This is probably the most common question I get asked – does eToro work? And it's a fair question. Before you invest money in anything, you want to know if it's a service you can trust and whether other people have found success using it.
Note – This post doesn't apply to US customers
How does eToro Work?
eToro is a multi-asset trading platform. Through eToro you can trade stocks, forex, cryptocurrencies, ETFs, commodities and more. But as well as being a trading platform, they are also a CopyTrading platform.
CopyTrading is where you automatically copy the trades made by more experienced traders. When you copy someone on eToro, whenever that trader makes a trade, your account does too. While I can't guarantee you'll make profits, what I can say that is if you copied a trader who was profitable over the past 12 months, you too will be profitable. You don't pay any extra fees or commissions for copytrading. You'll profit the same amount as the people you are copying.
Do people trade successfully?
So are there profitable traders on eToro? Absolutely – the good thing about eToro is you can browse through the history of every trader. It shows you what percentage they have gained or lost and how risky they have been. Remember that past results aren't indicative of future performance.
Here is a search I just did of traders on eToro. What's shown is their past performance for the last 12 months and their risk.
How to make eToro work for you too
So how do you make eToro work for you too? Well here are my tips:
- Stick to CopyTrading – trading is risky and takes a lot of practice and experience. So stick to copytrading unless you know what you're doing. Otherwise you'll just end up losing money.
- Diversify – If you can afford it, copytrade multiple people. This will diversify your portfolio so that if one trader has a bad month, it won't ruin your account.
- Only follow traders with 12+ Months History – anyone can make a few lucky trades. But it takes real skill to trade profitably over many months. That's why I only copytrade traders with more than 12 months history.
- Follow low risk traders – eToro assigns traders a risk score. The lower the better. The score is based on the traders tactics – whether they are using too much account capital per trade, too much leverage and trading risky assets. While high risk traders can deliver large short term gains, they can't do it over the long run.
The best way to find out if eToro works is to sign up with a free practice account. eToro gives you $100k in virtual funds which you can use to test out the platform, including copytrading. This way you can see how eToro performs under real world trading conditions, without losing any money.
Is eToro Less Risky?
I believe that eToro Copytrading is less risky than trying to manually trade on your own. eToro works if choose to follow good investing practices of diversification. It's definitely less risky than trading platforms like Plus500 – which I'm more and more convinced are simply setup for amateur traders to lose their money.
Disclaimer: eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results.
Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.