eToro Review

In my last post I talked about shorting the carry trade with a swap-free broker to avoid paying the overnight swap. I was unwilling and unable to open a large account at any single dodgy broker, so I chose to spread my risk over several. The second swap-free broker I chose was eToro, located in yet another offshore location (Cyprus). They have a US-based arm called eToro USA which is regulated by the NFA, but eToro proper is only regulated by its Cyprian counterpart CySEC - again, not exactly confidence inspiring. This outfit was started up by an Israeli group coming over from the gambling industry (the business model is remarkably similar), and it is quite obvious: the trading platform looks and feels like a game. When I first opened it up I thought it was a joke. They have a "visual mode", and no words can do it justice - you have to see it for yourself - if you buy say USD/JPY, you will see a fat cowboy racing a sumo wrestler down a track. While certainly amusing, any serious trader will shudder at the mere thought of turning the serious business of trading into a game. In all fairness however, these guys are serious about their business, just like they were in the gambling industry, and they do also offer an "expert mode" without the gimmicks. They are in it for the long haul, which is always a good sign that differentiates a legitimate business from the cut-and-run scammers that are running rampant in the industry.

PROS:
Chat feature right in the platform so you can interact with other traders and customer support;
Excellent customer support available for chat even on weekends (for real account holders);
Wide range of transaction methods (listed below under "Quick Facts");
Fixed spreads;
Multi-language platform;
Some great promotions, such as $500 free when you deposit $1,000+;
Segregated accounts;

CONS:
Relatively high spreads;
Mediocre execution;
Weak platform that relies more on gimmicks than functionality or reliability.
Trade sizes are in 10,000 units, not leaving many money management options to smaller accounts, which they specifically target. This is a predatory practice;

Quick Facts:
Headquarters in Cyprus, regulated by CySEC
In business since 2004
Client accounts segrated from operating capital and held at Marfin Popular Bank, Cyprus
US-based clients should visit eToro USA (NFA regulated)
Payments: Credit Card, Moneygram, NETeller, PayPal, Western Union and Wire Transfer
Maximum 400:1 leverage

You can visit eToro here, or get more information here. Thanks for stopping by.