Updated May 24, 2022

Is eToro Good for Beginners

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eToro, a popular cryptocurrency trading platform, lets you mimic other traders with their CopyTrading feature. But is it good for beginners?

With eToro's popular CopyTrading feature, you can mimic the moves of top-performing traders.

But is it actually a good option for beginners? Or is it just hand-holding?

Find out whether eToro is a good fit for beginner traders in this guide. Plus, see which fees they charge and how it compares to other beginner-friendly platforms.

What is eToro?

eToro was founded in 2007 with the goal of making trading more accessible. In 2010, they introduced their popular CopyTrading feature, which allows you to mimic trades of top-performing traders.

Since then, they've become the world's leading social trading platform.

In 2017, eToro began supporting cryptocurrency trading in the U.S. For international traders, they offer a wider range of securities like stocks, currencies, and ETFs.

Is eToro good for beginners? Because eToro is geared toward investors who have not yet developed a strategy of their own, it's a good place for beginners to dip their toes into crypto. Their CopyTrading feature and the social aspect they bring to trading is what really sets them apart from similar services like Coinbase.

How Does eToro Work?

eToro makes it easy to buy and sell cryptocurrency. You can trade wherever you are through their desktop site or mobile app.

Plus, with their CopyTrading feature, it shouldn't take long for beginners to learn the ropes.

Here's how it works:

  1. First, you look through the top traders. Each trader profile includes metrics like a Risk Score, portfolio composition, historical performance, trade frequency, and average holding time.

    You can also talk to any of these traders by posting comments on their public walls.

  2. Then, choose traders to follow. You're able to follow up to 10 traders at a time.

  3. Finally, set parameters, if you wish. To mitigate risk, you can choose to stop copying any trader if the value drops below a certain percent. There is a $200 minimum for copy trading, and a $500,000 max.

Is eToro safe? Yes, eToro is a safe platform for trading. User funds are kept secure in tier 1 banks, and cash deposits are FDIC insured in the U.S. Cryptocurrency cannot be FDIC insured, but they keep the majority of their holdings in cold storage, offline. Transactions and personal information are protected with SSL encryption.

What Cryptocurrencies Does eToro Offer?

eToro has over 20 cryptocurrencies to buy, sell, and trade:[1]

  • Aave, Algorand, Basic Attention Token, Bitcoin, Bitcoin Cash, Cardano, Chainlink, Compound, Dash, Decentraland, Dogecoin, Enjin, EOS, Ethereum, Ethereum Classic, Filecoin, IOTA, Litecoin, Maker, NEO, Polkadot, Polygon, Ripple, Shiba, Solana, Spark, Stellar, Tezos, TRON, Uniswap, Yearn.finance, ZCASH

eToro Features

eToro has a range of features that are great for beginners, especially their CopyTrader program, Smart Portfolios, and Virtual Portfolios. Let's look at them in detail.

CopyTrader:
With eToro's CopyTrader feature, users can mimic the trades of other traders. Metrics like risk score, monthly and yearly performance, portfolio composition, number of trades, and number of followers make it easy to choose who to follow.

Copyable traders can also post comments and communicate through a public feed.

A Note About CopyTrading: eToro's CopyTrading feature is a huge perk for inexperienced traders, but it's not without risk. In fact, no Popular Investor will ever ONLY profit, and you'd be wise not to over-trade for fear of missing out on the "next big thing". Always be careful when choosing a Popular Investor to copy, and aim for long-term returns over short-term spikes.

Smart Portfolios:
The Smart Portfolios feature expands on eToro's CopyTrading. There is a higher minimum investment of $5,000, but it allows you to minimize risk by investing in a portfolio of cryptocurrencies, rather than following a single trader.

There are currently 5 crypto-based portfolios to choose from:

  • BitcoinWorldWide
  • FuturePayments
  • CryptoEqual
  • Crypto-Currency
  • CryptoPortfolio

Virtual Portfolios:
You can practice trading cryptocurrency without risk using eToro's Virtual Portfolios. They'll give you $100k of virtual money to practice with.

