Since its establishment in 2017, eToro has become one of the biggest trading platforms globally—offering a comprehensive set of trading assets, commodities, and indices.
In 2009, the company launched the WebTrader platform, which enables users to trade financial assets online.
This article focuses on the trading aspect of the eToro platform. In this post, you’ll find answers to questions on what to invest in, their charges, copy trading, and how to make an informed decision should you decide to invest.
Apart from share trading, Australian users on the eToro platform can trade assets such as :
- US stock listed on NASDAQ and NYSE
- Fractional shares are allowed for companies with high individual share prices
- Market index, stock, currency, and contracts for differences (CFDs)
- Digital currencies like Dogecoin, Ethereum, and Bitcoin
CFD and cryptocurrency trading are risky endeavors that should only be undertaken after conducting extensive market research.
This review will give you an insight into how the eToro platform works when trading US stocks.
How eToro Works
To start trading on eToro:
- Open an account. During registration, you’ll need information such as your full names, identification documents, contact details, tax file number, username and password.
- Deposit at least $50 to start trading on your account. The deposit can be made using PayPal, credit card, bank transfer, or money transfer services like Western Union.
Important: The eToro trading platform operates using USD only. Consequently, you will be charged a conversion fee of 0.5% for deposits made using bank transfers and 1% for any other methods used to deposit.
You can start buying stocks as soon as your deposit is verified. The charge for minimum additional deposits and trade size deposits is 50 USD.
Commissions And Fees
You will not incur charges when opening and operating an eToro account. Furthermore, Australian users buying and selling US stocks are not charged any commission.
However, you are required to pay currency conversion charges. Each time you make a withdrawal on your eToro account, the transaction attracts a 5 USD charge.
Leaving your account inactive for 12 months attracts inactivity charges of 10 USD for each subsequent month of inactivity.
Trading Tools And Features
CopyTrader was released in 2010, and it is the first-ever social trading platform to be released by eToro. With this feature, traders anywhere in the world can emulate other successful traders, making the trading experience more profitable and enjoyable.
Currently, CopyTrader has over 10 million active users globally. The fast growth of the platform has been catapulted by its focus on social and copy trading. The platform also has a social news feed where users can interact with traders and fellow investors.
Free Demo Account
As soon as you create an eToro account, you’re given a 100,000 USD demo account. With this account, you can trade virtually to familiarise yourself with the market before you start trading using real money.
The eToro App
You can also use the eToro app on your phone to manage your portfolio.
Mobile trading is growing in popularity among many users as it gives you the flexibility of trading on the go. eToro will link your portfolio to all devices—tablet, desktop and mobile.
Who Should Choose eToro?
eToro has millions of users spread across 140 countries. You need at least a basic understanding of share trading to have an easy user experience on the platform.
The platform is also ideal for users who want to follow in the footsteps of other successful traders.
eToro leads the world in social trading and is well known for providing traders and investors with a wide range of trading options.
The platform offers one of the cheapest ways Australians trade in US stocks with its commission-free fee structure. However, users still have to pay a small foreign margin through transaction fees.
Pros and Cons
- Trading in US stocks is commission-free
- You’ll interact with other traders and share experiences and advice
- You can watch other successful traders through CopyTrader
- The apps and websites are easy-to-use; hence you can trade from anywhere
- Market guides, analysis and news, are all provided
- Education tools such as podcasts, video tutorials and trading schools are provided
- There is a demo account to help you familiarise yourself with virtual trading
- Cryptocurrency trading, CFDs and fractional shares are available
- Only US shares can be traded
- You’ll have to pay a conversion fee when making deposits or withdrawals from other currencies different from the US Dollar. Withdrawals incur a 5 USD charge
- CFDs attract overnight and buy/spread fees
- Digital currency trading attracts spread fees
Is eToro Free?
Yes. However, the right perspective depends on your perception and what you’re trading.
Opening and operating an account does not incur any cost. In addition, if you are trading US shares, you won’t pay any commission.
Is eToro Safe?
Yes, it is.
Since its inception in 2007, eToro has expanded across many countries globally and has become one of the leading companies in copy trading. The company is regulated by many financial regulatory agencies worldwide.
The company has put SSL encryption and two-factor authentication on all user accounts; if you encounter any challenges while trading, you can reach eToro support through live chat or email.
Is eToro Good for Beginners?
Yes, new users are given a free demo account with 100,000 USD to acquaint themselves with virtual trading.
