The eToro review for Australian investors

By   |   Verified by David Boyd   |   Updated 22nd June 2021

Finty review eToro
  • Trade US stocks and ETFs with zero commission.
  • Follow and copy successful traders using eToro CopyTrader.
  • Add CFDs and cryptocurrencies to your portfolio if you have a good appetite for risk.

Established in 2007, eToro has become one of the world's biggest social trading platforms. In 2009, it launched its groundbreaking WebTrader platform that enables anyone to trade financial assets online. The company is based in Israel, Cyprus and London, but its Australian operations are regulated by ASIC.

eToro offers such a broad choice of tradable assets, indices, and commodities that reviewing them all in one article would be very challenging — and probably wouldn't help you take your next steps with investing.

In this eToro review, we concentrate on the share trading aspect of their platform. Whether you have questions about copy trading, how their fees work, or what you can invest in, you'll find what you need to make an informed decision below.

eToro

On eToro's website

eToro

Brokerage Fee

$0.00

Tradable Assets

Commodities, Crypto, ETFs, Forex, Shares

Tradable Indices

NASDAQ, NYSE

Signup Bonus

None

Highlights

  • Trade and invest in top financial instruments, including a wide selection of stocks.
  • eToro is regulated by CySec, FCA, ASIC and FSAS.
  • Your funds are protected by industry-leading security protocols.

Compare eToro vs. alternatives to see how they stack up against the competition for trading shares.

Tradable assets

eToro is not just a share trading platform and Australian users can trade in the following assets.

  • US stocks and ETFs listed on NYSE and NASDAQ.
  • Fractional shares in companies with a high individual share price.
  • Stock, ETF, market index, commodity and currency CFDs (Contracts For Differences).
  • Cryptocurrencies including Bitcoin, Ethereum, and Dogecoin.

CFD and cryptocurrency trading is inherently very risky and should not be undertaken without extensive knowledge of how the markets works and a strong appetite for risk. This review will focus mainly on how the eToro platform works for trading US stocks.

You can't use eToro to purchase individual Australian shares listed on the ASX – only US stocks.

How it works

If you want to use the eToro platform you'll first need to open an account. You will be asked to provide your full name and contact details, create a user name and password, and then provide ID documents and your tax file number.

In order to start trading you'll need to deposit at least USD200 into your trading account, using a bank transfer, or your credit card, or PayPal, or a money transfer service such as Western Union. Because eToro trading accounts operate only in USD, eToro will charge you a currency conversion fee of 0.5% for a bank transfer and 1% for all other deposit methods. Once your deposit is confirmed, you can start buying US stocks. The minimum trade size and minimum additional deposit is USD50.

Commissions and fees

There is no charge to open and operate an eToro account, and no commission charged to Australian users for buying and selling US stocks.

You will, however, have to pay the currency conversion fees mentioned above, plus a USD5 fee each time you withdraw funds from your eToro account.

If you leave your account inactive for 12 months, you will be charged a USD10 inactivity fee for each subsequent inactive month.

Useful trading tools and features

eToro CopyTrader

In 2010, eToro released the first-ever social trading platform, CopyTrader. This unique feature allows anyone anywhere in the world to copy other traders who have been successful, making the trading experience more enjoyable and possibly more profitable.
Users can also follow traders and interact with fellow investors on eToro's social news feed.

This focus on social and copy trading has supported its fast growth, and CopyTrader now has over 10 million users all over the world.

Free demo account

When you sign up with eToro you'll be given a free $100,000 practice account. You can use if to make virtual trades to get a feel for how the market works, before you start to trade with real money.

The eToro app

You can manage your portfolio from your phone by using the eToro app. Mobile trading is becoming more and more popular as it allows you to buy and sell on the go. Your portfolio will also be synced to all your devices– mobile, desktop, and tablet.

