Hello Internet people, I’ll explain all the different Etoro fees and I’ll show you an example of what happens when you invest 1000 pounds on the platform and how the trading fees can eat up your profit, so invest with care!
Below is a video that will explain all the Etoro fees while trading stocks and CFDs. And you can click on this link to get to eToro.
I want to thank Reviver for suggesting this topic. If you have video ideas related to investing and trading platforms, let me know, it’s always great to get these for inspiration.
DISCLAIMER: All the information about trading fees and calculations are just for reference and based on my research and opinion at the time I was writing this post. You should always check eToro’s fees page as these change from time to time.
- Withdrawal Fee
- Currency Conversion Fee
- Spread Fees
- Overnight Fees
- Inactivity Fees
- Etoro Fees Calculator
- The conclusion to Etoro fees
eToro in summary
Etoro is one of the biggest CFD trading platforms in the world (according to Similarweb they have more than 20 million visitors per month). They are able to provide financial services to clients around the globe because of CFD trading. Therefore, you don’t actually own the securities/assets you buy, but instead, you are buying a contract. Learn more about CFDs.
From my experience, I consider eToro safe to use and I haven’t been scammed. Depending on your country, they are regulated by the Financial Conduct Authority (FCA) in the UK, by the Australian Securities and Investment Commission (ASIC) in Australia. All other clients are regulated by the Cyprus Securities and Exchange Commission (CySEC).
That said, they are running marketing campaigns claiming that they have commission-free stock trading, but this really just marketing talk with some fine print. In the end, you’ll have some costs even with stock trading. But to me, that’s not a show stopper.
eToro Withdrawal Fee
The easiest fee to understand on Etoro is the withdrawal fee of $5, which is charged every time you withdraw your money.
So it just makes sense to withdraw large sums of money at once, when you are happy with your trading profits.
This fee is a bit controversial as most other CFD trading platforms don’t charge this.
eToro Currency Conversion Fee
Etoro’s trading platform operates with dollars only, so when you deposit money from other currencies, they take a conversion fee.
Just to confuse all the newbies, the conversion charge is calculated in pips. And the amounts depend on your currency.
Let’s say you’ve just found 1000 pounds laying on the ground – yeah cause that could happen to anyone.
Now you decide to do a bit of trading on Etoro and you deposit the money at 1.3294 GBP/USD conversion rate.
So for 1 pound, you get 1.3294 dollars.
If there were no costs while converting your 1000 pounds, you would have about $1329.
On Etoro, the fee for GBP/USD is 50 pips or in other words 0.0050 or 0.5%.
If you want to learn more about what pip is check it out on investopedia. But all you have to know is that one pip for GBP/USD or EUR/USD is 0.0001
We take the conversion rate and subtract the 50 pips
1.3294 – 0.0050 = 1.3244
This means after the fees you would have $1324 which means there is a $5 fee.
If you would do the same with Euros you would also pay $5 dollars in conversions fees.
Conversion fees depend on the payment method
Okay to make things a bit more complicated, the Etoro platform has different conversion fees depending on your deposit method. So the cheapest will be to choose wire transfer, and that’s what most traders do to avoid extra charges.
To make a wire transfer, just click on the “Deposit Funds” button in your Etoro dashboard, and choose wire transfer in the dropdown. Make sure you select the currency your money is in. Just so you know, the wire transfers take from 4-7 days to appear on your account.
As you can see from the above image, for pounds it doesn’t matter if you use wire transfer or other methods, but for most other currencies, it might be good to wait few extra days to start trading cheaper.
These fees will also apply when you withdraw money.
Please note! You don’t need to worry about the fees below if you are just copy trading (a.k.a. social trading) because copy traders will handle everything for you while they trade. You are basically just copying their portfolios.
So make sure your portfolio has traders that have also lower risk ratings, that way you will diversify the investment and reduce financial risk.
In other words, when you see profits on your account, that’s what you are going to get (Minus withdrawal & currency conversion fees).
eToro Spread Fees
Since late 2019, eToro doesn’t have spread fees anymore, however, this only applies when you are buying unleveraged stocks.
In summary, Spread fees are charged when you buy anything on eToro, stocks, cryptos, and any other assets or instruments, however, they are included in the buying price that you see in eToro.
And it’s really specific to what you want to trade.
Commodities and currencies are in pips. Whereas stock and cryptocurrencies such as Bitcoin or Ripple, are in percentage.
Let’s assume you are buying Apple stock, the spread fee for stocks is 0.09%.
So let’s say, to buy one Apple stock you need $191,77.
And to sell at $191,41.
Thus, this means that the real price is somewhere in the middle, roughly 191.60.
If you are selling (shorting) you get this by $191.41*0.0009 = $0.1723.
And if you are buying $191.77*0.0009 = $0.1726.
Therefore, it’s the stock price times 0.09% and you get the spread fee.
