Commission-free is a growing trend in the investing world right now. Luckily, more than a few European online brokerages are getting into the game. This is good news for long-term and short-term investors alike, as we now get to keep more of the potential profits ourselves.
If you ask me, banks and national brokers have gobbled up exorbitant amounts of trading fees for way too long and taken bigger cuts of our pie than they deserve. Low-cost online stock brokerages offer the perfect solution to this problem.
But what does “commission-free” or “zero-commission” trading mean? In general terms, it usually means there are no trading fees for buying or selling shares of stock. Zero commission comes in place of the traditional fixed-price per trade model, which can be very expensive if you’re a small-time investor, buying a smaller quantity of shares, diversifying across multiple assets, or just trading on numerous exchanges.
Read more: My review of the best commission-free brokers for Europeans
If you want to invest commission-free and save on fees, eToro is a choice worth considering. It’s one of the largest players operating in Europe and one of the fastest-growing brokers worldwide, with 16 million registered accounts.
Here’s what I’ll cover in this guide:
- What is eToro?
- Is eToro trustworthy?
- How commission-free trading works
- Guide to get started
- Frequently asked questions
Just be aware there might still be other fees involved when trading commission-free, like currency exchange fees, connectivity fees, or withdrawal fees—these depend on the broker of your choice.
As with any investment style, it’s important to understand what you’re getting into, mentally prepare for the risk of losses, understand the small print terms, and consult with a professional advisor if you’re unsure how it all works.
With that being said, lets look at what eToro has to offer.
Below is my guide to investing commission-free on eToro. For he purpose of this article, we’ll be focusing exclusively on real equity and won’t be discussing CFDs, cryptos, commodities, leveraged trading, or any of the other financial products offered on the platform.
US citizens read this: This content is not intended citizens or residents of the US. Thanks for understanding.
What is eToro?
When it comes to stock trading, there are plenty of solid brokers to choose from nowadays. I have previously written a list of what I consider the best brokers for Europeans where you can find the safest and most recommend brokers.
eToro is easily among the most popular financial brokerages out there, perhaps because it suits the needs of many younger investors, but more importantly because they’re often cheaper than their competitors.
eToro was launched in 2006 in Israel by brothers Yoni Assia and Ronen Assia together with computer scientist David Ring. The company has come a long way since inception and now has over 2,000 people employed in offices around the world.
- Zero commissions
- Social trading experience
- Extremely beginner-friendly interface
- Easy-to-use mobile app
- 1,200,000 active customers
- Unique ecosystem of assets and tools
Things to keep in mind
- Conversion fee when depositing non-USD
- $5 withdrawal fee
- Charts and data are very basic
Is eToro trustworthy?
While eToro’s track record sounds exciting, the big question is how you’re protected as a regular investor on the platform. To begin with eToro holds a number of regulatory licenses for its European branches:
- eToro (Europe) Ltd., a Financial Services Company, is regulated by the Cyprus Securities Exchange Commission (CySEC) under the license # 109/10
- eToro (UK) Ltd. is regulated by the Financial Conduct Authority (FCA) under the license FRN 583263
Being licensed in Europe ensures that the broker complies with the rules and guidelines of these regulators. If the broker should go bust, you will receive your money back up to a certain amount thanks to the Investor Protection program. EU clients on eToro are covered up to €20,000 through the Cypriot Investors Compensation Fund, while UK users a guaranteed a maximum of £85,000 in compensation through the FCA’s Financial Services Compensation Scheme.
As something rare, eToro also provides clients of eToro (Europe) Ltd. and eToro (UK) Ltd. free insurance up to 1 million Euro or GBP from Lloyd’s of London. The insurance policy covers both cash, securities, and CFD positions (but not non-CFD cryptoassets), in case eToro should go bankrupt or incase of misconduct.