You obviously can't earn anything this way, but it's a safe way for beginners to get a feel for trading and using the platform.

Educational Resources:
If you want the latest crypto news, you can take advantage of eToro's Weekly Crypto Roundups, available on eToro's blog to keep you up to date.

They have detailed financial guides and video tutorials for new traders trying to understand the crypto space, and tips on how to trade on the platform.

eToro Club:
eToro's tiered VIP club offers a variety of benefits. You'll get access to exclusive newsletters, reports, and webinars, as well as bonuses to staking interest rates, dedicated account managers, and customer service perks.

There's no requirement to join the base tier at Bronze, but you won't enjoy any benefits until Silver, which requires $5,000 in equity. The tiers go up to Diamond, which requires $250,000 in your account.

eToro Fees to look out for

eToro charges a single 1% fixed fee when you buy or sell crypto. This fee is added to the market price and applies for each side of the crypto transaction, both when opening and closing a position.[2]

There are also a range of other fees not associated with trading:

  • The minimum investment is $50

  • The minimum withdrawal is $30

  • There is a $5 withdrawal fee in countries other than the U.S.

  • eToro charges an overnight fee per night for leveraged positions held overnight

  • eToro charges a $10 inactivity per month if your account has no activity for 12 months

  • Cryptocurrency transactions, including transferring funds, incur a fee, which varies depending on each blockchain provider

How to Create Account on eToro

It's easy to open an account with eToro. You should be able to do it in just a couple of minutes. Start by visiting their website or downloading the app on your mobile device.

Pick a username, choose a password, and put in your contact information.

You'll need to verify your identity with one of the following before you can start trading.

  • Valid U.S. passport
  • Valid driver's license
  • Valid state ID

How Does It Compare?

eToro vs Coinbase
Coinbase is certainly one of the best-known cryptocurrency exchanges operating today. They offer a wider range of cryptocurrencies for trade than eToro does, though eToro does still have a fair number.

There are a lot of perks to trading on Coinbase. For beginners, it's extremely easy to use—in fact, that's why it's so successful—with one of the most intuitive crypto trading apps available. They've got a wallet, a card on the way, and a range of educational offerings that let you earn crypto while you learn crypto.

What they don't have that eToro does is the social aspect. If that appeals to you, then stick with eToro. It's arguably a more dynamic, better long-term strategy for learning if that's what you want to do.

However, if you're looking to do your research elsewhere, it doesn't get much easier than starting with Coinbase.

eToro vs Robinhood
You've probably heard of Robinhood, an investing app where you can trade commission-free. In addition to a limited range of cryptocurrency, users can purchase stocks, options, and ETFs, which means it has more options than eToro, at least for customers in the U.S.

While Robinhood is easy to use, and their commission-free trades may be appealing, they don't have anything like eToro's CopyTrading platform or social network. They do have a range of educational resources for new investors.

Investors looking to learn, and who are more interested in crypto than other securities, probably want to choose eToro over Robinhood. Those interested in trading more traditional ones like stocks and ETFs won't find the option on eToro just yet.

Bottom Line

eToro has a lot to offer for beginners. Whether you're brand new to crypto or have been a casual trader for a while, eToro presents an opportunity to level up your game.

Thanks to their CopyTrading feature, you can mimic the most successful traders automatically. And whether you engage with the community of traders there or just lurk like so many of us do, there's a lot you can learn from your peers if you take the time to listen.

Give it a try. There's no rule that says you have to buy anything. Poke around, see what people are up to, and soon enough you'll be ready to take the next step in your crypto journey, whatever it might be.

References

  1. ^ eToro USA LLC. Trade Markets on eToro, Retrieved 5/24/2022
  2. ^ eToro USA LLC. Trading Fees, Retrieved 3/31/2022
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Jeremy Harshman is a protector of art and writing at CreditDonkey, a crypto comparison and reviews website. Write to Jeremy Harshman at jeremy.harshman@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

eToro USA LLC; Virtual currencies are highly volatile. Your capital is at risk.

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