With the demo account, users can make test trades to get a feel of how trading works. Other educational tools such as podcasts, trading schools, and video tutorials are also available for users.
Does eToro Have A Cryptocurrency Trading Option?
Yes, at the moment, there are almost 100 digital currency options, including the most common:
- Ethereum and Ethereum cash
- Bitcoin cash
- Stellar Lumens
Are CFDs Risky?
Trading in CFDs is highly risky.
According to eToro, about 67% of retail investor accounts usually lose money while trading CFDs on the platform. You have to do extensive research to understand how CFDs work before you begin trading.
Each online trading company has its unique features. Therefore, search for one that suits you best. Some other platforms to consider include:
1. Stake: The Best Alternative Option
The company was founded in 2017 in Australia. The platform is a zero-fee discount broker specialising in US stocks and EFTs. The platform is regulated by many financial agencies such as the UK’s ASIC and the Financial Conduct Authority (FCA).
Stake is a safe place to trade as reputable financial regulatory bodies regulate them. In addition, client assets worth $500,000 ($250,000 cash) are protected under the Securities Investment Protection Corporation’s (SIPC) insurance.
Stakes is operational in four countries; Brazil, Australia, New Zealand and the United Kingdom. The core services offered are similar in all countries, with slight variations. This review is based on UK services.
There are no brokerage fees charged for trading in stocks. The platform makes money by charging a conversion fee when you make any deposits or withdrawals on your account.
Before trading with Stake, you have to deposit funds into your account. For every 100 AUD you convert to USD and vice versa, Stake charges a 0.07 USD conversion fee.
The foreign currency transfer fees are similar to other brokers such as major banks and international trades. The difference is that while other brokers usually charge the fees per transaction with stake, the costs are applied when you transfer funds.
Other fees are applied when you deposit funds to your account using a debit or credit card. The charges are 2% on top of the transfer charge (US$0.70 per AUD 100). You can do a bank transfer in the app using Australia Post’s PoLi service to avoid this fee.
Traditional brokers require investors to trade with a minimum of $500 allotments. With Stake, you can trade with as little as $10 per purchase. However, you have to transfer $50 at a time on the app.
The platform is suitable for small-time investors and anyone in search of stock access without charges.
Stake is among the cheapest trading platforms with its $0 brokerage operational model for US stock. The platform plans to be charging $3 for ASX stocks soon. For standard accounts, there are no monthly fees.
The withdrawal charges for investors is usually 2 USD. Other broking companies such as Commsec, a leading broker in Australia, charge $10 and USD 19.95 per trade for ASX and US stocks, respectively.
Most investors find these low-cost trades appealing.
Investors who want sophisticated research from their broker would not find Stake to be an ideal trading platform. However, investors can pay for “Stake Black” to access and share market research.
- There are brokerage costs when trading stocks
- Easily accessible, with over 6,000 US stocks and ETFs
- The platform and app are user-friendly
- The platform has advanced filtering options to help you discover ETFs and stocks
- You can only trade in US shares
SelfWealth joined the likes of STAKE, eToro and Superhero in the trading app market in 2012.
Like its contenders, SelfWealth offers an option to the challenges Australian investors have encountered for years—investing in the share market without paying unreasonable brokerage fees.
SelfWealth comes with a flat fee brokerage of $9.50 on each trade since 2016, regardless of the size.
Currently, they offer more than just flat-free trading, and this feature sets the SelfWealth platform and its competitors apart from the Australian investment foundation.
With SelfWealth, you can trade US-listed and Australian-listed shares in Android apps and iOS.
SelfWealth has partnered with OpenMarkets and ANZ.
You’ll instantly set up an ANZ holding account when you create a SelfWealth account. Consequently, you’ll be given a Holder Identification Number or HIN.
OpenMarkets settles and executes all your SelfWealth trade.
As much as this is convenient, lacking a pre-existing account or preference may be a drawback.
There is no interest in SelfWealth’s default ANZ account. If you’re trading massive amounts and require holding hundreds of thousands of dollars, you may opt for an account that rewards interest on the cash. You should put this reality into consideration before signing up.
A majority of Australian users like SelfWealth because it’s easily accessible and is simple to use.
SelfWealth has won awards twice for being the cheapest online broker in Australia. Currently, they are expanding their offering past fixed-fee trading at low costs.
