eToro is a popular online brokerage service that allows users to trade a variety of financial instruments, including stocks, ETFs, indices, currencies, commodities and crypto-currencies via CFDs (contract for difference).
The intuitive mobile platform as well as social trading features have helped the broker grow worldwide.
In this article we will look at the different types of fees at eToro.
Table des matières
Deposit fees at eToro
There are no deposit fees when you use the eToro platform. However, you may pay a currency conversion fee.
Currency Conversion Fees
At eToro, you only trade with the US dollar, so when you deposit funds in other currencies, they charge a conversion fee. The amount depends on your currency.
For example, you deposit €1000 at the conversion rate of 1.1594, the current rate for the EUR/USD currency pair. So for every €1, you get $1.1594.
If there were no conversion fee for your €1000, you would have about $1159.
On eToro, the conversion fee for EUR/USD is 250 points, which is 0.0250 or 2.5%.
We take the price of the EUR/USD and subtract the 250 points:
1.1594 – 0.0250 = 1.1344
After paying the conversion fee, you would have $1134, which means you pay a $25 conversion fee, about €21.
eToro withdrawal fees
The withdrawal fee at eToro is $5. It used to be $25. After a lot of criticism, eToro has reduced its withdrawal fee to $5. This is a much better deal. This is the easiest fee to understand, it’s charged every time you withdraw your funds. So it makes sense to avoid withdrawing too frequently!
Spread fee
You pay a spread when you buy an asset. The spread is the difference between the buying price and the selling price of an asset. It is specific to what you want to trade.
For commodities and currencies, the spread is measured in pip. While stocks and crypto-currencies have their spreads in percent.
Let’s say you buy the asset Facebook and the spread for this asset is 0.09%. The spread for the Facebook asset is therefore the price of the stock multiplied by 0.09%.
eToro’s custody or overnight fees
Like most trading platforms, eToro also charges a daily custody fee, which is a small commission for lending you the money to keep your trades open between trading sessions. This fee only applies to your trades when you use leverage.
There are two types of custody fees at eToro. The eToro custody fee and the LIBOR fee.
The eToro custody fee is 6.4% for purchases and 2.9% for sales.
The LIBOR fee is an interest rate. This rate is called LIBOR. It stands for London InterBank Offered Rate. It’s the benchmark rate used by most international banks for short-term loans. And it is constantly changing, so you need to check it when you do the calculation.
Let’s say the LIBOR for the dollar is 1.55%, and you place $1000 on a US stock.
The eToro custody fee for a buy position is :
(6.4 % + 1.55 % ) / 365 * 1000 = 0.22 $
The daily custody fee for a sell position is :
(2.9 % + 1.55 %) / 365 * 1000 = 0.12 $
Note that 365 is the number of days in a year.
So eToro’s custody fee for stocks is 22 cents per day for buying and 12 cents per day for selling.
And remember, the custody fee is applied to the amount borrowed. If you have $1000 and you take a trade at $3000, you have borrowed $2000. The fee will be calculated from the $2,000 you borrowed.
Inactivity fees at eToro
If you don’t log into your trading account for 12 months, eToro charges a $10 inactivity fee every month. So don’t forget to log in from time to time even if you don’t trade.
Let’s summarize all of eToro’s fees with a €1000 deposit.
When we convert them to dollars, we get $1159. Right off the bat, we’re going to pay $25 in conversion fees. This leaves us with $1134, and we start trading.
On a $100 purchase of a stock CFD, a spread fee of 0.09% will apply to our trade. So there’s about a $9 spread fee.
Now, we waited a month and it turns out we picked the right stock and it went up 30%. In this case, we just made a little over $300, with the use of leverage.
We now have a total of $1425. And we decide to take our profits.
But remember, there is a daily custody fee of 22 cents per day. After 30 days, the custodial fee is $6.6. So there is actually $1418 in our account.
We decide to withdraw our profits and order a withdrawal of $284 to our online wallet or bank account.
Before the money is sent to our account, there will be a $5 withdrawal fee.
We end up with $259 in our wallet, about €223. Some users think this is a problem, but there is actually no problem with withdrawing money from eToro, it’s just a fee that is applied to every withdrawal.
Conclusion
eToro’s fees can sometimes lead some users to claim that eToro is a scam. However, their intuitive trading platform, besides allowing traders to copy from their more experienced peers, has also created interaction between traders in social trading. This is what makes eToro so successful today, and the fact that many traders use it. Despite these few drawbacks, eToro can still be a good solution for getting started in the stock market.
Warning:
eToro is a multi-asset platform that allows you to both invest in stocks and trade CFDs.
Please note that CFDs are complex instruments and carry a high risk of losing money quickly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You need to ask yourself if you understand how CFDs work and if you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. The trading history presented is less than 5 full years and may not be sufficient as a basis for investment decisions.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd, which is licensed and regulated by the Cyprus Securities and Exchange Commission.
eToro USA LLC does not offer CFDs and makes no representations and assumes no responsibility for the accuracy or completeness of the content of this publication, which has been prepared by our partner using non-entity specific information publicly available on eToro.