How does commission-free trading work on eToro?
eToro offers around 800 stocks from US, European, and Asian exchanges. The list of tradeable stocks include most big companies from the SP500 and other big indices (plus a few smaller names).
You can buy these stocks at zero commissions as long as your account belongs to eToro’s European branches (eToro UK and eToro Europe) and you don’t use leverage. eToro will absorb any fees for management, administration, and stamp duties, and you can hold these assets as long as you want without additional charges.
👋 Nice to know: There is no maximum limit of free trades you can make and you are investing the underlying asset. This means when you open a normal trade, eToro purchases the stock and stores it in their systems under your name, which should effectively grant you real ownership of the asset.
Guide: How to buy stocks commission-free on eToro
If you wish to trade stocks commission-free on eToro, you can follow these 4 simple steps to get started. Remember you can always test out the platform with a free $100,000 demo account before you deposit any real funds.
- Zero commission on real stocks
- Large number of available assets
- User-friendly website and mobile-app
- Free $100K demo account
- Large emphasis on social trading experience
If it turns out eToro is not something for you, I recommend you check out the best alternatives here.
Step 1: Open a free account
To get started, visit the eToro homepage and open an account. Since eToro is a regulated broker, you’re required to provide some personal details. This will include your name, address, date of birth, nationality, contact details, among other things.
There’s also a small questionnaire to assess how well you understand investing and different investment products. It’s important to be honest for eToro to tailor the platform to your level of experience.
Step 2: Verify your identity
eToro will need to verify that you’re the true owner of your account. This means you need to verify your phone number, identity, and residency by uploading a couple of documents. This includes:
- Proof of identity: a copy of a government-issued ID such as your passport or driving licence.
- Proof of address: a copy of a recent utility bill or bank statement.
eToro’s should verify your documents within a few hours, but you can proceed to fund your account straight away.
Step 3: Deposit funds
Click ‘Deposit funds’ during the sign up process or at the bottom left of the trading interface. The minimum first time deposit is between $200 – $1000 depending on your location and payment method.
There are several ways to deposit funds into your account. You can use debit/credit card, bank transfer, and different e-wallet services like PayPal and Skrill. If you want to trade right away, you can use a debit card as the money will arrive instantly.
As mentioned earlier, eToro accepts multiple currencies like EUR and GBP, however all non-USD deposits are converted into USD. The cheapest way to get funds into your account is usually by bank transfer, but this is usually also the slowest method.
Step 4: Buy shares
Now that you have your eToro account funded, you can go on to find the stock of the company you want to buy. To get an overview of the available assets, click ‘Trade Markets’ to browse through the library. If you already know which asset you want to buy, simply enter the name into the search box.
No matter what stock you want to buy, the process is usually always the same. Find the asset and click on ‘Trade’ and a popup will appear.
There are a number of parameters you need to specify, and this can be one of the more confusing parts of eToro for beginners:
- Set Rate: You can place either a Market Order or Limit Order on eToro. A market order will let you buy the share immediately at the current market price. This differs from a limit order which lets you specify the highest price you’re willing to pay. Limit orders are only executed when the market price hits your target, while market orders are filled instantly during market opening hours.
- Amount: Enter the dollar amount you wish to invest. Since eToro offers fractional shares, you can invest as little as $50. Alternatively you can select the number of ‘units’ (shares) you wish to buy.
- Leverage: Set this to 1x to buy the real stock with underlying asset. Anything above 1x will make it a CFD.
- Stop Loss/Take Profit: You can tell eToro to automatically close your position if the price falls or rises to a particular price point. A stop-loss is used to prevent losses if prices drop, while a take-profit is designed to lock in profits.
Notice that the important message saying “You are buying the underlying asset” and that it’s “commission free”.
Once you’re done adjusting the settings, complete your purchase by clicking the ‘Open Trade’ button. A new message will pop-up confirming your trade has been opened.
That’s it. You’re now the official owner of shares in the company you just invested in.
