eToro Vs Interactive Brokers 2023: Fight For Supremacy
eToro and Interactive Brokers are both known for being very secure, reliable brokers. Both have been in business for over 20 years, so they are well-established companies that should be able to protect their clients' money. Which one is better, though?
What Is eToro?
eToro is a social trading broker, which means it allows its traders to follow the trades of other traders. This makes it easier for new investors to learn from those with more experience.
It also offers stocks, indices, and commodities, as well as over 1,200 different instruments from currencies to individual stocks from around the world. eToro can be used on the Web but also has mobile apps for iOS and Android.
How To Create An eToro Account?
- Open your web browser and go to the eToro website.
- Click “Join Now” and fill out the registration form with your personal information, including name, address, date of birth, occupation, and phone number. The minimum deposit required to open an account is $200 for a micro account or $500 for a standard account.
- Review your information and submit the form by clicking “Next” in the bottom right corner of the screen.
- To complete registration, you will need to confirm your phone number through an automated call or text message sent to your mobile device. Once this step is complete, you can log into your new eToro account.
How To Deposit Funds In An eToro Account?
- Open your web browser and go to the eToro website. Click “Trade Markets” at the top of the dashboard. Click on one of the asset classes available on the list, for example, CFDs on Commodities. Click “Deposit” in the right column menu.
- Choose the country in which your bank account is located and click “Next.” Enter the amount you want to deposit, choose which currency you wish to transfer (most likely USD) and select your preferred method of payment (wire transfer or credit card for most clients).
- Once you submit this form, eToro will process the request. The funds should appear in your account within five business days.
Is eToro Safe And Secure?
eToro is a relatively safe and secure platform for trading CFDs due to the following reasons:
- eToro does not trade using your deposited funds. All transactions are carried out in a margined, round-turn fashion based on borrowed funds from a liquidity provider such as a bank or prime broker.
- eToro uses a segregated account to hold your funds separate from eToro's operating capital.
- eToro is regulated by the Financial Conduct Authority (FCA) in the UK and Cyprus Securities Exchange Commission (CySEC). It holds a tier 1 license which allows it to operate globally, including in the United States.
- eToro has never been hacked or suffered a major breach of security.
- All client holdings are fully segregated and held in separate client accounts at eToro.
How Is The Customer Support Service Of eToro?
Customer service at eToro can be reached via:
- Email, Telephone: 0808 238 9727 (UK) / 1 424 304 4626 (US)
- Live chat via the website.
- eToro is available 24/5 and 365 days a year.
- YouTube: https://www.youtube.com/user/eToroTV
- Facebook: https://facebook.com/eToroUSA
- Twitter: https://twitter.com/eToro
The eToro social trading network can be a bit confusing at first, but you'll get the hang of it soon. The interface is user-friendly but busy looking with lots of trading information.
The streaming news feed feature alerts you to impending economic events that might affect your trades or portfolio value. You can follow other traders on eToro and learn from their strategies by copying their trades automatically via the copy trader tool. If you get stuck, there is a comprehensive help section with FAQs and guides to answer any questions.
What Are Interactive Brokers?
Interactive Brokers is an online broker with over 2 million customer accounts worldwide. It offers stocks, indices, and commodities as well as 130 different instruments from currencies to individual stocks. The account minimum deposit needed to open an account is $10,000, and interest is compounded daily.
One major difference between these two brokers is the way they handle margin calls. Interactive Brokers gives the brokerage firm the right to liquidate a customer's position, while eToro uses a guaranteed stop-loss system.
This means that if the value of your investment falls below a certain level, eToro will automatically sell it, so you don't lose any money in spite of what is happening in the market.
If you are making a large investment or one that you expect to take some time, Interactive Brokers is probably the better choice since it will never liquidate your account.
How To Create An Interactive Brokers Account?
- Go to the Interactive Brokers website and click “Open an Account.”
- Fill out the account application form by entering your first name, last name, social security number or tax ID number, date of birth, current street address, current email address, and phone number. The minimum deposit required to open an account is $10,000.
- Review your information and submit the form by clicking “Submit” in the bottom right corner of the screen. You will receive a pop-up message that you need to print and mail or fax a signature page to complete your application process.
- Once this step is complete, you can log into your new Interactive Brokers account.
How To Deposit Funds In An Interactive Brokers Account?
- Open your web browser and go to the Interactive Brokers website. Click “Account Management,” which is located under “IB Accounts” on the left column menu.
- Select “Deposit” under the sub-category “Transfer Money Into Your Account.” Choose the type of deposit you wish to make (ACH transfer, Wire Transfer, or check) and select your country of residence if necessary. Enter the amount you want to deposit and choose your preferred funding method (ACH transfer, wire transfer, or check).
- After you submit this form, Interactive Brokers will process the request. The funds should appear in your account within three business days after processing.
- There are other deposit options for traders who want to invest using cryptocurrency. The company offers deposits via Bitcoin, Ether, or Ripple.
Are Interactive Brokers Safe And Secure?
Interactive Brokers is one of the most secure platforms for trading CFDs due to the following reasons:
- Interactive Brokers operates a self-clearing system, meaning it executes and clears its own trades.
