Is eToro a Scam? Here’s Why You Don’t Need to Worry

is etoro a scam

Did you know that 73% of men and 63% of women in the UK are considering investing their money?

But, there’s a big difference between thinking about investing and actually doing it! The truth is that a lot of people would like to get into it but just aren’t sure where to start.

This is when people turn to sites like eToro, which are meant to make investing easy. But a lot of people also worry that eToro is a scam, and when you’re transferring large chunks of your money you’ll want to make sure it’s safe!

To help you out, check out our guide answering is eToro a scam? once and for all.

Is eToro a Scam

The simple answer? No. eToro is a completely legitimate company used by over 13 million people around the world and, as long as you’re good at investing, your money will be safe in it!

eToro is actually a fully-licensed brokerage and it’s registered with the Cypriot Investment Firm. In the UK, they’re regulated by the Financial Conduct Authority, and for the rest of Europe, they’re regulated by the Cyprus Securities Exchange Commission. They’re also registered across some states in the US.

Through their license as a brokerage, you can access investments straight at the source. They call this a Straight-Through-Processing platform, and it makes investing very straightforward. 

What is eToro?

Now you know it’s definitely not a scam, let’s take a look at what this platform actually is. eToro is an online trading platform that lets you easily invest in real companies, earning real money (or losing it, if you don’t know your stuff). As trading platforms go, it’s definitely one of the best.

There are many reasons why eToro is so good, such as its ease of use and ability to make limitless withdrawals. But, one of the features that really makes it stand out is what is called a No Dealing Desk model. This basically means that they use real market prices, letting you invest properly in companies you believe in. 

In fact, you don’t even have to put money in to invest! If you’re new to the game, eToro has a great feature that lets you invest fake money in different companies, helping you get a feel for how it works and learn more about investing without losing anything. This is completely free to use and a great learning tool.

You can also copy other traders who are known for doing well. These top traders have made their investments public to eToro users, and you can put money in to copy what they’re doing. If you don’t have a clue how markets work, you can jump on the bandwagon of someone who does and (hopefully) make money. 

Why Do People Think eToro is a Scam?

It’s not too much of a surprise that a lot of people think eToro is a scam. Visually, it looks very different from other online trading websites and apps. It’s so easy to use that a lot of people just feel like it’s too good to be true.

The fact that eToro trading is at market value is another factor in people’s scepticism. Alongside seeming just too good, it leaves a lot of people wondering how eToro actually make their money? But there is an answer to that question, and it’s actually very sensible.

How Does eToro Make Their Money?

Because eToro trades at market value, they have other ways of making their profit. Luckily, these aren’t pesky adverts that pop up all over the place; eToro is too professional for that. Instead, they make their profit in more subtle ways that shouldn’t impact your experience with them too much at all.

Let’s take a look at how eToro make their money. 

Market Maker

eToro is a market maker, which essentially means that for every trade you make, they’ll make an opposite one. So, if you lose money on your investment, they’ll make money. Whilst this might put you off, it really shouldn’t!

eToro isn’t a regular market maker. They have a hybrid system that involved both NDD and STP features, meaning that they can release trades to liquidity providers and earn no commission themselves. This ensures that they have well-balanced orders and your trade won’t be interfered with at all by eToro. 

The Spread

Next up is the spread that eToro applies to every trade opened on an account. This means that when you open a BUY trade, it’ll actually open at the SELL price and vice versa. There’s usually only a small difference here, but it’s enough for eToro to build up a profit.

The spread applies to both manual and copy trading. In fact, this is one of the reasons why eToro loves their copying feature so much. When a popular investor opens a trade with a spread, it’s copied thousands of times by other accounts, giving eToro a nice chunk of money. 

Other Fees

There are some other fees that eToro charges to help bolster their profits. These include fees depending on whether you open a long or short trade, currency conversions, and withdrawals. But, these fees are always very small and won’t impact too much on your investing profits. 

Learn More About eToro

So, is eToro a scam? As you should be able to answer confidently now; no. eToro is far from a scam and is a great way to start investing your money easily. 

If you think it’s time to start trading, make sure to check out the Passive Trading System to learn more about how you can make money by copying eToro traders. Soon, you’ll be making money in your sleep!

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