I Wish I Knew Before Signing Up (eToro Review)

Summary

In this video, the creator shares insights about eToro, outlining five key things to consider before signing up. They emphasize that while eToro markets itself as a commission-free platform, its spreads on trades can add up. The platform's research tools are limited, making it hard for investors to find new opportunities. Copy trading and day trading on eToro come with their own challenges and aren't suitable for everyone. Lastly, eToro's social community can be toxic, influencing new investors negatively. Despite these downsides, eToro is recommended for long-term, novice investors looking for simplicity.

Takeaways

• 😀 eToro is not truly 'free trading' – while it has no commissions, there is a market spread that affects asset prices.
• 😀 eToro’s platform does not offer comprehensive research tools – its stock screener is limited and lacks key filters like free cash flow.
• 😀 The spread, although not a direct charge by eToro, adds to the cost of buying assets, which can be confusing for new users.
• 😀 Compared to its competitors, eToro still has relatively low spreads, making it a better option for buying ETFs and stocks in some cases.
• 😀 Copy trading and copy portfolios are not a guaranteed path to wealth – it requires commitment and a long-term investment strategy.
• 😀 To succeed with copy trading, one must be willing to invest regularly (e.g., $200/month) and for the long term (e.g., 5 years).
• 😀 Day trading on eToro is not recommended due to limited stock screeners, insufficient data, and spreads that hinder daily volatility trading.
• 😀 eToro is better suited for long-term, novice investors who prefer a ‘set it and forget it’ investment approach rather than day trading.
• 😀 The social aspect of eToro can be toxic, with many users confusing opinions with facts, leading to potential misinformation and arguments.
• 😀 eToro is easy to use for depositing funds and making trades, making it a user-friendly platform for beginners to start their investing journey.
• 😀 Despite its issues, eToro offers a solid platform for those looking to invest passively, with access to a community and learning resources like Discord.

Q & A

What is the biggest misconception about eToro that the video addresses?

The biggest misconception is that eToro offers completely free trading. While they claim no commissions for buying and selling stocks, there is a hidden cost in the form of a spread, which varies depending on the asset.

What is a market spread, and how does it affect eToro users?

A market spread is the difference between the buy and sell prices of an asset. On eToro, this spread is not a direct charge but affects the price users pay for assets, and it can vary based on asset volatility and liquidity.

How does eToro compare to its competitors in terms of spreads?

eToro's spread is relatively cheap compared to many other commission-free platforms, particularly for buying stocks and ETFs. However, users still need to be aware of how spreads can impact the overall cost of trading.

What limitations exist in eToro’s research tools?

eToro's stock screener is limited in features and difficult to navigate. It lacks advanced filters like free cash flow, which are essential for identifying undervalued stocks. The video recommends using other tools, like TradingView, for better research.

What should users know about eToro’s copy trading feature?

Copy trading can be an interesting feature, but it's not a get-rich-quick solution. Users should be prepared to commit to long-term investments and follow the strategy set by the trader they're copying. The reviewer suggests a commitment of at least five years and monthly investments.

Why is eToro not recommended for day trading?

eToro is not well-suited for day trading due to its limited stock screeners, data, and spreads, which eat into the necessary volatility that day traders rely on. It's better suited for long-term investments.

How should beginners approach investing on eToro?

Beginners should approach eToro as a platform for long-term, novice investing. It's ideal for setting up a portfolio and leaving it to grow over time rather than seeking quick profits or active trading.

What are the issues with eToro's social community?

eToro's social community can be toxic, with a lot of misinformation and personal opinions presented as facts. This can negatively influence new investors, and users should engage with caution, especially when making investment decisions based on social posts.

What is the best way to find stocks using eToro’s stock screener?

The stock screener on eToro is quite limited and complicated. Users have to navigate through multiple sections to access the screener, and the available filters are not particularly helpful. A better alternative suggested is TradingView for more comprehensive stock screening.

What is the overall recommendation for those considering eToro?

The overall recommendation is that eToro is great for long-term, novice investors looking for an easy-to-use platform for passive investing. However, users should be aware of the spread, limited research tools, and potential issues with the social community before committing.