- Interactive Brokers is regulated by the U.S Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) in the United States, Financial Conduct Authority in the UK, and many other regulators globally.
- The company was named the best online broker of 2017 by Kiplinger's Personal Finance.
- Interactive Brokers has never been hacked or suffered a major breach of security.
- The firm uses multi-factor authentication to protect withdrawals, which means that you will be sent an email and text message with a code to enter after attempting to withdraw funds. This makes it very difficult for hackers to gain access to your account.
How Is The Customer Support Service Of Interactive Brokers?
Interactive Brokers can be reached via:
- Email, Telephone: 1-866-548-4713 (US)
- Live chat via the website.
- Interactive Brokers is available 24/5 and 365 days a year.
The Interactive Brokers support team is excellent, and they will quickly resolve any issues you might encounter with your trading account or platform. You can reach them by phone, live chat, email, or come into a retail location.
If you get stuck, the support team is more than willing to assist with any problems that arise. There is a comprehensive help section with FAQs and guides on everything from creating an account to placing a trade.
Differences Between eToro And Interactive Are As Follows:
The minimum deposit needed to open an account is $10,000, and interest is compounded daily. Interactive Brokers has a bigger minimum deposit than eToro. eToro has a minimum deposit of $200.
Interactive Brokers offers only one type of account, whereas eToro has three types. Interactive Brokers Standard accounts have a commission rate of $0.005 per share with a minimum charge of $1 for every transaction.
Commission on EURUSD trades is fixed at 1 pip or 0.0001. For other currency pairs, the commission is taken from the spread. There are also two types of ECN Pro accounts available. All three account types come with a maximum leverage of 1:200 for stock trading and 1:400 for Forex trading (per side).
eToro has three different options, including Classic, CopyTrader, and Webtrader accounts. The classic account is the most basic and comes with lower commission rates, no stop-loss orders, and limited payment options. CopyTrader allows you to follow other successful traders automatically, while Webtrader is more like a traditional trading platform.
Interactive Brokers has extensive research tools, while eToro’s research tools are a little more basic. Interactive Brokers offers customers many different types of reports, including Profit & Loss, Margin Requirements, Tax Reports, and Account Status.
You can use the information from these reports to make better trades and improve your results. The charting features on Interactive Brokers include line charts, bar charts, and candlestick graphs. eToro only offers line charts. Interactive Brokers also offer access to both fundamental and technical research tools that can be especially useful if you are a more advanced trader.
eToro only has the most basic of trading platforms with no chance for analysis or learning how to trade before doing it yourself.
eToro offers beginners a chance to learn from experienced traders. Interactive Brokers, on the other hand, have limited resources for learning how to trade and don’t offer much in the way of education. eToro offers classes through webinars and live events along with web-based seminars and in-person training.
Interactive Brokers has its own customer service department along with an extensive online knowledge base that is available around the clock, seven days a week. eToro offers 24/7 email support through Live Chat during market hours, but there are no real phone support options.
Deposit and Withdrawal Options:
Interactive Brokers only accepts bank wires, EChecks, and credit cards when you make a deposit or withdrawal from your account.
eToro is more diversified when it comes to making deposits and withdrawals. You can use wire transfers, credit cards, Skrill, Neteller, and UnionPay to make a deposit. Withdrawals can be made through wire transfers, credit cards, or checks.
Interactive Brokers provides its customers access to stocks, options, futures, EFPs, forex spot products (such as currencies), bonds, mutual funds, CFDs, and futures spreads.
eToro, on the other hand, only provides its customers access to stocks, options, ETFs, forex spot products (such as currencies), and commodities.
Interactive Brokers has a variable commission rate that’s based on your account level and the size of the position you take.
To determine your commission, Interactive Brokers applies an overnight charge if your account is under $100,000 or a day trader rate of 0.75% if an account is over $100,000. eToro does not provide Forex trading.
Interactive Brokers is regulated by more than 10 of the world’s leading financial regulators, including the U.S. SEC, FSA (UK), AMF (France), FMA (Austria), and ASIC (Australia). eToro is only regulated in Cyprus.
A Market Maker is an individual or firm that quotes both a buy and sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread.
eToro has one of the largest market-making divisions that provide liquidity across all asset classes. Interactive Brokers does not have a Market Maker.
Interactive Brokers does not provide access to any investment products such as stocks, bonds, mutual funds, and other similar types of assets. eToro does offer access to investment products such as stocks, bonds, ETFs, and mutual funds.
When you open an account with Interactive Brokers, they ask that you pick one account currency that will be used when you make a withdrawal. You can also use your account currency for funding or transfer it to another currency. eToro uses the U.S. dollar as its account currency and doesn’t allow transfers to other currencies.
Account Currency Conversion:
Interactive Brokers has a variable commission rate that’s based on your account level and the size of the position you take. To determine your commission, Interactive Brokers applies an overnight charge if your account is under $100,000 or a day trader rate of 0.75% if an account is over $100,000. eToro does not provide currency conversion for any currencies other than the US dollar.
