Is eToro Safe or a SCAM? Find out in our review for 2023

Investing in the stock market can be lucrative but comes with risks. With the rise of online trading platforms, such as eToro, many investors wonder whether these platforms are safe to use. Users of the well-known social trading website eToro can trade various financial instruments, such as stocks, cryptocurrencies, and commodities.

However, as with any online platform that deals with sensitive financial information, security and safety are critical concerns for investors. In this article, we will examine the safety of eToro and consider the various factors that determine it. 

eToro in short: 

• Regulated market-leading brand
• Deposit protection
• Easy to use and competitive pricing 

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Company overview

eToro is a well-established social trading and investment platform founded in 2007 by Yoni Assia, Ronen Assia, and David Ring under RetailFX in Tel Aviv, Israel. Since its inception, eToro has grown and developed significantly, expanding its financial product offerings to include stocks, commodities, currencies, and cryptocurrencies. Its ability to cater to cients with diverse investment options has enabled it to become a leading fintech industry player, serving over 20 million users in 140 countries worldwide.

The platform’s innovative features, such as its CopyTrader function and CopyPortfolio feature, have contributed to its success, allowing investors to replicate the trades and portfolios of other successful traders on the platform. Furthermore, eToro has made significant acquisitions, including Delta, a Belgian-based crypto portfolio tracking application company, and Marq Millions, the UK division of e-money, later renamed eToro Money. As a result, the company has obtained a primary membership of Visa and an electronic money institution (EMI) license from the Financial Conduct Authority, offering its users greater flexibility in managing their financial transactions.

Legality of eToro

The company is operated by eToro Group Ltd, based in Cyprus, and regulated by the Cyprus Securities and Exchange Commission (CySEC). eToro is also registered with other regulatory bodies, including the Financial Conduct Authority (FCA) in the United Kingdom and the Australian Securities and Investments Commission (ASIC).

From a legal standpoint, eToro is a legitimate and regulated broker. It operates in compliance with the rules and regulations set forth by the regulatory bodies under which it is registered. This includes adhering to strict financial and operational standards, maintaining client funds in segregated accounts, and providing investor protection measures.

eToro’s regulatory compliance means it is subject to ongoing monitoring and oversight by the regulatory bodies. These bodies ensure that eToro follows strict ethical and transparent business practices guidelines. In addition, eToro is required to maintain adequate capital reserves and risk management practices to protect investors’ funds.

However, it is essential to note that trading always involves risk, and no trading platform can guarantee profits or protect investors from losses. Investors must conduct thorough research and risk analysis before making investment decisions. They should also understand the fees, charges, and risks of trading on the eToro platform.

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eToro services

The multi-asset trading platform eToro provides its users with a range of services. Here are a few of them:

Trading

eToro is an online trading platform that offers a variety of investment opportunities. The platform provides access to trading in stocks, indices, currencies, commodities, and cryptocurrencies. It has gained popularity due to its user-friendly interface and advanced trading tools, making it a viable platform for novice and experienced traders alike. eToro also provides a wealth of educational materials and resources to help traders keep up with the latest market trends and make informed investment decisions.

Trading on eToro comes with several benefits, including the ability to copy the trades of other successful investors and to invest in fractional shares. This means traders can gain exposure to high-value assets and potentially earn significant profits over time, even if they don’t have much capital.

eToro is a suitable platform for diversifying a portfolio, exploring new investment opportunities, or learning more about trading. The platform’s wide range of assets and intuitive interface allows traders to start trading confidently and take their investment game to the next level. It’s important to note that trading on eToro, like any other investment platform, carries inherent risks, and it’s essential to conduct thorough research and invest wisely.

Copytrading

CopyTrader is a useful service offered by eToro that allows users to replicate the trading strategies of successful traders on the platform. This feature is an excellent tool for those new to trading who wish to learn from the best in the business. By copying successful traders’ trades, users can earn significant profits without having extensive trading knowledge or experience.

To use CopyTrader, users can select a trader they wish to follow and allocate funds to replicate their trades automatically. This way, they don’t have to spend time researching the market or making investment decisions. Instead, they can rely on the trading strategies of successful traders, saving time and effort while potentially earning significant profits.

CopyTrader is a convenient way to benefit from the experience and expertise of successful traders on eToro. The feature allows users to learn from the best and improve their trading skills over time. However, it’s essential to note that copying a trader’s strategy does not guarantee success, and there are inherent risks associated with trading. It’s crucial to invest wisely and conduct thorough research before allocating funds to CopyTrader. Nonetheless, this feature is an excellent addition to eToro’s platform, providing users with more options to diversify their investment portfolios and earn profits.

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Wallet services

eToro Wallet is a cutting-edge service offered by the eToro platform that allows users to store and manage their cryptocurrency assets securely. This feature is essential for those who want to invest in cryptocurrencies, as it provides a secure and convenient way to store and manage their digital assets.

The eToro Wallet service is simple to use, and users can quickly deposit and withdraw cryptocurrencies directly from their wallets. Users can also view their cryptocurrency balances and transaction history with the wallet and monitor market prices. The wallet is available as a mobile app and a web-based platform, making it easy to access and use.

One of the significant benefits of eToro Wallet is its top-notch security features. The wallet employs multi-signature technology to ensure that all transactions are verified and approved by the user. This way, users can be confident that their assets are safe and secure from hackers or unauthorized access.

