Is eToro a scam?

Or the fastest way I ever lost $50. Actually “only” $25…

But first of all the I’ll answer the question posed in the title of this entry: no. eToro is not a scam. However it’s very easy to lose money if you’re not careful. And unfortunately I wasn’t that careful.

And now on to the story. I discovered eToro accidentally and I’ve spent quite a few days on the demo account to familiarize myself with the system before commiting to deposit. Unfortunately there are some differences when you’re dealing with a real account. Differences I didn’t know about until after I actually made the deposit. If you read around about Forex trading systems, there are warnings everywhere to only invest money that you afford to lose. And I heeded them, although the $50 required as the minimum amount to be deposited is at the top of my “I can gamble that” threshold. On the demo I wasn’t actually trading currencies but commodities, more specifically gold and as it was going very low I thought hey, I can’t go wrong with this, it has to climb back to a “normal” rate sometime and that could earn a bit of money. I could even set a “take profit” limit and have the computer work for me…

This is where I went wrong. You see, on the demo account they give you 2000 virtual dollars to play around with (and you can request more by contacting customer care) and this gives you the ability to use low leverages. To be short: leverage gives you the ability to “move” a large sum of money by using a small amount of money. So I made my deposit and clicked the commodities tab only to find out that the minimum amount of money I should have had to be able to start one trade with gold was $200. Nasty. Clicking back to the Forex tab I received another blow: with $50 deposited one could only initiate two trades and these trades are incredibly risky as you’re using a 400x leverage. You can indeed win big with this leverage but it’s a lot more likely that you’ll lose big. You see when you initiate a trade there’s a “stop loss” defined and with a 400x leverage it all becomes very sensitive. What I mean is that if the exchange rate suddenly moves by a few thousandths of a unit, you’re not there to close your trade in time and your trade’s stop loss is tipped you lose all the money you invested in the trade. Even if the rate later returns, your money is gone. Lower leverages give you less profit but the currency can fluctuate quite a lot without risking too much. But lower leverages require more money. With 400x trades you’re practically playing an action game watching the 1 minute charts, keeping a close eye on the slightest modifications in the exchange rate and hitting the close trade button at the right time.

And this is where another downside of eToro comes into play. While the interface is butter smooth in demo mode but there are serious lags when switching to real money trading. And it’s not my imagination, many others are also complaining about this around the web. And these lags can cost.

I stopped when my balance went under $25 and I couldn’t initiate another trade. Now we’ll see if my withdrawal request will actually yield because the process sort of started out on the wrong foot as I requested the withdrawal to be made via PayPal yesterday and today they’ve sent me an e-mail requesting my bank account details and stating that I’ve requested the money by wire transfer. I politely replied that they’re wrong, and even their interface confirms this. (I’ll keep you posted on how this all progresses – watch this post for updates.)

I wrote this post to give others a chance to learn from my mistakes before commiting to deposit. Hopefully…

8 Responses to “Is eToro a scam?”

Steve on October 25th, 2009

I actually had one of the best experiences with E-toro, If your new to the Forex Trading you might now like it as much as i do. But it’s helped out ALOT.

Nohthings perfect but i’m pretty sure if you know what you are doing you’ll find e-toro is at least one of the best. If your new to forex trading. do some google’n about the industry first and get your feet wet and then try the e-toro demo so you have a better understanding of how everything works.

I see too many people bashing good programs not knowing what they are talking about. Another good one is FAP Turbo but… like everything else it’s not perfect!
afatninja on December 9th, 2009

etoro is the worst site ive used, they are ignorant people who allow one nation to take over its chat room and verbally and racist abuse other members, and when you complain, they ban you not them. Do not use this site they are not to be trusted. there are many better sites out there.
cava on January 11th, 2010

What are the ‘better sites out there’
Andrei on January 31st, 2010

I asked my broker about this.
He said: I do not recomand to enter there. You can loose your money very fast! But,… look I have some recommended stocks that you can try. So, I listed to him… I do not regret this!
Well, good luck anyway!
Juno on February 3rd, 2010

First things first.

In the case of leverage the only difference is that if you loose you can loose slow or fast same way as if you win.
So if the rate of loosing is the same if you start making profit at x10 you will also be making profit at x400 but much more profit, same goes for loosing.

I recommend you to star with the demo account use and learn forex for a month maybe two then go for real trade account.

To Andrei:
Of course your broker said that we wants a share of the cake.
mokashi on March 7th, 2010

Fuck eToro
They have program which grabs money to their account and finally u will lose.
You will never win
Omniforex Reiew on March 8th, 2010

Using eToro alone. you can make losses. what is required is a forex strategy and accurate fx signals.
This way you are guaranteed to make profits consistently.
optionrider on July 11th, 2010

They are a joke. If you want to trade forex, not gamble, manage your risk. You shouldn’t risk more than 5% of your account per trade (if you have $1000 on your account your maximum risk per all open positions shouldn’t be more than $50). EToro is probably a bucket shop as they’re based in Israel, have their corporate headquarters in Cyprus (where business regulations are hardly existent) and their FTC “legitimacy” doesn’t mean too much as spot currency markets aren’t regulated in the US and all over the world. One of the best firms where you can open an account with less than $50,000 is Dukascopy in Switzerland (they also have offices in the US and other countries), but for accounts below the 50,000 USD threshold your commission rates will be exorbitant by forex standards albeit you’ll have access to one of the best professional trading platforms in the industry. They are not regulated by US laws and you still can hedge your bets by opening offsetting positions to lock your losses or profits (plus transaction and carry costs). And, last but not least, if you’re set up with them (which is quite a lengthy and meticulous process) transfers of your profits is fast and easy. My withdrawal requests sent by e-mail, often over $50,000, are processed and completed within 24 to 36 hours and the only fees are charged by my bank for receiving the wires.