Who eToro is designed for

eToro has millions of users in more than 140 countries. Its platform is ideal for clients with at least a basic knowledge of share trading.

eToro attracts clients who want to mimic the actions and trade strategies of other successful users.

Why would you choose eToro over competing platforms?

eToro prides itself on being one of the world's leading social trading platforms, and providing plenty of options for investors and traders. Its commission-free fee structure makes it one of the least expensive ways for Australians to trade in US stocks, although there is a small foreign exchange margin to pay.

Pros and cons

Pros

  • Commission-free trades for US stocks and ETFs.
  • Social interaction with other traders to share advice and experience.
  • CopyTrader to replicate the actions of successful traders.
  • Easy-to-use website and app makes it easy to trade from anywhere.
  • News, analysis and market guides all provided.
  • Education tools, including video tutorials, podcasts and Trading School.
  • Demo account for virtual trading to help you understand how it works.
  • Fractional share and cryptocurrency trading, plus CFDs all available.

Cons

  • Can only trade US shares and ETFs, not Australian securities.
  • Trading account operates in USD, so you have to pay a currency exchange margin when depositing and withdrawing funds.
  • Funds withdrawal fee of USD5.
  • Overnight fees and buy/sell spread fees are charged on CFDs.
  • Spread fees are charged on cryptocurrency trading.

FAQs

Is eToro really free?

It depends how you look at it, and what you trade. There are no fees to open and operate a trading account, and you won't pay a commission on US share and ETF trades. However, there are overnight fees and spread fees payable on CFDs, and spread fees payable on cryptocurrency trades. There's a USD5 fee to withdraw funds from your trading account, and because the trading account is held in USD you'll be charged a foreign exchange margin whenever you deposit or withdraw funds in AUD.

Is eToro trustworthy?

eToro is regulated in Australia by ASIC (Australian Securities and Investments Commission). Clients' personal information is protected by SSL encryption. There is an option to activate two factor authentication on your account.

Is eToro good for beginners?

Yes, since you'll be given a free demo account pre-loaded with a virtual USD100,000 that you can use for test trades to get an idea of how securities trading works. There are also plenty of educational tools, including video tutorials, podcasts and the Trading School.

Does eToro have a cryptocurrency trading option?

Yes, there are currently almost 100 crypto trading options, including the most popular:

  • Bitcoin
  • XRP by Ripple Labs
  • Ethereum and Ethereum Classic
  • Dogecoin
  • Bitcoin cash
  • Litecoin
  • Dash
  • Stellar Lumens

Are CFDs risky?

It's essential to understand how CFDs work before you join other traders, because it is a high risk trading activity. eToro says that 67% of its retail investor accounts lose money when trading CFDs on the platform.

Alternatives

Each online securities trading platform has its own special features, and it's important to decide which one is best for you. Alternatives to eToro include:

  • NAGA. Available in Australia since late 2020, NAGA has a similar mix of tradable assets and social trading, i.e. their version of eToro's CopyTrader.
  • CommSec. Trade ASX and global shares, with US market transactions starting at USD19.95 for trades up to USD5,000.
  • SelfWealth. Flat fee of $9.50 per trade for both US and Australian shares.
  • Stake. Trade in US shares and ETFs without paying commission.
  • Superhero. No access to US stocks, but trade ASX shares at $5 per transaction and ETFs at zero commission.

Comparisons

Quickly compare eToro versus similar brokers with these helpful side-by-side comparisons.

Verdict

eToro's commission-free trading in US stocks is certainly not unique, but it has several other features that make it stand out. It has positioned itself as "the world's leading social trading platform", but alongside its active social channels and CopyTrader it also provides a practical way to trade in US stocks, fractional shares, ETFs, CFDs and cryptocurrencies from a single account.

Their foreign exchange margin and USD5 funds withdrawal fee are annoying, but probably won't bother serious investors and traders who want to build their US portfolio or engage in short-term trades and then re-invest. Beginners aren't forgotten either, because you can practice with a demo trading account before making your first trade.