eToro: crypto, fees … The essentials

Are you starting to shop and hesitant to sign up for eToro? Here’s all there is to know about this platform which has the uniqueness of offering “social commerce”.

eToro is one online trading platform : Individuals can register to invest in various financial products. The platform plays the role of intermediary between the various financial markets by executing their orders with them. The platform was founded in 2009 in Israel. It operates in more than a hundred countries. Its European headquarters are based in Cyprus. It practices “social trading”, that is, users have the opportunity to copy the movement of “influencer” traders to try to reproduce their strategy.

Cryptocurrencies, stocks … What financial products are available?

The platform allows investment in assets such as stocks, currencies, commodities, indices (ETFs) as well crypto-assets (cryptocurrencies such as bitcoin, ethereum …). It also provides access to CFDs (contracts for difference) supported by various assets. The platform also offers a Copy Portfolio, through which investors can access a portfolio of stocks from a predefined sector and invest in the entire portfolio without selecting assets one by one to diversify their portfolio.

What are the fees on eToro?

As with all trading platforms, there is a fee plan that varies according to the assets in which the internet user invests, their amount, the duration of the investment … On eToro, transactions are mainly carried out in dollars. This means that the fees are used in dollars and that for people who finance their accounts in euros, conversion fees are added.

The broker shows 0 euro fee for buying and selling shares in long positions without leverage and no commission. On the other hand, fees are charged for short positions. For difference contracts (CFD) on Euronext and internationally, a fee of 0.09% is charged on all positions (buy and sell), as well as evening and weekend throughput fees for the purchase of shares. For ETFs, the fee is 0.09% per part, plus a fee for leveraged short positions. Finally, fees are charged from 0.75% to 5% on investments in cryptocurrencies.

The site charges custody for shares: 22 cents pr. day to buy and 12 cents to sell, applied to the amount borrowed. A $ 10 fee is also charged when account inactivity reaches 12 months, provided there is money left in the available balance. However, eToro does not agree to close any open positions to recover this inactivity fee. To stop charging these inactivity fees, all that is needed is an activity of any kind, such as a simple connection to your account.

That withdrawal fee is $ 5. On the other hand, there are no fees for opening, managing or closing an account, and access to real-time prices is free for stocks and ETFs. Conversion fees apply to any non-US dollar deposit. Payout fees are waived, and conversion fees are reduced for customers who have higher equity on the platform.

The platform is accessible from any device with internet connection and offers an application available for iPhone and Android devices. To start trading, all you have to do is create an account on the site. Before investing money, the user must fill in his identity, answer questions to assess his knowledge of trading and read a number of documents regarding eToro’s training tools and general risk information. .

You will then need to make a deposit to your eToro account, using a credit card payment, equivalent to at least $ 200 for an initial deposit and $ 50 for a new deposit, to have capital on the site, allowing you to trade . Unlike traditional trading players, eToro does not work with a tax envelope (a bank account specifically designed for investment): the amounts invested and earned are temporarily hosted by partner banks on behalf of eToro, and the investor must then transfer them to their own bank account to use.

Once the registration is completed, the various marketplaces covered by eToro are available and the user can invest in them as he sees fit: simply select the asset that interests him and click on “Trade”.

eToro offers a copy trading feature: its technology makes it possible to automatically copy the strategy from other traders in real time for those who want to do so. The investor then defines a certain amount that he wants to allocate to copy trading, and his investment will automatically follow the movements of the trader (s) he follows. The site advises though Invest no more than 40% of your capital to follow a single traderbut the minimum is 200 euros.

It is possible to consult risk scores, history and portfolio diversity for all traders. This can allow, within the framework of a copy trading strategy, to select the most serious traders and exhibit the least risky behavior. The platform also offers social trading functionality, ie the ability to chat with other investors.

Is eToro a reputable site?

eToro is a platform that benefits from several guarantees: it is regulated by the Cyprus Securities & Exchange Commission (CySEC), the Authority for the Financial Markets of Cyprus, and by the FCA, the Financial Conduct Authority, the Authority for the UK Financial Markets. The amounts deposited on the platform are also guaranteed up to 20,000 euros. Users are therefore sure to get the funds deposited on the site back within the limit of 20,000 euros in case of eToro errors. The trading platform also provides all its customers with a free insurance from Lloyd’s of London, which covers losses in the event of insolvency up to a limit of one million euros, against payment of a deductible.

But the fact that the site is serious does not prevent the risk of losing money are very important. The broker states on its website that “67% of retail investor accounts lose money when trading CFDs with this provider”. However, eToro is taking a number of steps to limit the risk to its customers. During registration, the Internet user is sent to a questionnaire to assess his trading skills. Depending on its response, eToro may decide to limit some of its activities, including investing in riskier assets. The site also offers numerous training resources, analyzes, guides to the financial markets to support traders. And these can train on a virtual account.

eToro and taxes, how does it work?

The amounts earned on the platform must be declared for tax when preparing their tax return. eToro specifies in its general terms and conditions that the company does not collect or pay any tax on income earned or lost by investors: the latter must itself notify all these elements to the tax authorities. First you have to do total gains and losses for the year to achieve the net balance. If the trading activity shows a net loss, it is possible to declare it. If it can not be deducted from the total income, it is possible set off against capital gains of the same nature for the following ten years.

Financial assets are subject to a flat tax of 12.8%, called a single flat tax or flat tax. However, it is possible to prefer the use of the progressive scale for income tax. For this, you must make an explicit request. We need to add CSG, CRDS and social security contributions, which amount to 17.2%.

eToro does not offer a PEA type securities account, it is not possible to benefit from the tax relief that this type of product gives rise to. The trader must declare what he has won or lost, even though the amounts are still in the eToro account and have not been transferred to his bank account.

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