Beware of this Dangerous Trading Platform
eToro markets itself as the leader in social trading and Crypto Trading. They are marketing aggressively by hiring esteemed athletes such as Nabilla and Gael Monfils so people would talk about them more.
If you’ve ever taken an interest in investing or finance, you must’ve seen ads about Bitcoin and Crypto Trading such as “If you could have invested in Bitcoin when it was worth only a few dollars, would you have done it?”. Major platforms have banned these ads now but one business has benefited greatly from them: eToro.
eToro claims to have more than 9 million users and is now using celebrities to publicize their shady services. They recently hired Gael Monfils as their brand ambassador who has praised this platform countless times on different occasions.
Similarly Nabilla, another prominent celebrity, urged her fans to invest in Bitcoin through a “safe site” with a few traders who had “already invested in Bitcoin”. Such publicity has helped eToro in attracting numerous customers.
In this eToro review, I’ll discuss why eToro is a terrible choice for you and why you should stay away from this broker.
What is eToro?
eToro is an online platform based in Cyprus which specializes in CFDs (Contracts for Difference). Although they offer other trading instruments too, they mainly promote their CFD division and their Crypto Trading facilities.
A CFD is a contract where the seller (eToro) pays the buyer (you) the difference between the current value of the instrument and the value at the end of the contract. If the difference comes out to be negative, the buyer has to pay the difference. You should note that you don’t actually buy a financial instrument in this transaction, you only expose yourself to the changes in its value.
You can use CFDs for any kind of assets (such as shares, commodities, stocks, and more). Because you don’t actually buy something, the transaction cost remains low. eToro is trying to deceive people into using CFDs for trading cryptocurrencies.
THe cryptocurrencies eToro is offering as CFDs haven’t been CFDs for weeks. This way eToro holds them and puts the buyer (which is you) at a disadvantage. When you buy this CFD, you only expose yourself to the risk and you can’t use them as you wanted (sell them or remove them).
eToro’s main highlight is its social trading feature where you can replicate the trades of another investor. However, there’s no way to verify whether you’re seeing the performance of an actual trader or not, which is a significant red flat.
Why eToro is Dangerous
eToro primarily deals in CFDs, and you should avoid its trading instruments if you’re a beginner to trading. For example, one of the trading instruments you get at eToro is ‘shorting’. In this case, you bet on the fall of an asset in the future. If the value of that particular asset falls as you had expected, you’d get a capital gain. On the other hand, if the value of that asset increases, then you can suffer a tremendous loss. You could lose hundreds (or even thousands) of euros in such a trade.
Another dangerous instrument is ‘leverage’. Leverage is a temporary loan the broker gives to you according to the funds present in your account. So, for example, if you have 100 euros and the broker offers a leverage of 1:100, then you can trade with 100 x 100 = 10,000 euros. This means if a product’s value increases by 1% in such a transaction, you’d double your investment. But if it falls by 1%, you’d lose all the funds you had invested.
At eToro you can never be in debt of the broker, but losing all of your capital is not a laughing matter too. In my example, the proposed leverage was 1:100. eToro offers leverage upto 1:400, so you can understand how dangerous it is to deal with this broker.
The Real Risk of Dealing with eToro
eToro’s obvious qualities and perks might convince anyone into thinking they are a legit organization. However, the problem with eToro is they are using popular faces to sell highly risky investment products. By using the image of Nabilla and Gael Monfils, they are appealing to the general public and selling a product which could lead the consumer to lose all of his/her investments.
The Sapin II law prohibits such advertising of trading sites for products that are too speculative. However, eToro remains an exception to this rule because the website claims it has a ‘protection mechanism’. In other words, eToro makes sure that the trader doesn’t lose more than their initial bet.
eToro has received several warnings from regulatory watchdogs for its aggressive and shady marketing tactics. However, the only defence eToro had for this problem was their usual response, “We encourage responsible trading and provide educational resources to help novice and seasoned investors”.
eToro’s Scam Has Many Victims
eToro’s scam is prevalent in the market and it has numerous victims. People are griping about their painful experiences with eToro on multiple platforms.
Here’s a reviewer who lost more than 100,000 Euros due to eToro. They found out that eToro wasn’t showing them simulated results instead of genuine ones.
Another reviewer lost more than $70,000 which they had invested in their account over time:
People are losing their hard-earned income due to such shady and manipulative tactics of this broker. There are many victims of this eToro’s scam and you can find them out just by searching for eToro complaints.
eToro Review: Conclusion
Just because a particular broker has a big brand, it doesn’t mean it is reliable. eToro is the perfect example of this case. They are using popular names to promote their risky products and they are taking advantage of the loopholes present in our laws to do so.
Numerous people are losing their hard-earned cash because of the shady operations of this broker. In the end of my eToro review, I strongly advise you to stay away from them at all costs. You can find another broker who is more reliable and trustworthy but for your own safety, stay away from eToro.
eToro is using deceptive marketing tactics and using loopholes in regulations to promote its highly risky and unfair trading instruments. Numerous people are losing their funds due to eToro's scam.
- Popular Brand
- Deceptive Marketing
- Highly Risky Trading Instruments
- Stealing Money from Customers