You are entering the world of online trading and, by analyzing the various solutions available online, you have chosen to contact eToro , a service that seems very intuitive and full of solutions that could lead you to invest your money effectively. However, you still have some doubts about its functioning and, therefore, you would like to know if I can help you. Don’t worry: if you want, I’m here ready to explain in detail how to trade online using eToro .
First of all, I want to say that you have chosen well. In the world of online trading, alas, it is not difficult to come across solutions that are not transparent and with hidden costs. With eToro, on the other hand, we turn to a platform that has been recognized for years as the world’s leading social trading network and that has one of its founding values in transparency: there are no hidden commissions and all costs to be incurred are always indicated in clear way. On the other hand we are talking about a broker authorized by CySEC for Europe, active since 2007 and with over 23 million users from more than 100 countries from all over the globe.
As you too have had the opportunity to learn, eToro’s main objective is to simplify activities such as the purchase of shares and online trading, making them accessible to everyone and facilitating the creation of a community in which traders can be inspired. each other. It is also possible to invest not only in stocks, but also in commodities, crypto, ETFs and more, with the opportunity to analyze charts, trends, sentiments and consult news from the markets updated in real time. Interesting, right? For all the details keep reading: you will find everything explained below.
- What does it mean to trade online
- How to trade online on eToro
- Open your account
- Deposit funds
- Finding the assets to invest in
- Open and close positions
- Commissions and taxes
- For more information
What does it mean to trade online
Before getting to the heart of the guide and explaining how to trade online using eToro , it seems appropriate to dwell a little on the concept of online trading itself . Let’s see, therefore, what it means to carry out this activity and how it differs from the classic purchase of shares .
Given that the shares are the parts into which the share capital of a joint-stock company is divided and that buying them allows you to own a portion of the company (with related rights and charges), it is possible to either buy the shares directly by becoming shareholders of the company , and trade with various instruments, including contracts for difference (CFDs).
Buying the shares of a company means making a long-term investment with the aim of managing them in a securities account and reselling them after many months or years, collecting, in the meantime, any dividends (which many companies distribute based on the profit margins made during the year). This activity is allowed by eToro without paying any commission .
Trading shares instead allows you to obtain more immediate profits , while exposing yourself to higher risks and costs : this is due to the use of CFDs (Contracts for Difference) , with which you engage in a contract with a broker (in this case eToro) rather than buying the underlying asset directly. If the asset rises, the broker distributes the corresponding earnings to the client; if the asset falls, the customer records a loss.
Going into more detail, by buying with CFDs you can invest money that you don’t really have (loaned by the broker’s liquidity providers), thus having the possibility of investing in assets that require a very high minimum investment amount. However, this involves the payment of spreads (the difference between the sale and purchase price) and overnight commissions , even potentially high.
Overnight (or rollover ) commissions are those that are used to keep the position open on the next trading day, and on the weekend they are “triple” (they are not charged on Saturdays and Sundays, so there is a day of the week when you pay a triple commission). Also, the higher the leverage applied (ie the amount of “money you don’t really have” that you invest), the higher the commissions. Finally, there is to consider the fact that if the underlying asset the CFD goes down and the real capital ends, the position is closed automatically.
Selling with CFD becomes instead what is called short selling (or short selling ). In this way it is speculated that the value of an asset underlying a CFD decreases and, if this happens, a profit is obtained; otherwise there is a loss (which can also be significant if leverage is applied ). Again, spreads and overnight commissions are paid.
In conclusion, we can say that trading is the ideal solution for those who buy and sell shares within a few hours (or throughout the day) to take advantage of the daily volatility of the securities and collect potentially high profits immediately (but also exposing themselves to potential high losses in the short term).
The stocks you can invest in the long term, with a more “traditional form of investment” (though not without risks); if, on the other hand, you are considering making a short-term, leveraged or short-term investment, then the most appropriate term to use is trading . Given this, I urge you to inquire very well before embarking on an activity of this kind and to proceed only if you have “extra” capital to commit, knowing that you could lose it.