If you would buy 1 apple share, you would pay about $0.17 in spread fees on Etoro. If you buy 5 shares, you pay almost a dollar. I think you get the point.
eToro Overnight Fees
Like most other CFD trading platforms, eToro charges overnight fees, which is basically a small fee for them to lend you the money to hold the asset overnight.
This again really depends on what you are trading, for example, if you trade stocks and you don’t leverage them then there are no overnight fees. If you do leverage, it means eToro is lending you money so they are collecting an interest rate on it.
Here is the list of the overnight fees for stocks. By the way, this is only for leveraged and short positions.
Example of overnight fees:
$1,000 investment in a US stock
USD LIBOR 1 month = 1.55%
Daily fee for BUY position =
(6.4%+1.55%)/365 * $1,000 = $0.22
Daily fee for SELL position =
(2.9%+1.55%)/365 * $1,000 = $0.12
So the overnight fee for US stock is 22 cents per day on Buy and 12 cents per day on SELL.
Let’s break down the BUY position. So you can understand what’s going on.
- 6.4% is the Etoro fee.
- 1.55% is USD Libor for 1 month
You are probably wondering what the heck is Libor?
Well, it stands for London InterBank Offered Rate.
This is the interest rate at which banks borrow money to each other internationally. And it’s one of the benchmark rates that indicates how much it costs for banks to borrow money.
And it is constantly fluctuating so you have to look it up when you do the calculation
- 365 is the number of days in a year.
- And $1000 is the investment.
In other words, in this case, you end up paying $22 cents for a day.
And keep in mind that overnight fees are applied to the borrowed amount. So if you have 1000$ and you leverage that by x3, which means you have $3000. The fee is applied to the $2000 you borrowed.
But don’t worry, anytime overnight fees are applied, they appear at the bottom of the trading popup so that traders can easily see how much it costs per day.
If you don’t log in for 12 months to your account, eToro chargers a monthly inactivity fee of $10 per month. Until you ran out of balance on the platform or your login.
So don’t forget to login from time to time.
eToro Fees Calculator
Okay, let’s take a look at an example with the most common fees put together.
You can download the Etoro fee excel calculator.
The conditions I’ve set for this trading example.
- The conversion rate from pound to US dollar is just over 82 cents.
- The opposite conversion rate is just over 1 dollar and 22 cents.
- The conversion fee is 50 pips or 0.005
- Stock will go up by 10%
- The spread fee is 0%
- No leverage applied
For simplicity, I won’t include overnight fees as these are mostly in place when you leverage your trade and for most people, it won’t apply.
Alright, at the top you can see we have invested 1000 pounds.
When we convert it to dollars, we end up with $1219.41.
Right, from the start we are going to have $5 dollars in conversion fees.
So we are left with $1213.41, which we take and buy stocks on Etoro with the whole amount.
Now we’ve waited for a month and it happens to be that we’ve chosen the right stock and it goes up by 10%. In this case, we’ve just made a bit more than $121 and which means we have now $1335 in total. And we’ve decided to cash in.
Just before the money is sent to your account, there will be a withdrawal fee of $5.
And another conversion fee when we convert from dollars to pounds which is just under 7 dollars.
Conclusion to calculation
When we convert the $1324 back to pounds, you can see that we are left with 1086 pounds. However, without fees, we would have 1100 pounds. That means there were almost 14 pounds of Etoro fees. Which is 14% of our profits.
Fees really depend on the initial amount and stock gains.
Now the fees get smaller in proportion when you invest more money or your stocks go higher up in price.
But with 5000 pounds it would be 11% out of profits. So it really depends on how much you invest.
Or if the stock went up by 20% even with 1000 pounds, the fees would be 7% out of profits. But hey that’s pretty much the case on all trading platforms, especially when dealing with CFDs.
You can download this excel calculator, so you can play around with it. Just keep in mind it’s just for indication and based on my opinion. You should not base your investing decisions on the calculator.
The conclusion to Etoro platform fees
I personally think eToro is not the cheapest CFD trading platform. On the other hand, they have heavily reduced their fee structure in late 2019 and I’m a big fan of social trading and the financially minded (not sure that’s a real word?) community on the platform.
In addition, it’s super easy to use and you have a lot of choice of what to trade, such as stocks, commodities, and cryptocurrencies. All on one platform and could be in your portfolio!
However, the biggest advantage I see with eToro is a service called copy trading. They give you all kinds of tools and charts to analyze the traders and the risk levels, so you can start making a bit of extra money on the side by just following one of the “pros”.
If you are an experienced trader, you can make extra money by getting people to copy your portfolio. More about eToro popular investor program.
If you choose to go with eToro, I would appreciate it if you could use this link to eToro, as they will pay me a commission if you sign up through the link. Thanks!
Besides eToro, I’m using a few other platforms to trade stocks and they are a bit cheaper, but they have fewer options as they are not trading CFDs, but actual assets.
If you like to be more hands-on and control all the trades then you should check out other platforms, where you have more control and fewer fees such as Degiro or Lynx Broker. But be aware you also get fewer options in terms of what you can trade.