Research analysis

As one of the leading online trading platforms, eToro offers its clients access to many market research and analysis tools to help them make informed investment decisions. The platform recognizes that for traders to be successful, they need access to accurate, reliable, and timely market insights.

With this in mind, eToro’s team of market experts and analysts works tirelessly to provide users with up-to-date research and analysis, including daily market updates, trading signals, and economic calendars. These resources are available to all eToro users, from beginner traders to seasoned investors, and are designed to help them stay ahead of market trends and capitalize on potential opportunities.

eToro’s daily market updates are a valuable resource summarizing the most significant developments in the global financial markets. These updates give traders a concise overview of the day’s events and potential market impact. eToro’s trading signals, on the other hand, provide traders with specific buy and sell recommendations based on technical and fundamental analysis. These signals help traders make better-informed trading decisions and exploit potential market movements.

CopyPortfolios

CopyPortfolios is a unique and innovative investment solution offered by eToro. It allows investors to diversify their portfolios and achieve their financial goals by investing in a collection of assets bundled together based on a specific theme or strategy. These portfolios are managed by eToro’s expert investment committee, ensuring that they are constructed with sound investment principles and best practices in mind.

The investment committee at eToro comprises seasoned financial professionals with years of experience in the financial markets. They are responsible for selecting the assets and constructing the portfolios in a way that is aligned with the investment objectives of the portfolio theme or strategy. This committee considers a wide range of factors when selecting the assets for each portfolio, including risk level, performance history, and market trends.

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eToro fees

Regarding trading fees, eToro’s may not be considered low compared to those found at other online trading platforms. However, it’s important to note that eToro’s appeal to retail traders is not necessarily in its spreads or fee structure, but in its unique social copy trading platform capabilities. Below are some of the various fees eToro charges:

• VIP accounts: eToro offers a VIP club (called eToro Club) with five membership tiers ranging from Silver to Diamond. The VIP perks range from access to Trading Central, through discounted withdrawal and deposit fees, to a dedicated account manager – among other VIP-style benefits.
• Cryptocurrency trading: eToro’s pricing for trading physical cryptocurrency is close to the industry average. For each buy and sell position, users pay a single fixed fee of 1% (on top of the spread) on each side of the trade (both when opening and closing a position).
• Crypto switching: eToro provides a cost-effective and convenient solution for switching between cryptocurrencies. The platform offers a seamless and secure process to convert one digital asset to another while keeping fees reasonable. When you choose to convert your crypto on eToro, you only need to pay a nominal fee of 0.1% in addition to the prevailing spreads. This low fee structure allows you to optimize the value of your investments without worrying about incurring high costs that could potentially reduce your profits.
• eToroX platform: If you want to focus exclusively on trading cryptocurrency, the eToroX platform features even lower fees – but it doesn’t offer CFD trading or the range of markets found on the main eToro platform.

eToro pros

• Safety and regulation: eToro is a safe broker for trading forex and CFDs, as indicated by its regulation in two tier-1 jurisdictions and one tier-2 jurisdiction.
• Social copy trading: eToro is an excellent platform for social copy trading. It means that traders can follow and copy the trades of successful investors and traders, allowing them to learn and profit from their expertise.
• Cryptocurrency trading: eToro is also a top pick for cryptocurrency trading, making it an ideal platform for investors seeking exposure to this emerging asset class. With a user-friendly platform and a range of cryptocurrencies, eToro provides a convenient and accessible way to invest in this exciting market.
• Range of markets: eToro is a multi-asset broker with over 3,000 symbols available. As the platform expands its range of markets, traders can benefit from a diverse and comprehensive selection of assets to invest in, including stocks, commodities, and forex.
• VIP-style perks: For club members and popular investors who reach higher tier status, eToro offers VIP-style perks. These can include exclusive access to investment opportunities, a dedicated account manager, and other benefits designed to enhance the trading experience for high-volume and experienced traders.

eToro cons

• Higher trading fees: eToro charges slightly higher fees than most competitors, making it less cost-effective for traders looking to keep their trading costs low.
• Limited research materials and tools: eToro offers a limited range of traditional research materials and tools, which may need to be improved for experienced traders who require advanced research and analysis tools.
• No support for automated trading strategies: Automated trading strategies (algorithmic trading) are not supported at eToro, which may be a disadvantage for traders relying on these.
• Mandatory stop-loss and take-profit: eToro has mandatory stop-loss and take-profit features, which may hinder specific trading strategies that require more flexibility in managing positions.
• Limited access to trading central research and tools: eToro’s Trading Central research and tools are only available to certain eToro Club members who have reached higher Club tiers, which may limit access to valuable research and analysis tools for some traders.

Conclusion

In conclusion, eToro is a legitimate and regulated trading platform offering various financial products, including stocks, cryptocurrencies, and commodities. The platform has several features, such as CopyTrader and CopyPortfolio, which allow users to replicate the trades and portfolios of successful traders on the platform. eToro is registered with regulatory bodies such as the FCA and the ASIC and adheres to strict financial and operational standards. However, it’s essential to remember that trading on any platform comes with inherent risks, and investors should conduct thorough research and risk analysis before making investment decisions. 

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