In any case, it is necessary to consider the fact that the shares respect the classic market law of supply and demand : when a good is scarce but the demand is high, this sees its price rise; conversely, if supply is high but demand is low, its price falls. But there are also many other variables at play, such as ratings by rating agencies , economic news related to a particular company or industry, and so on.
Predicting what will happen in the future with absolute precision and therefore eliminating the risk is impossible: this is why it is important to evaluate the equity risk well and take the right measures to reduce it. For example, it is important to diversify by investing in different assets and to use tools such as the stop loss , which automatically stops losses when the price of a share falls below a certain margin. Furthermore, it would be good to make long-term investments that can guarantee a return that grows over time and not dwell on short-term trading.
It is also essential to develop your investment strategy by deepening techniques such as value investing (buying shares at a price considered below their market value in view of a rise), growth investing (investing in the growth of young companies that have good possibility of growing above the average of the companies in the reference sector), small-cap investing (investment in companies with a reduced market capital, called small caps, to obtain high returns in the future, knowing however that these are volatile realities and at high risk of failure); The dividend investing(focus on companies that issue a dividend on the shares owned, i.e. the profits of the company shared with the shareholders, knowing however that these depend on the performance of the company and are not always paid out) or socially responsible investing (which has as its purpose not only profit, but also the well-being of the environment and of the people who work for the company in which you have chosen to invest).
For more details, I strongly urge you to read this eToro page where the differences between the purchase of shares and trading are illustrated in great detail, and where all the topics I have just talked about are also in-depth.
How to trade online on eToro
Now let’s move on to the practical side of the matter and see how to trade online using eToro . I will use the eToro website for the tutorial but you can also do everything through the handy eToro mobile app for Android and iPhone / iPad .
Open your account
To trade on eToro you must first open an account . The procedure takes a few minutes and can be completed independently: all you need is a valid identity document and proof of residence (e.g. a bill in the name of the person opening the account). At the end of the registration it is possible to choose whether to make a deposit to start investing or to practice with a demo trading account with $ 100,000 of virtual funds .
Once the registration is complete (remember to visit the verification link you receive via email) you can start using the demo trading account . To deposit and really use the service, however, you must verify your account : to do this, click on the appropriate button, go ahead and fill out the form that is proposed to you with your personal information , then enter your address , your social security number and indicate your degree of investment experience by completing the various on-screen questionnaires.
Then specify which assets you plan to invest in ( stocks , crypto , currencies , commodities or indices ), how long you plan to keep your positions open and indicate your main purpose between short-term returns , additional income , plans for the future or savings for the house .
Next, indicate how much you plan to deposit into your account over the course of the year and which risk / reward scenario would best describe your annual investment expectations with eToro ; answer the questions about personal and family activities that eToro must ask by law, indicate your sources of income , what you do , your employer’s name and address , your net annual income and your total cash . The information entered is strictly confidential and is used by eToro to ensure that its customers invest based on their actual availability.
Now you can use eToro to trade, but with a deposit limit of 2,000 euros : to remove it, you must verify your profile by entering your mobile number (on which you will receive a verification code to be copied in the appropriate field on the screen), upload photos of your identity card or passport and also provide proof of your address (e.g. a bill in your name) and enter your tax identification number (i.e. tax code). It all gets done in seconds. If any steps are not clear to you, you can consult my “generic” guide on how eToro works, in which I went into even more detail on the procedure for registering for the service.
Later in time, if you become an expert trader, you might also think about opening a professional account on eToro : after passing the appropriate tests, you can in fact acquire the status of a professional client and remove the restrictions that are normally in the use of leverage. financial (but renouncing certain ESMA protections, such as the Investors Compensation Fund and the use of the Financial Ombudsman Service). Read more here .
The deposit of funds on eToro is simple and does not require any fees. Just press the button Deposit funds present in the service menu, indicate the ‘ amount to be loaded (minimum 50 euro) and a method of payment including credit / debit card , PayPal , Rapid Transfer , Moneybookers , bank transfer , direct transfer , and Neteller . You must then enter the relevant data and complete the transaction by following the instructions on the screen.
