eToro Review: Foundation, Protection and Account Types

Nowadays, eToro is one of the most recognized online brokers in the world, but that was not always the case.

While having an incredible amount of financial assets from where you can choose your best investments for the future, the real reason because the internationally famous Israeli broker became so famous goes beyond the offer itself.

It is the concept of stock trading that changes when dealing with eToro and that’s because of its revolutionary concept of “Social Trading”. Linked to this concept it’s also the most iconic feature of this online broker, the CopyTrader, which enables eToro traders to see what other users are trading in real time, follow those traders you like the most and, of course, copy all of their trading activities.

But let’s take a step back and start our eToro review from where everything started: its foundation.

eToro review: Foundation and Development

Foundation’s year of eToro is 2007, when two brothers, Yoni and Ronen Assia, both grown up in a banker family, decided to found RetailFX in Tel Aviv, Israel, together with the help of David Ring.

But it was in 2010 that eToro released its eToro OpenBook social investment platform, which included already its trademark option called “Copy Trader”. 

And, last but not least, it was that very same year that they developed and released their first mobile app.

Because of that, the company saw an exponential growth that can be tracked as it follows:

  • From 2007 to 2013, eToro raised around $31.5 million thanks to four rounds of funding.
  • In December 2014 alone, Chinese and Russian investors saw the potential of this revolutionary online broker, and eToro raised $27 million thanks to them.
  • Three years later, in December 2017, eToro achieved the objective of raising the incredible number of 100 million thanks to a private funding round.

Globally, eToro reported that there has been an investment of $162 million executed by important investment firms such as Spark Capital, Korea Investment Partners, SBI Holdings, and China Minsheng Financial Holdings.

The company’s value reached $800 million in 2018.

eToro review: Operational Department and Legal Entities 

The Israeli online broker is a well-rounded and extremely regulated company which has its financial and main operational department situated in Tel Aviv, in the financial area of Bnei Bra. In that area, the company signed an agreement in 2019 to lease the 39th and 40th floors of one of the most important skyscrapers of Israel, the Champion Motors Towers.

 Beside its main operational department of Tel Aviv, eToro is allowed to operate worldwide thanks to a series of legal entities registered around the world. These are divided as: 

  • eToro AUS Capital Pty Ltd is authorised by the Australian Securities and Investments Commission (ASIC) to provide financial services under Australian Financial Services License  number 491139.
  • eToro (Europe) Ltd. based in Cyprus with registration number HE20058 and regulated by the important Cyprus Securities & Exchange Commission (CySEC) with license number 109/10
  •  eToro (UK) Ltd which is authorized and well regulated by the Great Britain national authorities of the Financial Conduct Authority (FCA) under the company reference number 583263.
  • eToro USA LLC is the legal entity for the States and is registered with FinCEN as a Money Services Business.

Additionally, it complies with ESMA standards, which makes it available and regulated by most of European countries.

This makes eToro available in most world countries, but there are some exceptions

In the scheme below you can see which countries are excluded by the eToro service.

Africa Asia Europe Americas Oceania
BotswanaBurundiChadCongo RepublicDemocratic Republic of the CongoEthiopiaGuyanaGuineaGuinea-BissauLibyaMaliNamibiaSomaliaSudanSyriaUganda AfghanistanBruneiIranJapanLaosMyanmarNorth KoreaTurkeyYemen AlbaniaBelarusBosnia and HerzegovinaCrimea RegionSerbia CanadaCubaNicaragua PalauSamoa

eToro Review: Protection Standards

While we are being protected by the law and regulations already mentioned in the past paragraph, eToro protects your funds by taking two specific protective measures to give you the certainty that your money will be safe no matter what happens to the broker itself.

The first measure is the deposit of its client’s funds in what are called segregated accounts within trustful and globally renowned banks such as Goldman Sachs, to give you an example. Taking such a measure means that the broker cannot use your funds for any other reasons but your trading choices.

It also gives protection against any financial challenge or difficulty in which eToro may occur such as bankruptcy.

The second measure put in motion by eToro when you open a trading account with them is the negative balance protection, which blocks your account when it reaches the point when it’s going below $0.

eToro Review: Account Types

This online broker gives to its future customers a vast variety of accounts which may appease them in many ways depending on their specific needs. Those accounts are divided as it follows.

eToro Practice Account

The first approach to eToro should always be made with its demo version.

It is a Practice Account that allows a free and unlimited access to the platform while giving at the same time the chance of performing any operation usually allowed on the trading platform thanks to a virtual $100,000 balance.

What you need to proceed in opening this type of account is just an email address, a telephone number and a username to choose. 

eToro Standard Account

The Tel-Aviv based online broker gives the chance to non-professional traders to open this type of account to perform live trading operations.

To open this account you will need more papers and spend a little more time than for the practice account, of course, and it includes documents that proof your identity such as ID (or passport) and a proof of residence that shows the same address that you put when you signed-in.

Once finished with the bureaucratic part, you will have to do your first deposit. The eToro minimum deposit worldwide is $200, except in Australia ($50), USA ($50) and Israel ($10.000).

eToro Islamic Account

In case you follow the Islamic faith, eToro gives the chance to its Muslim traders to open an Islam Account. In order to abide by religious rules, eToro does not apply any SWAP fee while performing any trade with this type of account.

To open this kind of account you will have to contact eToro customer care and make a minimum deposit of $1,000.

Professional Account (eToro PRO)

Because eToro complies with ESMA regulation standards, it classifies and divides its traders in two typologies: retail traders and professional traders.

The EU qualify a professional trader any trader who satisfy two of the next three requirements:

  • A large trade volume with a minimum of 10 transactions and a total value of $500.000;
  • A financial portfolio that exceed $500.000;
  • A professional experience of at least one year in the financial working field.

Once classified as ab eToro PRO trader, you  will receive many additional benefits such as:

  •  A dedicated account manager;
  • An higher leverage than can arrives up to 400:1;
  • A competitive fee and spread on trading activities. 

You will also maintain your negative balance protection, aforementioned in the paragraph related to protective account measures.

eToro Club Membership

We want to finish our eToro review with the last addition related to account types: its newest premium program called “eToro Club”.

The eToro Club Membership tiers are divided in five levels, and every one of these enhance the eToro experience somehow by giving its members many additional benefits depending on a tier.

The eToro Club Membership Tier-list is (starting from the lowest to the highest level):

  • Silver
  • Gold
  • Platinum
  • Platinum+
  • Diamond

The last top and most exclusive tier, the Diamond Membership, includes all of the above bonuses, plus access to a Financial Times subscription,an exemption on exchange fees and the chance of having one-to-one Zoom meetings with Account Managers. 

And on top of all, it gives access to eToro’s prestigious Diamond events which take place each time in a different and exclusive location around the globe.