liked to see more support options.
The gold standard among technology companies in 2023 is at least:
- Phone support during business hours, and/or
- Live chat during business hours.
eToro falls short of this mark.
2. You Must Trade In US Dollars.
I’ve already touched on this, but let me unpack.
The benefit of this is access to global stock markets, forex and crypto, with CFDs and leverage. The downsides are:
- Currency conversion fees (I’ll show you how to avoid them below).
- Rewiring your brain to think in USD.
3. Research & Technical Tools.
Above: eToro’s research offerings are a mixed bag.
First of all, a lot of people don’t realise that eToro has a fairly sophisticated range of charting tools buried in its interface, with more than 70 technical indicators and analyses:
- Moving averages.
- Bollinger Bands.
- Ichimoku Clouds.
- Elder Ray Index.
Even more tools become available once you hit the Silver eToro Club tier by depositing more than $5,000 into your trading account.
Unfortunately, a lot of them are let down by the scope of available data:
- The longest time span you get in the charting tool is only 6 months.
- Charting isn’t available for all companies.
I believe this is an intentional strategy by eToro, as it encourages beginners to stick with copy trading.
However, I did raise an eyebrow when I discovered that once you deposit $25,000 to hit the Platinum tier, you get access to Trading Central – a pro-level toolkit that offers Expert Analysis (EAs), economic insights and a fairly decent economic calendar.
Above: the eToro training academy contains modules on eToro basics, charting and foundations of investing.
eToro provides an Academy full of videos that help users learn about trading and investing. They’re pretty good at explaining:
- eToro’s tools and features.
- Copy trading guides.
- Foundations of investing and trading.
- Latest market trends and news.
While eToro could certainly do better in this department, I won’t scold them too much for two reasons:
- Educational content on all trading platforms sucks. eToro’s is slightly better than average.
- You would be a fool to believe that eToro will teach you trading and investing strategies that lead to profits. Their financial interests are diametrically opposed to yours. Remember the #1 rule of business – never ignore conflicts of interest.
eToro’s Fees In Detail.
Let me demystify eToro’s (rather complex) fee and commission structure for you.
While trading platform fees often seem small, experienced investors will tell you they can accumulate and eat away a substantial chunk of your portfolio.
Here’s how eToro trading fees compare, starting with the least important.
1. Withdrawal Fee.
You’ll pay $5 to get your money out. It is the easiest fee to understand – and also the least important. (For some reason, it’s one that a lot of beginner traders worry about).
2. Inactivity Fee.
If you don’t log in for 12 months, eToro will slap you with a $10/month inactivity fee until you run out of capital or log in.
This fee isn’t consequential. Even the most defensive buy-and-forget investors are likely to log in and check their portfolio at least once per year.
Active traders will never have to worry about it.
You’ll pay zero commissions on all stocks, ETFs and options available on eToro. Crypto attracts a 1% commission.
Brokerages make money through commissions, spreads or a combination of both. Zero-commission brokers like eToro will not charge you commissions but will have higher-than-average spreads (more about spreads below).
4. Currency Conversion Fee.
Because eToro offers only USD as a base currency, you’ll need to pay a 1.5% conversion fee when depositing your Aussie dollars.
You’ll also need to do the same in reverse, meaning you’ll lose 3% of your trading capital on fees – before you even start trading.
eToro displays its currency conversion fees in pips. Technically, the currency conversion is 150 pips per side (or 300 pips round-turn). If you don’t know, a pip is 0.0001 of a percent.
Is it a deal breaker?
No, as long as you’re smart about it.
A $1000 deposit, for example, will skim $15 in currency conversion fees. And $15 again when you convert your USD back To AUD.
It stings, but isn’t consequential when investing small amounts.
The fee starts to add up once you start depositing larger amounts. A $10,000 deposit, for example, will trigger a $150 fee (one way).
Thankfully, eToro gives you significant discounts on this fee once you start upping deposit amounts. This happens automatically as part of your rise through eToro Club tiers.
|Level||Deposit||Discount||Fee On $10,000 (with discount)|
Above: Discount on the currency conversion fee. Not perfect, but much better than paying full rate.
People with large amounts of trading capital will dodge the fee altogether by depositing more than $250,000, while the rest of us mortals will have to make peace with either a 25% or a 50% discount.
You’ll find calculations for each tier in the table above.