I inform you that, once you have made your first approved deposit by credit or debit card, you can set up periodic deposits by going to the Settings> Payments menu .
To make the withdrawals the same speech: just select the appropriate item from the eToro menu and enter the required information. Very easy.
Finding the assets to invest in
eToro offers over 2,500 assets on which you can trade (or even to buy to hold in your portfolio), such as the shares of the main companies listed on the stock exchange (divided by category); The raw materials (commodities) , such as oil, gold, coffee, etc .; the ETF (Exchange-Traded Fund) , ie investment funds managed passively comprising a basket of stocks often linked to specific sectors (eg. technology) or certain geographical areas (eg. China); The stock market indices such as the Nasdaq, the S & P 500 or the Dow, to invest collective trend of a specific group of relevant securities; and finally cryptocurrencies , such as Bitcoin, Ethereum, Ripple, Bitcoin Cash, Dogecoin etc.
How, then, to identify the assets on which to invest ? Unfortunately there is no magic solution, but you have to commit yourself, get informed and adopt all the possible tools useful for the purpose, many of which are included directly in eToro.
Among the first things to do are technical analysis and fundamental analysis . The first is the most suitable for trading (i.e. for short-term investments) and is based on the analysis of the graphs relating to the price of the asset: using models, you go to evaluate the history of movements to look for repeating trends. with a certain constancy and frequency over time (eg the 52 week range which takes into consideration the higher and lower price at which a stock was traded in the previous 52 weeks) and thus predict the behavior of the asset in the future.
The ‘ Fundamental analysis is more suited to the purchase of shares (ie for long-term investments) and provides a holistic approach, analyzing not only the data of a specific asset, but also of everything that is around, for example, the state of health of a country’s economy, international political conditions, the level of competitiveness and development of a sector, the production costs of certain goods and so on.
You can get an idea of the most interesting assets of the moment by going to the Search section of eToro, which features various investment opportunities in global markets with equities (eg. Chip-Tech sector stocks), cryptocurrencies (eg. Bitcoin) and various other assets to invest in.
Scrolling the page you will then find the suggestions related to Copy Trading , i.e. the possibility of discovering the traders with the best performances and automatically copying their portfolios, and the Smart Portfolios with thematic collections of various assets selected by eToro.
You can also browse all available assets by category by clicking on the items related to stocks , cryptocurrencies , indices , ETFs , commodities and currencies . By accessing the sections in question you can do even more in-depth research; for example, for shares you can view the available assets based on Industry (i.e. sector to which they belong ) or the exchange market to which they belong.
Continuing to scroll through the Search section you will also find the daily movers , with the assets that have gained and lost the most in the current day, the trending assets and those added recently .
To analyze an asset in detail, select it. You will then be shown a screen divided into tabs: in the Feed you will find the recent posts of traders regarding the asset; in Statistics an overview of the balance sheet items, the market price (with 1-year yield, dividends, etc.) and other data useful for fundamental analysis; in the Chart tab there are the charts useful for technical analysis, with the possibility – by clicking on the icon with the two arrows located at the top right – to access the ProCharts function and create professional charts to view multiple instruments at the same time or the same instrument using various parameters ( more information here ); the boardFinally, Research contains a technical and fundamental analysis that shows the trend of the asset and the forecasts of various analysts with Hedge Fund activities and internal transactions.
You can follow the assets that you think are most interesting, even before investing in them, by adding them to your Favorites (section of eToro in which you will find by default some of the most relevant assets of the moment).
If you are just starting out with trading it might be a good idea to copy the portfolios of traders with better performances : here comes the eToro CopyTrader that allows you to do just that. By accessing the Search section of the platform and selecting the item relating to the most popular traders, you can in fact view the list of traders who have obtained the best results and analyze their “numbers” in detail.
Using the menus at the top you can filter traders based on where they come from , the markets they invested in and the earnings obtained over a given period of time . Selecting a trader, just like assets, then opens a page containing various tabs with the news feed, statistics, charts, etc.
If you find a trader that you think is good and in line with your investor profile, you can copy his portfolio by clicking on the appropriate button. You can choose whether to copy open trades or only those that will open and whether to stop copying if the value of the copy falls below a threshold . Once copied, you will find the contents of the trader’s wallet in your eToro wallet . Read more here .
