June 19, 2022

How eToro Makes Money

Read more about eToro
Ad Disclosure: This article contains references to products from our partners. We may receive compensation if you apply or shop through links in our content. You help support CreditDonkey by using our links. (read more)

eToro is a popular mainstream platform for trading stocks, crypto, and more. But how does eToro make money? Keep reading to find out.

eToro's CopyTrader feature gets you expert-level trading insights for free.

So how does eToro make their money?

In this detailed look at eToro, find out how they make money and what fees you can expect to pay.

What is eToro?

eToro is a social trading platform founded in Israel in 2007. They support the trading of over 1,200 instruments, including stocks, ETFs, and cryptocurrency for users around the globe.

eToro is well known for their CopyTrader feature, which allows users to automatically mimic the trades of other traders. These "copyable" traders are ranked and measured by risk level, past trades, asset lists, and historic profits and losses. And you can see all of that info on their profile.

Each trader on eToro can create and share blog posts about their trades or specific assets. You can also leave comments on others' profiles to discuss analytics, trading strategy, and more.

Beyond that, eToro provides a range of educational content and tools such as a virtual or demo trading account, where traders can invest risk-free with virtual cash. All these features make eToro a solid option for beginner traders.

eToro is available through its desktop site as well as an easy-to-use mobile app, which can be found on both the Apple Store and the Google Play Store. They have over 25 million registered users in 140 countries around the world.

How eToro Makes Money

There are a number of ways that eToro makes money. Their primary source of revenue is transaction fees and the bid-ask spread applied to trades on the platform.[1]

Transaction Fees
eToro's current fee structure is fairly straightforward and easy for users to understand.

eToro doesn't charge commissions on stock trading.

The transaction fee for cryptocurrency on eToro is 1%, charged when you purchase an instrument on the eToro platform and 1% when you sell it again.[2]

To make this more visible to traders, eToro takes both fees into account in the profit and loss indicator for open positions. When you open a trade on eToro, you will immediately see a loss of 2% of your original purchase to reflect these fees.[3]

Bid-Ask Spread
The bid-ask spread is a separate, sometimes undisclosed fee that amounts to the difference between the sell and buy price for a particular asset. The spread goes to eToro each time a transaction is made.

This fee is harder to determine in some cases, as it may vary depending on market conditions as well as potentially by asset, and may change from one moment to another.

While the cryptocurrency spread is undisclosed, other assets' spreads are measured in PIPs (percentage in point, the last digit in the price of a given asset), or Points (price changes left of the decimal point), as you'll see in the list of CFD spreads below:[4]

  • Currencies: 1 PIP and up
  • Commodities: 2 PIPs and up
  • Indices: 0.75 Points and up
  • Stocks and ETFs (CFDs): 0.09%

Because eToro makes money from transactions, one of their main goals is to increase the number and the volume of transactions conducted on the platform. That means incentivizing trading.

They incentivize trading by offering commission-free trades and an easy-to-use platform targeted at beginners.

The more assets that eToro supports, and the more types of trades they offer, the more likely people are to use the platform.

This also likely explains the logic behind offering the CopyTrader feature free of charge. While eToro could justify charging a fee for the privilege of copying other traders, this would probably put off some potential customers and shrink their base of retail traders.

Instead, by letting users copy other traders for free, they can earn a small amount each time a copyable trader makes a transaction. Since popular traders may have copiers numbering in the thousands, a small percentage can quickly add up.

Other Fees
There are a range of other fees that eToro may charge users in certain situations.

  • Overnight Fee: eToro may charge an overnight fee for CFD positions that are kept open overnight.

  • Weekend Fee: Weekend fees are like overnight fees, charged for CFD positions kept over the weekend, and are triple the overnight fee.

  • Withdrawal Fee: eToro charges a fixed $5 withdrawal fee, with a $30 minimum withdrawal for non-U.S. customers.[5] eToro USA LLC does not charge any fees on withdrawals.[6]

  • Conversion Fee: 50 PIPs and up.

  • Inactivity Fee: If a user goes 12 months without logging into their account, eToro will charge a $10 monthly inactivity fee on remaining available balances.

As we mentioned earlier, there are no fees involved in using the CopyTrader or Smart Portfolio features. Deposits on eToro are also free.

Bottom Line

As you can see, eToro makes its money through a combination of transaction fees, the bid-ask spread (which is the difference between the buy and sell price of a given asset), and a range of other fees.

If you're looking to minimize the impact of fees on your own trading profits, consider making fewer, longer-term investments and trading less often.

Since most of the fees are incurred on a per-transaction basis, this will help to reduce the amount you have to pay in the long run.

References

  1. ^ "Trading Fees": eToro, 2022.
  2. ^ eToro USA LLC. How does eToro crypto pricing work?, Retrieved 5/31/2022
  3. ^ eToro USA LLC. Why is there a loss as soon as I open a trade?, Retrieved 5/31/2022
  4. ^ eToro. eToro Fees CFDs, Retrieved 5/31/2022
  5. ^ eToro. General Fees, Retrieved 5/31/2022
  6. ^ eToro USA LLC. Are there withdrawal fees?, Retrieved 5/31/2022
eToro

Deposit $100 and Get $10

For a limited time, you can get $10 when you deposit $100 in your eToro account. Here's how:
  1. Sign up for an eToro account
  2. Deposit $100
  3. Explore stocks, ETFs, and crypto
You'll automatically receive $10 directly to your account balance. eToro USA LLC; Virtual currencies are highly volatile. Your capital is at risk.
Expires 12/31/2022
Webull

Get Two Free Stocks, Each Valued Between $3 - $300

Expires 7/31/2022

Open a Webull brokerage account and get two free stocks, each valued between $3-$300

BlockFi

Get Up to $250 in Bonus BTC

DepositCrypto Bonus
$100 - $1,499$15
$1,500 - $19,999$20
$20,000 - $39,999$40
$40,000 - $74,999$75
$75,000 - $99,999$100
$100,000+$250

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.

Read Next:

eToro Review: Pros and Cons

eToro Review

eToro Alternatives

eToro Alternatives

Is eToro Good for Beginners

eToro Good for Beginners

How to Sell on eToro

How to Sell on eToro

How eToro Copy Works

eToro Copy Works

How to Invest in Cryptocurrency

Invest in Cryptocurrency

Compare:

Leave a comment about How eToro Makes Money?




About CreditDonkey
CreditDonkey is a crypto comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.

About Us | Reviews | Deals | Tips | Privacy | Do Not Sell My Info | Terms | Contact Us
(888) 483-4925 | 680 East Colorado Blvd, 2nd Floor | Pasadena, CA 91101
© 2022 CreditDonkey Inc. All Rights Reserved.