eToro offers Australian users access to a range of instruments all inside the same account. eToro supports three main investment instruments for Australians; FOREX, share trading and CFDs (cryptocurrencies, indices, EFT & more). The aspect that sets eToro apart from its competitors is their 'social trading' which allows users to copy popular traders move for move automatically. The social trading feature combined with the community section on the platform means eToro is a great place for beginner investors and traders to learn.
Share trading at eToro:
eToro offers their Australian users commission free stock trading which is very popular. When you buy stock from eToro you are actually buying the underlying asset, its not a CFD or leverage instrument (more on this later), this means you actually own a piece of the company. The only downside is that you are limited to only buying US stocks.
One of the reasons I like eToro is their ability to provide an nice clean and easy to use interface, simply click B when you want to buy and S when you want to sell.
Trading stocks with leverage on eToro:
So how eToro make money from their stock trading section is by offering leverage to traders. If you select the leverage option two things happen:
- You are now trading a CFD and no longer will own the underlying asset.
- You are now paying CFD fees (covered later)
You can see on the buy screen your options are X1, X2 and X5. If you select X1 this means you are using no leverage and are buying the underlying asset directly with no fees. If you select X2 you are now trading a CFD that multiplies your stake by two, X5 multiplies your investment by five. It's important to know that leverage products carry additional risk. Read the CFD section next to fully understand what they are.
What is a CFD?
A CFD stands for 'contract for difference'. Simply put, if you buy a CFD from eToro and the price of that particular asset rises they will pay you the difference, equally if it falls you will owe them the difference. You never own the underlying asset, you just have a contract with the broker for paying the difference in value from the time of buying to the time of selling. It is a very popular financial instrument and is often leveraged.
What is Leverage?
Leverage is the technique of using borrowed funds to invest. Simply put, eToro will loan you money when you buy a leverage CFD, this means your profits can be much bigger, but equally you can lose a lot more.
Trading CFDs with eToro:
As an Australian user you get access to CFDs on the following markets:
- Forex - You can trade currencies as a CFD, eToro support 47 different pairs
- Shares - Direct access to US stocks that are listed on the NYSE and NASDAQ
- Indices - Trade groups of companies such as the S & P 500
- Cryptocurrencies - Trade the most popular cryptos
- Commodities - Trade Silver, Gold, Oil and lots more
- ETFs - Trade the popular EFTs
Trading Cryptocurrency with eToro Australia:
Due to the rapid increase in popularity of crypto many eToro customers want to get in on the action but its important to note that you can only trade crypto as a CFD with eToro Australia. This means you never actually own the underlying asset but instead you speculate on the direction of the price. The upside of this is you don't need to worry about blockchain security, hackers or blockchain transaction fees (which are massive at the moment), you also get access to leverage in a simple format which is nice.
Available cryptocurrencies: BTC, ETH, BCH, XRP, DASH, LTC, ETC, ADA, IOTA, XLM, EOS, NEO, TRX, ZEC, XTZ, LINK, UNI, DOGE
eToro CFD fees:
In general eToros CFD fees are quite low compared to competitors but they're hard to gauge as they're built into the spread. The best way we can show the fees is through an example. The table below shows the fees on $2000 long position held for a week.
S&P 500 index CFD
Europe 50 index CFD fee
Apple CFD fee
Vodafone CFD fee
As you can see the fees are pretty low, combined with the user friendly interface I am a fan of the CFD trading part of eToro.
FOREX trading with eToro Australia:
eToro supports Forex trading for their Australian customers, users get access to 47 different pairs where they charge $0 commission and have a minimum spread of 1.0 pips. The minimum opening balance is $200 and eToro offers leverage all the way up to 30:1 unless you open a professional account in which case you get access to up to 400:1 leverage but then you're charged a commission of $7 per lot.
eToro Forex fees:
Fees are calculated on $20,000 long position held for one week.
You can make a deposit in a variety of ways, including:
- Wire transfers
- Credit card
- Western Union
If you make a deposit via wire transfer, a 0.5% foreign exchange fee is applied. A 1% fee is charged on all other deposit methods.
Yes. You can buy shares directly when using eToro but you will only be able to trade stocks listed in the US.
When you withdraw money from your account, you will be charged a fee. The fee charged depends on the amount withdrawn, but a minimum withdrawal fee of $5 is always applied.
The copy trading feature allows you to emulate investors when making your own trades. You can copy a maximum of 20 investors at a time.
There is a live activity feed within eToro OpenBook that features real-time updates.
On the social trading network, you’ll find a list of top-ranked traders. These traders are ranked based on their winning ratio or total gain.
Yes. You can make deposits to your eToro account in a variety of currencies, including AUD. Once you have made a deposit, the funds will be converted and displayed in USD. Conversions are based on the market rate at the time of the transaction and a conversion fee will be applied.
Yes. You can copy a trader with a minimum of $200 and continue emulating traders up to a maximum of $500,000.
Yes. You can use a stop loss to close a trade if the market moves against you. You can choose to set a stop loss based on a particular market level or as a financial amount. To simplify risk management, this can also be shown as a percentage of your investment.