A division of this expansion is SelfWealth Premium, a members-only paid division of the platform—you can track and trade investments anonymously and follow and watch other members’ investment portfolios.
This review covers details about the free and premium features of SelfWealth.
According to the industry know-your-customer standards, you’ll have to provide proof of Australian residential address and standard identification when signing up.
Signup pretty quick and straightforward, just like signing up for CommSec or other Australian trading platforms.
The standard wait time for creating a new account for SelfWealth is two days.
CHESS-sponsored shares are available on the SelfWealth platform.
The only types of stocks operated by Australian stockbrokers are the CHESS-sponsored ones and those that aren’t sponsored by CHESS.
The Australian Securities exchange keeps a record of every user who owns shares in a CHESS-sponsored stock.
Without CHESS sponsorship, you’ll have to depend on the company or broker to keep records of your shares ownership.
In simpler terms, if SelfWealth closes down, the exchange will record the shares you own through it. That way, you’ll not be in danger of losing your investments.
You can also own CHESS-sponsored shares directly instead of other trading platforms and apps where a third party is involved.
This reality is a significant benefit for SelfWealth users since the platform backs up its features and tools with a high level of fundamental investment security.
Pros and Cons
- Both set price trades and market price trades are available
- No extra charges unless you choose a SelfWealth Premium account
- The trading account funds are securely held in an ANZ bank account
- Your HIN beneficially owns your holdings, not in a joint custodian account
- The trading fee is low and flat. The charges are $9.50 per trade for all sizes
- There are shared trading accounts for kids with an adult trustee(s)
- The free version is inclusive of live pricing and stock analysis
- SelfWealth Premium has free access for the first 90 days
- SelfWealth Premium accounts enable users to follow and replicate successful members’ portfolios
- Trading services are only available in the US and Australia
- $20 monthly fee for the SelfWealth Premium account—you begin paying this fee after the 90-day free trial period elapses
Superhero, a leading share trading platform, offers a flat brokerage charge of 5USD for all ASX stocks and zero brokerage for exchange-traded money purchases. Additionally, they offer stocks listed on Wall Street at $0 commission for every trade.
There is no inactivity or account fee for the Basic account. Superhero is one of Australia’s cheapest brokers.
Another benefit of Superhero is that you can invest a minimum amount of $100 for every trade—this is lower than the standard minimum deposit for ASX trades which is $500.
The proprietary system of Superhero is distinctive from other brokers. It enables them to lower the minimum investment of $500 for ASX stocks to $100.
Superhero applies a custodian model commonly used by brokers like IG and Vanguard Personal Investor and micro-investment apps like Spaceship and Raiz. Therefore shares purchased on Superhero are beneficially held in your name.
According to John Winters, Superhero’s CEO, the custodian model uses the CHESS system. However, it uses one HIN on ASX’s CHESS system. At the end of the trading day, Superhero’s tech consolidates settlements to reduce costs.
Superhero Key Features
- Zero brokerage US stocks: you can sell and buy ETFs and US stocks for $0 commission per trade. You can opt for fractional investment (investing in fractions shares) instead of whole shares, though the minimum investment is $100.
- Zero brokerage ETFs: there is no commission fee for investing in exchange-traded funds (EFTs) via Superhero—Australia’s only share trading platform that offers zero brokerage of ASX products.
Please note: this offer applies to ‘buy’ orders only.
- Flat 5 USD brokerage fee for ASX stocks: the brokerage fee for every ASX trade you make is as low as $5. This fee is flat regardless of the size and value of the trade.
- Real-time FX orders: transfers of currency exchange happen instantly instead of waiting for days to switch from AUD to USD so that you can trade US stocks.
- Tax reporting: Superhero provides extensive reporting of current stock holdings and all transactions, as well as franking credit detail, dividend, performance, and comprehensive tax.
- Invest with a minimum of $100: you can invest in ETFs and Australian stocks with as little as $100. This amount is lower than the standard minimum investment price of $500 set by ASX for Australian companies.
Superhero is Australia’s first broker to allow investments as low as $100 in ASX stocks.
- Real-time prices: you can get live pricing of stocks on charts and when you set orders. This feature doesn’t exist on other trading platforms, which charge a monthly account fee to get live prices.
- NAB holds cash funds: The Superhero Wallet found in the app acts as your cash management account. You can transfer funds used to place trades in this wallet. NAB holds the funds in your Superhero Wallet account. You can use PayID, bank transfer or BPay to transfer funds into your cash account.