eToro


(Alex Sherwood) #1

I almost missed this but eToro have launched a service to enable users to buy shares (not CFDs) on their platform, without charging stamp duty, although they do have a spread of 0.99%. There’s no mention of ISAs in the press release either. Obviously they offer a pretty good UX so this is probably worth keeping an eye on. Has anyone tried it out yet?

Also, don’t miss the small print :eyes:

**eToro reserves the right to withdraw the practice of absorbing stamp duty in future.


(Vladislav Kozub) #2

Just 0.09!

The pricing is transparent as fees are included in the spread which is just 0.09% per side.

$25 withdrawal fee is quite nasty though.

As you mentioned, this is funny too:

**eToro reserves the right to withdraw the practice of absorbing stamp duty in future.

Like Monzo realised how expensive it is to do free cash withdrawals, they limited those and hidden card top ups. Quite likely eToro will limit/remove stamp duty feature soon as well.

It is really annoying when companies use unsustainable promotions to boos the customer base and then remove these services when deemed not financially viable.


(Alex Sherwood) #3

Oh ok, I hate that. Moving the costs to the point of the journey where the user has already bought in & has no other way out sucks IMHO.

To be fair to Monzo, I genuinely don’t think they saw that cost becoming unsustainably high. The fact that eToro seem to be considering it as a promotional thing, with that disclaimer, is a bit of a red flag for me.


(Tommy Lowe) #4

eToro have already been caught out lyinmisleading customers before, why change now!

To think positively though, it’s good to see more players offering share purchase services in a well presented app.

But then…

Investors can also be charged:

  • $25 withdrawal fee when removing funds from the platform
  • Conversion fee (GBP/USD) of 50 pips when depositing and withdrawing funds from the platform
  • When depositing accounts run 12 months without any login an inactivity fee of $10 per month may be charged against uninvested balances (no investments are closed to fund this charge), and the fee is only applicable if there are still funds in the available balance.

Really?


(Adam) #5

https://www.etoro.com/customer-service/cfd-trading/

"Are CFDs riskier than traditional market investments?

No. Any financial investment involves risk, and CFDs are no different. CFDs only become riskier if you’re using leverage, thereby increasing your market exposure. On eToro for example, you can invest in any asset without any leverage."

All you need to know about eToro. Dishonest would be a charitable description imo.

Any other thoughts on this?


(Vladislav Kozub) #6

This says it all

Especially in comparison! :grin:


#7

I wonder if they are using any dark patterns to guide users to CFDs.

Ignoring that, I think they say somewhere they need to use CFDs for their patented CopyTrader™ and that will push a lot of people towards CFDs.

And ignoring that, let’s assume we’re all new to this investing thing and this is your first introduction to investing, and you believe del boy when he says “…he who dares Rodney, he who dares…” or a handful of other common phrases which tell you to go big or go home. In which case you would be more likely to use a leveraged CFD as 200 shares is better than 20 but more importantly if you win ( keyword ), it’ll be bigger. Now you’ll be happy as long as you keep winning, but when you lose, oh boy, angry reviews, no more investing, plus you might now owe way more than you can afford.

Long story short it could viewed as a marketing strategy, look we let you buy actual shares, but when you use the app, you are guided towards CFDs.


(Christopher) #8

They are brazen @adam!

Statements like this are at the very core of the recent drive by the FCA and ESMA to protect retail customers from often misunderstood, and complex derivatives products.

Totally @Vlad, there’s something particularly cynical about this approach when they create friction in the form of fees when you want to withdraw funds.

I think you’re on the money here @saf, could they be positioning themselves for the coming CFD pushback? Regulatory pressure and competition from new entrants like Freetrade, revolut, etc. It may also give them (limited) wiggle room with the regulator if they are no longer purely peddling CFDs.

To me, it seems like rather than eToro wanting to do this, they feel they have to do this, which says a lot about what they really think about their customers.


#9

Not sure the pushback or regulation will be big enough to have that effect, besides any regulation will be watered down given how motivated some of these companies and people are.

Which makes me think it’s a ploy to bring in customers who want actual stocks, and then use dark patterns and human greed to push those customers to towards leveraged products. It’ll be interesting to see how this plays out…


Any eToro users who have purchased actual stocks using this feature on here? How did you find it?


(Viktor) #10

We unfortunately see multiple CFD firms doing this.