Avoid eToro’s steep conversion fees by converting your money from AUD to USD using an app like Revolut or Wise, then sending the USD from the app to eToro. As of 1st November, Wise charges just under 50 pips for the transaction, which is 66% cheaper than eToro’s rate. It’s an extra step, but you will save money.
Above: The currency conversion fee on Wise is less than 50 pips vs eToro’s 150.
5. Spread Fees.
Spread fees are how zero-commission brokers make their profits.
The good news is that eToro doesn’t charge spreads when you open a long, non-leveraged position on stocks of ETFs (e.g., you buy BHP Australia stock, expecting it to rise).
But spreads begin to apply as soon as you apply leverage or short a stock, and vary depending on the instrument you want to trade.
Shorting a stock means you’re assuming its price will go down in the future.
1. Forex CFDs.
You’ll pay between 1-2 pips on forex, which is about on par with other commission-free brokerages.
However, if forex will be the centrepiece of your portfolio and you plan to trade it actively, you’re better off with a platform that specialises in it.
You’ll be able to get as little as 0.13 or even 0 pips on something like Fusion Markets.
2. Stock CFDs.
You’ll pay 0.15% per side when applying leverage. This is average when compared with other zero-commission brokers.
3. Commodity CFDs.
Most spreads are between 5 and 20 pips. Hard to compare due to the large range and variability. Check in your demo account for the latest prices.
4. Index CFDs.
Charged in points, with most major indices hovering around 1-2 points. These are average when compared with other zero-commission brokers.
6. Overnight Fees.
Think of overnight fees as interest on a loan eToro gives you to hold your leveraged position overnight.
It’s calculated relative to the size of your position and is typical practice among stock trading platforms.
If you open and close a position on the same day, you won’t be liable for overnight fees.
Above: The easiest way to check current overnight fees is by looking in your trading box. Here, $5,000 worth of Apple stock at 2:1 leverage will trigger a $3.21 overnight fee.
On stock and ETF CFDs, it’s calculated using a LIBOR + markup formula:
- BUY position: 6.4% + LIBOR
- SELL position: 2.9% +LIBOR
The London Interbank Offered Rate (LIBOR) reflects the overnight borrowing costs of banks. Calculated by averaging 35 interest rates that cover 5 major currencies, it’s used to price financial contracts globally.
eToro’s Limits On Deposits And Withdrawals.
eToro limits the amount of money you can deposit into your account:
- Minimum deposit: At least $50 for your first deposit and at least $50 for subsequent deposits.
- Maximum deposit: Up to $10,000 daily using credit or debit cards and PayPal. Bank transfers don’t trigger any maximum daily limits.
Withdrawals have minimal boundaries:
- Minimum withdrawal: At least $30.
- Maximum withdrawal: No limit. Up to the amount of your available balance.
Is eToro Safe For Beginners?
Yes, eToro is considered safe from a compliance point of view due to the following four factors. However, I encourage you not to overlook the most significant risk factor on eToro – you.
Most beginners either lose money or blow up their accounts when they start trading, especially if they apply leverage.
Remember that share and derivative trading is not a short-term sport and carries significant risks.
Instead, seek personalised financial advice (this is not it) and trading education that teaches how to construct long-short asset portfolios, perform fundamental analysis and read market dynamics.
1. ASIC License.
In Australia, eToro is licensed and regulated by the Australian Securities and Investments Commission (ASIC), an AFSL (#491139) and operates via an Australian entity (eToro Australia Pty Ltd, ABN 46 621 283 369).
2. Data Encryption & 2FA.
eToro uses SSL encryption to secure all data transfers between users and the platform, while two-factor authentication prevents unauthorised access to your account.
Above: 2FA setup is unobtrusive but persistent. It gives you three changes before locking you out of your account.
3. Funds Segregation.
eToro can’t use your money to bail itself in the unlikely event of the company’s bankruptcy, as the company keeps trading capital segregated from its operating funds.
4. $1,000,000 Insurance.
eToro provides up to $1 million in insurance coverage for users if the platform becomes insolvent or the target of fraud.
This added layer of protection ensures that users’ investments are safeguarded against unforeseen circumstances.
Unfortunately, eToro doesn’t offer CHESS sponsorship, which some investors consider a risk factor.
What Are The Best Alternatives To eToro?
When considering alternatives to eToro in Australia, some of its main competitors include Fusion Markets, Interactive Brokers, Tiger Brokers and Vantage.
