Review of eToro Social Trading Platform

Written by Karen Bryan

etoroI’ve been trying out the eToro social trading platform. The idea behind social trading is that you can benefit from the knowledge of other traders.

It’s relatively easy to get started on eToro. I recommend that you start off with a virtual portfolio. This gives you the opportunity to invest up to a virtual $100,000, allowing you to experiment with eToro’s features.

You can verify your eToro account either by text message or through your landline.

I didn’t feel that comfortable having to give my date of birth, phone number and address in order to register on eToro. As soon as I registered, there was an offer to boost my initial real investment.

I decided to try a two-pronged approach, selecting my own trades and following some people.

Firstly, I chose some shares myself. You can also trade in currencies, commodities or indices.

The first shares that I bought were Apple. When you want to buy, you can change the amount you wish to spend and the stop loss (where the shares are sold if they drop below a certain value) and the take profit (where the shares are sold to realise your profit).

However, I experienced a bit of time lag before my virtual purchase was listed on my portfolio. By that time, I had already made another two purchases of Apple shares. Maybe that was caused by a slow internet connection, but I think that a transaction completed confirmation message would be useful.

I wondered if any possible time lag when I was selling might affect the price that I’d get.

The price that you pay to buy shares is different to the price at which to sell the shares. This margin is one of eToro’s sources of revenue. At the bottom of the trade page, it tells you the overnight and weekend fee for holding the shares. There’s a fee to withdraw your money and pricing is in US Dollars.

In addition to making my own share selection, I had a look through the People section on the eToro website to select whom to follow. You can filter people by geographic location, type of investment, rate of return and period of time. It’s useful to look at the person’s stats, as you can see their full trading record. My inclination would be to select people who haven’t had wild swings, and have maintained regular gains.

Traders who have many copiers can earn money by commissions paid through the Popular Investor Program. This, on top of the fact that they are investing their own money in the hope of making a profit from their own trades, gives them a big incentive to achieve high rates of return.

There’s an online chat facility, enabling you to communicate with other users.

You can earn eToro credits by recommending the site to your friends.

The day after registering on eToro, I received a phone call welcoming me, asking me if I had any queries and inviting me to a webinar.

In summary, I found the eToro social trading platform easy to use. It gives you the ability to hold a very varied portfolio of currencies, shares, commodities and indices, and to benefit from shared knowledge. If your trading is profitable, you can earn more money if people start to copy you.

I’d like there to be a confirmation message once a transaction is completed. I didn’t like that there’s a fee to withdraw your funds. As everything is priced in US Dollars, this means that you are at the mercy of currency fluctuations, if your home country uses a different currency.

As with all investments, you need to be aware of the risk of loss, as well as the possibility of gain.