eToro Review: The Social Trading Giant

 

Here, we’ll get into an eToro review of the largest social trading website in the world. But first, for the unaware, let’s start with the basics.

Social Trading Platform

Social trading is the process via which investors use online data and financial content sourced from a multitude of web applications as the main source to drive financial decisions. Etoro introduced a new way to trade on the internet. In 2010, the company launched OpenBook, which is a crowdsourced investment platform. Using this platform, it is possible for first-time or inexperienced traders to copy the transactions of top investors in the foreign exchange marketplace.

 

Comprehensive eToro Review Video

 

EToro Revolution

EToro is widely considered the first and most advanced social trading platform. Subscribers have an immediate in with a community of experienced traders, as well as a social network within the investment world. EToro provides all the tools needed to trade in the modern marketplace. The platform enables you to:

• Perform retail trading on the open market
• Observe the other traders and copy their transactions
• Use Copy Trading feature on the platform to automatically duplicate all trades made by your selected traders you choose

How it Works

EToro compiles the activity of all users and shares it with the entire community. This works like a financial transaction social network. Users can even like, comment and share on a user-generated feed.

Every trader gets assigned a public profile, which is open for consultations. Your performance is public and everyone can follow everyone else and replicate them.

EToro’s Performance Data

Once you’ve found a Professional Investor you want to copy, just click on their name. This brings up their profile, portfolio, stats, open trades, even their history and investment friends. This screen displays live trading feed of the trader. You have access to each live trade and any comments from other social traders, some of whom openly discuss their own trades. This is a tremendous opportunity for newcomers to learn the lay of the land.

EToro is second to none when it comes to the ability to quickly share information. Every investor can follow selected traders without copying trades automatically.

Video Example of Copying Top Traders

 

Markets Section

EToro Markets displays all products, such as currency pairs and stocks, that can be traded via CFDs (contract for difference, a contract between a buyer and seller that pays the current value minus the value at contract time).

Copy Trading

Generally, CopyTrader is an eToro tool that allows subscribers to choose a trader to copy and select an amount to copy for investments. You can watch how your account performs using this strategy. Here is additional information to consider before trying out this feature:

•  Minimum investment is $100. Maximum investment is $500,000.
• You can follow a maximum of 100 traders.
• Minimum amount for copying is $1.

EToro Search Feature

This functionality lets you search for people or stock symbols and returns information on trades pertaining to the search criteria. The Top 100 traders, holding the most profits realized in the current week, are displayed. Here, you can review 10 instruments (indices, currency pairs and commodities) that they are trading at the moment.

EToro Advanced Search

Advanced Search filters on eToro help you figure out your favorite traders. The feature includes a risk level filter. You can search profiles by Average Position, Weekly Drawdown, Gain, Leverage, Winning Weeks, Win Ratio, Exposure and Min. # Trades.

Tips for Investing on eToro

• Don’t always pick traders with the highest returns. Opt for frequent investors over “one hit wonders.”
• Look for consistent, long-term returns, say 10-20% over the past six months.
• To start, be conservative. Take advantage of the filtering tools to find traders with low-medium average risk
• Diversify your investments over a bunch of traders; you can follow up to 100.
• Etoro has real-time stock trading, and many investors who hedge and invest in forex and stocks simultaneously have more reliable long-term performance.

EToro Pros and Cons

Here are some great things about EToro:

• Has tight fixed spreads
• Guarantees stop losses and limit orders
• Does not charge trade commissions
• Available in four languages
• Trade in Bitcoin currency
• Price alerts
• One click trades
• Automated trading
• Islamic and Arabic friendly

These are the cons:

• Inactivity fee if not active in one year
• Currently not available for United States citizens
• No direct market access
• No scalping
• No VPS services
• Charges fees to deposit and withdraw funds

Basically, eToro simplifies the amount of analysis that you have to do as an investor. This is a tool that lets you invest without siphoning through endless graphical performance data.

Some Attributes of Worthy Traders You Should Copy

1. Their profile feed includes posts that demonstrate market knowledge
2. Have low drawdowns (how much they’ve been down this week or month) under 10 percent.
3. Consistent investment won’t have ridiculous returns in a short period of time. Look for long-term consistency, because these are sustainable without being reckless.

Islamic Trading Account

Islamic law forbids usurious interest rates in lending or borrowing money. This includes stock exchanges. The requirements to prevent Riba (usurious lending) include:

• Stocks must be bought and sold without delay
• Monies for each trade must be paid for upon the time of the transaction
• Currencies should be directly moved from the seller’s account to the buyer’s
• There can be no interest on any trades.
• If any indication of usurious interest is detected, the contract is void as forbidden (Haram).

To resolve this issue, a trader can buy as much as his current balance allows or borrow from a broker, who cannot receive any usurious interest rates on the transaction. Also, no interest can be obtained from contracts ongoing for 24 hours or more, which means that the daily rollover of interest has to be zero on a consistent basis.

[A List Of Other Forex Halal Sites Here]

Conclusions

The eToro website is dynamic and easier to use. Looking back through old reviews, it is easy to see how much they evolved and are still evolving. As the first and still premium social trading platform, they have set the bar high and rising. With easy to understand interfaces and constantly advancing tools, this site is an easy “Yes, please.” Starting risks are very low; you can join for $100 and, as long as you make one investment a year, there are no transaction fees.

It is great that they have an Islamic account that respects the Islamic culture in a very straight-forward way. That kind of forethought attracts diversity, which can only improve the social investing gene pool, in my opinion.

One thing I did not see anywhere was the risk of heavy investors manipulating trade. It seems to me that it would be easy enough to band together a with few super investors and create some real chaos. It apparently hasn’t happened yet, so, for now, I am going to enjoy my relatively new eToro count and see how well my performance tracks against my advice.