In different scenarios, eToro may perform better or worse than its competitors.
|Social trading and copy trading||eToro is a clear winner as it pioneered these features. The others are still playing catch-up.|
|Algorithmic trading on MT4 and MT5||Interactive Brokers for selection of assets and rock-bottom commissions|
|Trading CFDs only||Vantage or Plus500 are your best bets.|
|Buying ASX and US equities||Tiger Brokers is one of the best low-cost share trading platforms in Australia|
How To Open An eToro Account?
To get started on eToro and start investing in stocks, ETFs, forex, and crypto, follow these five steps:
- Visit eToro’s website or download its mobile app and click the “Login” button.
- Fill in the registration form with your basic details (Name, email, phone number, etc).
- Verify your identity and Australian address by uploading a copy of your ID and proof of address (e.g. utility bill or bank statement).
- Deposit funds into your eToro account using your preferred payment method (I recommend using bank transfer to minimise currency conversion fees).
- Choose the assets you want to invest in. You can browse different asset classes and/or use eToro’s search function to research specific assets. Place a market order (buy/sell at the current market price) or a limit order (buy/sell at a specified price).
Frequently Asked Questions About eToro Australia.
Here’s what beginner investors and traders usually want to know.
What about the negative reviews of eToro?
I’m sure you have seen them. Websites like Productreview.com.au are loaded with woeful, one-star feedback from eToro users. These reviews need to be placed in the right context.
While some have merit, it’s important to note that every Australian trading platform has a similar review profile.
|Trading Platform||Rating On Productreview.com.au (as of November 2023)|
In my opinion, this has less to do with eToro and more with the nature of the retail trading industry.
Unfortunately, most people who enter the stock market lose money, with many blowing up their entire accounts. Online review platforms become their go-to channels for venting.
This is why I keep reminding you to take a long-term, cautious approach. Don’t expect quick wins, as these aren’t possible without taking excessive risks.
What are ‘pips’ and ‘points’?
A pip is used to measure an asset’s change in value(both gains and losses). It is the smallest increment in the value of an exchange rate.
A pip, also known as a “point” in currency trading, is worth 1/100th of one cent on most exchanges, including eToro.
Is eToro really free?
eToro is not free. While its “zero commissions on stocks” offering is often mistaken for “zero fees and charges”, this isn’t the case.
eToro charges spread, currency conversion and withdrawal fees that you must familiarise yourself with before trading.
Does eToro support MT4 and MT5?
No. While eToro does not support MetaTrader 4 and 5, the company offers a proprietary, award-winning trading platform that is easy to use and suits both beginner and intermediate traders.
The platform offers more than 3000 tradable assets and analysis tools to help you make the best investment decisions.
MT4 and MT5, meanwhile, are trading platforms that are aimed at intermediate to advanced traders.
Does eToro pay dividends?
eToro will credit your account if you hold stock of a company or ETF that pays a dividend. This applies to positions you open manually as well as positions in your SmartPortfolio.
How can I become a Popular Investor on eToro?
It’s not difficult, but you need to satisfy a few criteria:
- Avoid a single-month loss of 30% or more.
- Ensure no single holding represents more than 20% of your portfolio.
- Have at least 2 months of trading history.
- Have trading capital of at least $1000
- Have one verified copier.
- Have at least $500 of Assets Under Copy.
Is eToro A Good Trading Platform For You?
eToro is a unique trading platform in the Australian market. It offers a substantial range of assets, user-friendly UI and a strong social and copy trading focus.
If you don’t plan to become a sophisticated investor by spending years learning fundamental and technical analysis, eToro is a great option.
However, it also has some shortcomings.
Its fee structure is complex and, on average, its fees are higher than what you’ll find on dedicated low-cost platforms. For example, you’ll find cheaper:
But what you gain in cheaper fees, you’ll lose in your time. The dark secret of trading is that it’s a skill that takes years to develop.
Very few people who jump into the market to pick stocks make money.
Inexperienced traders who apply leverage are even less successful, with many blowing up their trading accounts within a few months.
I hope my eToro review was useful – and don’t forget to use the hack I described above to avoid its nasty currency conversion fee.
eToro AUS Capital Limited AFSL 491139. eToro is a multi-asset investment platform. The value of your investments may go up or down. Smart Portfolios are not exchange-traded funds or hedge funds and are not tailored to your specific objectives, financial situations and needs. Your capital is at risk. See PDS and TMD. Real crypto assets are unregulated & highly speculative. Being unregulated, there is no consumer protection. Your capital is at risk.