Open and close positions
Once you have found the asset on which to invest , you can invest in it by clicking on the appropriate button. In the box that opens, then select whether to buy or sell , specify the amount to invest (if you write 0, the minimum amount foreseen for the selected asset will automatically appear) and, if you want to trade, choose to buy with financial leverage by selecting an option from X2 upwards . At the bottom you will see the information relating to the overnight fees due (which you will have to pay together with the spread ) automatically appear .
By selecting the Stop loss tab you can instead type in the maximum amount to lose, in order to automatically close the position if the loss reaches this limit. By checking the Trailing stop loss option , you can make sure that the stop loss is adjusted to the market trend and thus safeguard the profit obtained. Read more here .
Going instead to the Take profit tab you can set your profit target, in order to close the transaction at a specific rate if the price moves in your favor, ensuring you make a profit (which will be credited to the available balance) and closing the position. Read more here .
Through the Invest / Order drop-down menu (top right) you can also open a pending order , in order to actually convert the order into a position only when the market reaches the rate ( price ) you set in the appropriate field. The allowable range varies by instrument. Read more here .
Once everything has been adjusted, click on the Set Order button to confirm the order. You will then find all your orders and investments in the eToro Portfolio section . To access it, simply select the relevant item from the menu.
The eToro portfolio shows, at the bottom, available cash , total invested capital , profit and virtual assets , while at the top it proposes the tabs to access its various sections and filter the contents displayed: in the History tab there is the list of operations carried out; the Portfolio tab shows the composition of the portfolio with all the related statistics updated in real time; finally, in the Orders tab it is possible to view and manage the orders placed.
To close a position or cancel an order , just click on the line of the instrument you want to close, then on the red X and select the item relating to closing or cancellation . Also noteworthy is the possibility of closing part of the transaction by selecting the amount in USD or in units that you want to close. Read more here .
Clearly, transactions are executed during market opening hours, which vary according to the assets chosen and the reference markets. Read more here .
Commissions and taxes
As for costs and commissions , as mentioned above, eToro does not charge commissions or spreads on the purchase of shares or EFTs , while on CFD trading spreads and overnight commissions are applied . On crypto only the spread is applied , without commissions, while on CopyPortfolios (pre-packaged thematic portfolios) you only pay any commissions provided for by the individual assets that compose them. The same is true if you do Copy Trading and therefore copy the portfolios of other popular traders on the eToro platform.
The deposits are free , while the withdrawals (minimum $ 30) there is a fee of $ 5 sets , needed to cover some fees for international money transfers. Then there are conversion fees starting from 50 pips (percentage in point, which is the change in the exchange rate of a currency pair in the foreign exchange markets), necessary since withdrawals and deposits are made in USD and therefore any other currency must be converted.
Finally, there are the inactivity fees that are applied after 12 months without login activity on eToro and amount to $ 10 / month for inactivity on any remaining available balance (no open positions will be closed to cover the commission). However, you can close your account at any time by going to eToro’s settings (making sure that all open positions have been closed and that available funds over $ 25 have been withdrawn). You can find all the information on the commissions applied by eToro on the official website .
With regard to taxes , however, Italian citizens must declare the eToro account to the tax authorities through the RW framework (as a foreign account) and attach the eToro account statement (downloadable directly from the site) to the Single Tax Debt Certificate. You pay 26% tax on any capital gains and 2 per thousand for IVAFE (which is equivalent to stamp duty). For more details, contact your accountant and read this eToro page .
For more information
For more details about eToro, I strongly invite you to consult my other guides dedicated to the service, starting with the general one on how eToro works , but also the more specific ones on how to buy shares on eToro and how to buy Bitcoin on eToro . Also, do not hesitate to consult the official eToro help center which contains dozens of informative articles on the functioning of the platform and all the answers to the most frequently asked questions.
In case you need to get in touch with an operator, you can instead open a ticket from this page or contact the live chat service , both available from Monday to Friday 24 hours a day.