(Richard varga) #11

I’ve been using Etoro since early 2017. The biggest issue of etoro is that if you created your account after April 2017 then the minimum stock position for you would be $500. This forces people with smaller equity to use leverage, in which they have recently increased the daily fees over 550%. I used to like the platform but I’ve seen a lot of horror stories, with it being a social platform. Etoro have had general bugs in their system where they have been 100% at fault yet it would cost the users… I’m planning to move most of my funds from there to here…


#12

Terrible


(Richard varga) #13

What makes the $500 minimum even worse is users who joined before April 2017 have a minimum of $50 for stocks.
When I see people complaining about the platform I always ask what makes them stay, they always say it is the very simple easy of use and the social side which keeps them there…I believe without it Etoro wouldn’t be what it is.

When I joined etoro I only traded cryptos and wanted to take advantage of etoro’s leverage…at the time I think they had lower spreads as well, not the 5% they have now. I’d never traded stocks before but after I seen AMD and Nvidia, with being a gamer and into crypto I wanted to buy some. Being new to trading I was using x5/x10 leverage which looking back was stupid but luckily for me the tech bullrun went crazy so I made over 150% profit on my account in 2017. By the end of the year I’d already felt the risks of using high leverage and stopped using x10. But as I couldn’t afford $500 at x1 I stuck to using x5

The problem for me came around Feb/march this year with the big -10% nasdaq100 selloff. While I made 30% gains in January I made a loss of 26% in March. This is when I realised it was impossible for me, with only afew thousand dollars in my account to do any low risk trading on the platform. Now that my first real year of trading is over, i’m much more experienced to know that I need to quit while i’m ahead with the high leverage trading a find a new platform which caters for smaller investors without the extortionate fees. I searched and searched for weeks and the only thing I found was robinhood (US only). After weeks of looking id practically gave up, until one day i was sat bored at work and randomly typed ‘Free Trade UK’ into google…Everything changed haha

When I signed up I was around 23k in the queue but after finding out I could bump the queue by referrals I invited all the UK traders I know…I Think i’m around 230 now and literally can’t wait to start trading here.

The moral of the story here is yes i’ve used etoro for over a year and would recommend saying well away if you are a small investor or don’t fancy paying $500 minimum for a stock…


Googling for Freetrade
#14

Yes, that is right. Humanises it, makes it approachable and introduces the network effect and it’s a big deal. The basic premise of the network effect is, you are less likely to leave a platform as doing so means you have to start your network again or lose it.

Another technique they use effectively is leaderboards for copying funds. But it’s not aligned to long term investing if you are competing for position on leaderboards.

If you or anyone else is interested in these sort of techniques and patterns and want a accessible introduction then you should check out “Hooked: How to Build Habit-Forming Products by Nir Eyal”. He also has a blog, done some videos, and advises companies on how to make sticky products for a lot of money. :smile:


(Chris) #15

That’s just straight up doing a Wonga.


(Louis Otto) #16

I’ve used eToro for over a year now, there have been good bits and bad bits (much like every platform in existence). I like the simplicity, and the easy access to US stocks, and also I quite like the copy system. I don’t like the fact that the social feeds are just an absolute mess of at-best unrelated nonsense, and at-worst downright lies.

The leverage thing is annoying though - on opening a stock position it defaults to around 5x, so you have to toggle it each time you open a position, which can catch a lot of people out.

I use it for low cost exposure to US stocks. The $25 doesn’t really hurt much when you have a decent amount of cash on there, but I much preferred it when it was weighted depending on how much you were withdrawing. I think if you use it as a specific tool for a specific purpose, it’s fine, but I will be using Freetrade for different reasons which will compliment eToro in the short term. Once Freetrade go global and I’m confident on the platform, I’d switch away from eToro.


(Richard varga) #17

So I did something abit cheeky yesterday… I made a post on my etoro account to my copiers and follows explaining how I think etoro is slowly pushing away the smaller investors… and I slipped my referral link for freetrade in… my referrals are going through the roof!! Now sitting around 50 in the queue haha!


(Louis Otto) #18

Cheeky? That’s great!


(JP) #19

eToro get a lot of hate simply because they are a CFD broker but the fact of the matter is that CFDs has been much better regulated the last couple of years, in April ESMA released new guidelines for trading where leverage was limited, binary options was prohibited for retail traders and a whole lot more good stuff.

With that said, is this broker for everyone? No, absolutely no, you need to be aware of the many risks with CFD trading. There are both positive reviews and negative reviews about this broker. (See the trustpilot link posted earlier in this thread) Make up your own mind :slight_smile: and make sure you understand what CFD trading is, the risks, the benefits, the uglies and the goodies.

EDIT: posted early by mistake.


(Calum McWhir) #20

My issue is that they take no responsibility for helping this happen. Most recent example:

The vast majority of retail customers will lose money (some eye-watering amounts and very quickly) and as a result will be put off from investing for life. It is incredibly damaging and takes advantage of get rich quick mantras.