Benefits of eToro’s commission-free model
From a fee-perspective, I see only a few drawbacks in using eToro’s commission-free trading model for buying stocks. It’s free to open an account, and there are no monthly/yearly fees as long as you log in to your account at least once every 12 months (which takes less than 10 seconds) which makes it ideal for long-term holders.
Besides low trading costs, there are other benefits worth considering:
- Easy to get started: The process of opening an account is extremely easy and takes only two minutes on average. You’re given $100,000 in demo funds to test how the platform works, make paper trades, and decide on your overall strategy.
- Intuitive platform but an outdated design: eToro’s web and mobile platforms are easy to use, even for beginners, but design-wise they feel slightly outdated in comparison to other fintech brokers. Aesthetics aside, the platform has all the features and functions you need for trading and portfolio tracking.
- Multiple asset classes: eToro is a multi-asset broker that lets you trade more than just real stocks. They also cover CFDs and cryptocurrencies, allow short selling, and leveraged trading in both directions (long and short).
- CopyTrader feature: eToro brands itself as a social trading platform due to its popular copy-trading feature which which lets you automatically copy the strategies of other investors. You can sort by top investors, most copied, risk scores, and other criteria.
Drawbacks of eToro commission-free model
I don’t think any stock broker is perfect, and there are always some unsatisfied clients out there for one reason or another. Here are some disadvantages that come to mind:
- USD only: eToro operates in USD exclusively, which means deposits in other accepted currencies are converted into USD by eToro against a fee. The same fee applies for withdrawals. For a broker whose largest customer base is European, it would be a great addition to include EUR and GBP accounts. Holding USD also means FX risks due to changes in the relative value of the involved currencies.
- Withdrawal fee: eToro has a flat $5 withdrawal fee, which is quite steep compared to other stock brokers
- Mixed products: New users may be confused by the mix of real equity with CFDs, as they are not necessarily easy to tell apart for beginners.
It’s easy to to see why eToro has gained massive popularity over the past few years. eToro was the first broker in Europe to offer commission-free stocks with no trading limits, and the ability to buy fractional shares. Not only is the platform is super-easy to navigate, but you get access to over to over 2,500 instruments in total.
Altogether, eToro can be great stock brokerage if you’re looking for a simple trading platform to become part of the stock market in a cost-efficient manner.
- Zero commission applies when investing in non-leveraged BUY stock positions.
- Zero commission does not apply to stock CFDs.
- Zero commission stock investing is available to eToro users residing in countries under FCA and CySEC regulations.
- Zero commission applies to US stocks only for countries under ASIC regulations (Australia, Asia, GCC, LATAM).
- Other fees may apply. Please see etoro.com/trading/fees/ for additional information.
Frequently asked questions about eToro
Is eToro regulated?
Yes, eToro is a fully regulated online stock broker.
- eToro (Europe) Ltd., a Financial Services Company authorised and regulated by the Cyprus Securities Exchange Commission (CySEC) under the license # 109/10.
- eToro (UK) Ltd, a Financial Services Company Authorised and regulated by the Financial Conduct Authority (FCA) under the license FRN 583263.
- eToro AUS Capital Pty Ltd. is authorised by the Australian Securities and Investments Commission (ASIC) to provide financial services under Australian Financial Services Licensce 491139.
What currencies can you deposit on eToro?
eToro operates exclusively in USD, and there are no fees for depositing USD. They also accept 14 other currencies but these are converted into USD against a conversion fee: EUR, GBP, AUD, RMB, THB, IDR, MYR, VND, PHP, SEK, DKK, NOK, PLN, CZK.
How much does it cost to withdraw from eToro?
There is a $5 withdrawal fee, plus a conversion fees if you withdraw a currency the is not USD.
Is eToro available in my country?
eToro has a running list of countries and territories where the broker is unavailable due to local regulations. As the list of restricted areas changes from time to time, visit eToro’s webpage for the latest information.