Updated May 24, 2022

Is eToro Safe and Legit?

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eToro is a popular platform for trading stocks and cryptocurrency, known for its unique CopyTrading feature. But is it safe and legit? Read on to find out.

eToro is a popular trading platform that stands out for their CopyTrading feature.

But are your investments (and data) safe with eToro?

In this guide, find out if eToro is safe and legit. Plus, review their popular fees and what fees to expect if you decide to trade with this platform.

What is eToro?

eToro is a popular investing platform that lets you trade stocks and cryptocurrency, founded in Israel in 2007.

eToro's goal is to make trading more accessible. To that end, they introduced their popular CopyTrading feature in 2010, which allowed users to automatically copy the trades of successful traders.

This makes eToro a good option for beginners in trading.

It has other useful tools as well, such as their Smart Portfolios, curated sets of stocks and crypto that you can invest in with minimal effort.

Is eToro trustworthy? eToro is regulated by leading authorities, like FINRA, FinCEN, FCA, and more internationally. They also employ top data security tech and tools to keep your data and assets safe. As far as customer reception goes, eToro has a 4.2 out of 5 rating on Trustpilot, with over 14,000 reviews.

Is eToro Safe and Legit?

Yes, eToro is a safe and legit platform for trading stocks and crypto.

According to eToro's disclosures page, they offer securities trading through eToro USA Securities Inc, Member SIPC, FINRA, and a registered broker-dealer.

Meanwhile, crypto trading is offered through eToro USA LLC, which is not a member of FINRA/SIPC and not a registered broker-dealer.

However, it's important to distinguish between safe and risk-free.

Investing on eToro is safe, but it also carries risk (like any investment platform would). That's because no investment is guaranteed to pay off. Most importantly, never invest more than you can afford to lose.

This applies to trades you make yourself, as well as those made as part of their CopyTrader or Smart Portfolio features.

eToro also takes security seriously. User funds are kept secure in tier 1 banks. Transactions and personal information are protected through SSL encryption. They also add that they "employ top vendors, web solutions, and firewalls to block a full range of cyber-attack possibilities".[1]

Is eToro insured?
Cash deposits are FDIC insured in the U.S. However, it isn't possible to FDIC-insure cryptocurrency, but eToro keeps the majority of their crypto offline, in cold storage.[2]

Fees to look out for

Fees are an important factor in choosing a trading platform. At eToro, accounts are free to open, with no commissions or management fees.

Keep in mind that they charge a variable spread on cryptocurrency trades. This is the difference between buy and sell prices, typically amounting to a few percent or less.

There are also a range of other fees not associated with trading:[3][4]

  • Cryptocurrency transactions incur a fee that varies depending by blockchain provider
  • $5 withdrawal fee in countries other than the U.S.
  • $10 inactivity per month if your account has no activity for 12 months
  • Overnight fee per night for leveraged positions held overnight
  • The minimum investment is $10 in the U.S.
  • The minimum withdrawal is $30

eToro Features

What all can you do on the eToro platform? There's quite a bit, and now that they offer stock trading in the U.S. as well as cryptocurrency, there's even more to choose from.

Cryptocurrency Exchange
Many will know of eToro as a cryptocurrency exchange, and with good reason. eToro is a well-known entity in the crypto space.

eToro has over 60 cryptocurrencies (20+ in the U.S.) to buy, sell, and trade including:

While it isn't as high a number as you'll find on some other popular exchanges, eToro's roster of crypto coins includes the most widely traded ones.

If altcoins are your primary interest, you might want to look elsewhere. But if you're only interested in the biggest cryptocurrencies, eToro probably has what you need.

Stock and ETF trading
eToro can be a convenient option if you're looking to trade stocks and crypto all in one place.

eToro offers access to around 2,800 stocks (1,900+ in the U.S.), including some of the most popular companies:

  • Apple
  • FedEx
  • Nvidia
  • PayPal and more

You can also trade ETFs on eToro, with over 200 funds to choose from, including the SPDR S&P 500 ETF, the Vanguard S&P 500 ETF, and the ARK Innovation ETF, to name a few.

CopyTrader
With eToro's CopyTrader feature, you can copy the trades of successful traders for free.

It's easy to find top traders, as their profiles show you important metrics like portfolio composition, historical performance, risk score, trade frequency, and average holding time.

And eToro is a social platform. That means you can talk to any of these traders or their followers by posting comments on their public walls.

You can follow up to 100 traders at once, and you're able to set a rule to stop copying a trader if the portfolio value drops below a set percent. CopyTrading has a $200 minimum and a $2,000,000 max.[5]

Smart Portfolios
The Smart Portfolio feature works similarly to eToro's CopyTrading, but instead of copying other investors, you invest in curated sets of assets.

Smart Portfolios have a minimum investment of $500[6], but they allow you to minimize risk by adding valuable diversification to your assets.

Virtual Portfolios
You can practice trading cryptocurrency without risk using eToro's Virtual Portfolios, a kind of paper trading account. You get $100k of virtual money to practice with, and can learn a lot from your successes and mistakes.

While it's true you can't earn anything this way, it does offer a safe way for beginners to get a feel for trading and using the platform.

eToro Club
You can take advantage of a variety of benefits thanks to eToro's tiered VIP accounts. Useful content like newsletters, reports, and webinars, as well as bonuses to staking interest rates, dedicated account managers, and customer service perks, are just some of what they offer.

The base tier is Bronze, and you'll start out there automatically. You won't receive any perks until reaching Silver (for those with over $5,000 in equity). Diamond is the highest tier, and requires $250,000 in your account.[7]

Educational Resources
eToro has detailed financial guides and video tutorials for new traders, and tips on how to trade on the platform. The latest crypto news is available through eToro's Weekly Crypto Roundups, available on eToro's blog.

Bottom Line

eToro is a legit trading platform that takes the safety of its customers' data and assets seriously, and makes efforts to comply with regulations related to their business.

With a range of useful features for new and experienced traders alike, eToro has a lot to offer those interested in investing in stocks, ETFs, and cryptocurrency.

It is important to distinguish between a safe platform and a risk-free one, however. Keep in mind that while eToro will do everything in its power to protect you from outside harm, it can't guarantee your investments. For that reason, it is vital that you always take extreme care with any money you invest.

References

  1. ^ "Security": eToro, 2022.
  2. ^ "Are my funds insured?": eToro, 2022.
  3. ^ "Fees": eToro, 2022.
  4. ^ "Are there withdrawal fees?": eToro, 2022.
  5. ^ eToro USA LLC. Copy Trading - How To?, Retrieved 4/13/2022
  6. ^ eToro USA LLC. What are Smart Portfolios?, Retrieved 4/13/2022
  7. ^ eToro USA LLC. eToro Club Membership tiers, Retrieved 4/13/2022
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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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