eToro review for Australians
We look at the fees, features, pros and cons of one of the world’s biggest online trading platforms.
Update (18 May 2020): eToro is now offering $0 brokerage share trading on its Australian platform. This means that you have the option to buy and sell stocks directly, instead of trading them through CFDs.
- $0 commission on US stocks
- Copy trading feature
- World's biggest social trading network
- One account for stocks, forex, CFDs, cryptocurrency
Not so good for
- You can only buy US stocks
- Account base currency always in USD
- No MetaTrader 4 (MT4)
FYI: Buying and selling stocks directly is different to trading CFD stocks. CFDs are leveraged products where traders speculate on the price movements of underlying assets like stocks, without ever actually owning them.
While there are plenty of global online brokers, eToro's big drawcard is its social trading feature that allows you to copy the actions taken by the platform's leading traders.
Although targeted towards more active traders, the fact that you can learn from others and share investment ideas makes this platform a good option for anyone looking to master their skills in share trading, CFDs, forex, commodities and cryptocurrencies.
Standard brokerage fee for ASX shares
Disclaimer: CFDs and forex are complex financial products that come with a high risk of losing money. Most retail client accounts lose money trading CFDs and forex. Consider whether you can afford to lose your money.
eToro was launched in 2006 in Tel Aviv and soon became a global trading phenomenon. Today it has the biggest social network of CFD, stock, commodity and forex traders in the world, with 13 million users worldwide.
The platform soon made a name for itself after spearheading the social trading revolution with its popular copy trading feature which allows users to track and imitate the actions of the platform's top traders.
If you're looking for more than just a standard forex or CFD broker, then the social trading elements outlined in this review are for you.
Is eToro trustworthy?
eToro is regulated by financial authorities in the US, Europe and Australia. In Australia, it's licensed by the Australian Securities Investment Commission (ASIC) under the trading name eToro AUS Capital Pty Ltd.
Among popular user review sites, feedback has been mixed. On the complaints side, reviewers primarily point to the withdraw fees, spreads and poor online customer service. The positive reviews highlight eToro's user friendly platform and OpenBook feature which allows users to share live trading news and ideas with each other.
Ratings from review sites:
- Forex Peace Army: 2*/5
- AU Trustpilot: 2.5*/5
- ForexBrokers.com: 4*/5
Note: Forex and CFD trading itself always carries risks which you should be aware of, so read up before you start investing. Do your research before signing up to any forex or CFD trading platform.
What markets can I trade with eToro?
- US stocks. Directly buy and sell US stocks listed on the NYSE and NASDAQ.
- Forex. Currencies are traded on eToro as CFDs and you have 47 forex currency pairs to choose from.
- Stock CFDs. Trade individual, publicly listed companies as CFDs. eToro gives you the option of trading a number of global share market CFDs.
- Indices. Stock market indices allow you to trade a basket of companies, such as the top 500 US stocks in the S&P 500.
- Commodities. eToro offers silver, gold, copper, palladium, platinum, natural gas and oil.
- Cryptocurrencies. eToro allows you to trade cryptocurrency CFDs such as Bitcoin or Ethereum.
Here are the notable account features worth highlighting:
- $0 brokerage. There's no broker (aka commission) fee when you trade stocks.
- Copy trading. You can follow the trading activity of other users and imitate their trades if they have a good track record. The trading decisions made by eToro users are uploaded to the eToro network, where you can view them in different statistical ways.
- Market data and news. eToro's platform connects you with users around the world so you can discuss, share and learn market ideas and trading strategies. Its Twitter-like news feature on the OpenBook platform offers live user updates on which trades your peers are making and the markets they're keep an eye on. You also have access to training courses, research papers and price data.
- Access to to markets. From the one account you can trade US stocks, global forex, commodities, cryptocurrencies and CFDs through any web browser or mobile phone (iOS and Andoid).
- Risk management. You can choose your desired risk level and the amount you wish to invest with each trade through with mandatory stop loss levels. This allows you to tailor each trade to suit your risk/reward strategy.
What are eToro's spreads and fees?
eToro does not charge any traditional broker fees or commissions, regardless of the asset being traded. Instead it charges entirely on foreign exchange spreads.
For this reason, eToro doesn't have the lowest forex spreads on the market, starting at 1.0 pips for AUD/USD and running as high as 50.0 pips for exotic currency pairings.
Deposit fees. There's no fee to deposit money into your account but eToro users trade in USD, so Australians will need to pay a currency conversion fee of 0.5% for wire transfers or 1% for any other method such as PayPal or card.
Withdraw fees. The same currency conversion fee applies again to withdraw funds. You can withdraw your funds at any time however the minimum you can withdraw is AUD30 and there is a AUD5 withdrawal fee. You can withdraw funds using a credit card (1-2 days), PayPal (1-2 days) or bank transfer (up to 8 days).
Inactivity fee. If there has been no login for 12 months, eToro charges an inactivity fee of US$10 per month until any remaining funds are removed. No open positions will be closed to cover this and the fee will stop once a user logs in.
Stocks versus CFD stocks
eToro's platform is unique from most others in Australia's market because you can trade contracts for difference (CFDs) and stocks from the one account, so it's important to understand the difference.
CFDs are risky leveraged products that allow you to speculate on the price movements of stocks and other assets such as cryptocurrencies and commodities without ever owning them. Because they're leveraged, both your profits and losses are magnified and you can lose more than your initial investment.
When you trade stocks, you own the underlying asset and your profits can only be equal to the price rise of the stock. This also means you can't lose more than your initial investment.
On eToro's platform you have a choice of adding leverage when you trade stocks. If you choose 1X leverage, you're buying the real stock and you'll see the message 'You are buying the underly asset'.
If you choose to add leverage above 1X, you'll automatically switch to CFD trading as you can see in the image below:
When you sign up to eToro you have the option of opening a retail account or professional account. Below is a comparison of the fees, minimum deposits and spreads.
|Minimum opening balance||US$200||US$200|
|Spreads||From 1.0 pips||From 1.0 pips|
|Commission per lot||$0||$7|
|Leverage||1:1 - 30:1||1:1 - 400:1|
|Minimum trade size||US$50 (For share trading)||US$50 (For share trading)|
What customer support options are available from eToro?
If you have a question about your account, eToro has a help section on the platform. You'll see a live chat option but this isn't available for Australian users at this stage.
- Trading academy
- No phone service
- Live chat not yet available in Australia
How do I open an eToro Australia account?
It's free and easy to create an eToro account. Simply apply online by clicking the go to site button at the top of this page and follow these steps:
- Supply your full name
- Enter your email address and phone number
- Create a username and password
- Supply proof of ID and tax file number
In order to satisfy financial service regulations, you'll need to answer a few questions about how much experience you have trading stocks and other products such as CFDs as well as a short quiz that you'll need to pass to qualify for an account.