eToro: Cryptocurrency, Fees… The Essentials


Are you starting to trade and hesitating to register on eToro? Here is everything there is to know about this platform, which has the particularity of offering “social trading”.

eToro is a online trading platform : Individuals can register to invest in various financial products. The platform fulfills the role of intermediary between the different financial markets by executing their orders with them. The platform was founded in 2009 in Israel. It is active in more than a hundred countries. The European headquarters is located in Cyprus. It applies “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 there?

The platform allows to invest in assets such as stocks, currencies, commodities, indices (ETFs), as well as crypto assets (cryptocurrencies like bitcoin, ethereum…)† It also gives access to CFDs (contracts for difference) backed by various assets. The platform also offers a Copy Portfolio, which allows investors to 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 costs on eToro?

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

The broker shows 0 euro fee for buying and selling shares on long positions without leverage and without commission. On the other hand, charges apply for short positions. For contracts for difference (CFD) on Euronext and internationally, a 0.09% fee is charged on all positions (buy and sell), as well as evening and weekend fees for share purchases. For ETFs, the fee is 0.09% per item, plus a fee for leveraged short positions. Finally, fees ranging from 0.75% to 5% are levied on investments in cryptocurrencies.

The site costs guardianship rights for stocks: 22 cents per day to buy and 12 cents to sell, applied to the amount borrowed. A $10 fee will also be charged when account inactivity reaches twelve months, provided there is still balance on the available balance. However, eToro agrees not to close any open positions to recover these inactivity fees. To stop the collection of these inactivity fees, all it takes is an activity of any kind, such as a simple connection to your account.

The withdrawal fees Its $5. On the other hand, there are no fees to open, manage, or close an account, and access to real-time prices is free for stocks and ETFs. A conversion fee will apply to any deposit not made in US dollars. Withdrawal fees are waived and conversion fees are reduced for customers with higher equity on the platform.

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

You will then need to make a deposit into the eToro account, through payment by credit card, equal to at least $200 for an initial deposit and $50 for a new deposit, in order to have capital on the site. to trade. Unlike traditional trading players, eToro does not work with a tax envelope (a bank account specially designed for investments): the invested and earned amounts 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 eToro covered marketplaces will be accessible and the user will be able to invest in them as they see fit: all they need to do is select the asset that interests them and click on “Trade”.

eToro offers a copy trading feature: the technology makes it possible to automatically copy the strategy of other traders in real time, for those who want it. The investor then defines a certain amount of money he wants to allocate to copy trading, and his investment will automatically follow the movements of the trader(s) he follows. However, the site advises don’t invest more than 40% of your capital to follow a single traderbut the minimum is 200 euros.

It is possible to consult the risk score, history and portfolio diversity of all traders. This can make it possible in the context of a copy trading strategy to select the most serious traders and exhibit the least risky behavior. The platform additionally offers social trading functionality i.e. the possibility to chat with other investors.

Is eToro a serious site?

eToro is a platform that benefits from several guarantees: it is regulated by the Cyprus Securities & Exchange Commission (CySEC), the authority of the financial markets of Cyprus, and by the FCA, the Financial Conduct Authority, the authority of the UK financial markets . The amounts deposited on the platform are also guaranteed up to 20,000 euros. Users are therefore assured that they will get back the money deposited on the site within the limit of 20,000 euros in the event of eToro failure. The trading platform also offers all its clients free insurance from Lloyd’s of London, which covers insolvency losses up to a limit of one million euros, against payment of a deductible.

The fact that the site is serious though does not prevent the risk of money loss are very important. The broker states on its site that “67% of retail investor accounts lose money when trading CFDs with this provider”. However, eToro is taking a number of steps to mitigate the risk to its customers. During registration, the Internet user is subjected to a questionnaire to assess his trading skills. Depending on its responses, eToro may decide to restrict some of its activities, including investments in riskier assets. The site also provides various educational resources, analysis, guides to the financial markets to support traders. And they can train on a virtual account.

eToro and Taxes, how does it work?

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

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

eToro does not offer a PEA-like brokerage account, it is not possible to take advantage of the tax relief that this type of product gives rise to. The trader must declare what he has won or lost even if the funds are still in the eToro account and have not been transferred to their bank account.

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