With Interactive Brokers, you can choose from options requiring low margin (2:1) to high margin (20:1). eToro doesn’t offer leverage.
Interactive Brokers provides access to portfolio analysis and tracking tools that help in your trading decisions. eToro does not provide any portfolio-related tools or reports.
eToro offers a stock simulator where you can practice trading without risking real money. Interactive Brokers does not offer a similar service.
Interactive Brokers provides options for stock alerts where you can specify your preferences and be notified via email, SMS, text message, or through their platform when an option is about to expire. eToro does not provide any type of automated alerts on its platform.
eToro offers its customers access to social trading where you can follow other traders and copy their trades automatically. Interactive Brokers does not offer this type of service.
eToro allows its customers to copy (or trade-in parallel) other traders’ orders and gain from their investment expertise. eToro offers the CopyTrader® system. Interactive Brokers does not offer a similar tool or service.
Interactive Brokers allows trading in bitcoin futures, meaning you can do arbitrage between the price on a bitcoin futures market and the price on a live bitcoin wallet.
eToro only offers trading in CFDs, meaning you cannot do arbitrage between a product offered by Interactive Brokers and a cryptocurrency wallet.
Interactive Brokers offers clients access to streaming real-time data from 15 different third-party trading platforms, enabling you to use the one you prefer. You can also access your account using Interactive Brokers’ Trader Workstation (TWS), where you get complete control over charting and analysis tools, including drawing tools and more than 150 technical indicators.
eToro offers its clients streaming real-time data on eight different third-party trading platforms. eToro’s proprietary web-based platform lacks charting tools, and you cannot use more than 16 technical indicators on the platform.
Commissions & Fees:
The commission structure at Interactive Brokers varies depending on account size, trade value, asset class, and market vs. limit order type. The average stock trade commission at Interactive Brokers is $5.86, while the average online equity options order costs about $1.58.
eToro charges a flat fee of $25 on any withdrawals made through wire transfer or check, while for cryptocurrency withdrawals, you must pay additional mining fees on top of the withdrawal fee.
Interactive Brokers offers micro accounts for clients looking to test-drive the platform. eToro does not offer micro accounts at this time.
Interactive Brokers offers clients a range of banking options with support for wire transfers, credit cards, ACH transfers, checks mailed by Express Mail or courier, and cash sent by mail. eToro only offers a credit card for withdrawals.
Who Is A Broker?
A broker is essentially a third party that executes trades on behalf of the trader. They handle all the details such as opening and closing of trades, deposits, withdrawals, etc.
How Does A Broker Work?
A trader makes an order by opening a trade, with the broker either accepting or denying it. If the broker accepts it, he will then go on to ‘locate’ where the price should be in order for him to fill this particular trade.
The final price is known as the “execution price,” and it is different than the “indicative price,” which is simply an estimate of where the price will be at. Once the broker has found and filled the trade, he then closes it by either buying or selling, depending on whether it is a call or put option.
What Does A Broker Do?
Brokers handle all transactions such as deposits and withdrawals, the opening of trades, and the execution of trades. They also assist traders by providing advice through educational centers, webinars, and live trading rooms.
What Are The Benefits Of Brokers?
A huge benefit of using brokers is that they allow traders to trade on different platforms. For example, if a trader only has an Android, he would not be able to use an iPhone platform. Using brokers allows you to avoid this hassle and, essentially, gives you the freedom to trade on any platform that fits your needs.
Most importantly, though, brokers allow traders to diversify their portfolios. This means that they can trade on different assets, which adds stability to their overall portfolio.
Educational centers are extremely helpful for new traders since they provide explanations about the basics of trading and how to use the platform. They also offer tutorials on what steps should be followed when trading. There is also 24/7 customer support, which can be extremely helpful for those who need assistance at odd hours of the day.
What Are The Downsides Of Brokers?
While brokers are certainly extremely beneficial, there are also some downsides. For example, they may place their own interests above that of the traders, which can be seen through higher spreads and commissions.
Broker Choosing Guide:
Factors that need to be considered before choosing a broker:
Deposit and Withdrawal Methods:
The most efficient way to make deposits or withdrawals is often through credit cards, debit cards, Skrill, Neteller, Payoneer, bank transfers, etc. Researching whether a broker accepts the deposit/withdrawal method you are interested in will save you time in the long run.
Leverage is the amount of money a broker will allow you to borrow in order to open trades greater than your deposit. This number can be anywhere between 1:100 and 1:500 or even higher, so it is important to do thorough research.
Currencies, Commodities, Indices, and Shares/Stock markets are all instruments that brokers allow traders to trade on. Knowing exactly which instruments you want to trade with before you begin looking for a broker will allow you to narrow down your search.
It is important to choose a broker that is regulated, so do thorough research before choosing one.
When traders need help in different situations, customer support can be extremely helpful. Knowing which type of customer support is available at different brokers can save you time in the long run.
Desktop/Mobile Trading Platforms:
Different brokers offer different types of trading platforms, so it is important to choose which type of platform would best suit traders' needs.
Not all traders like to use a desktop or mobile trading platforms, which is why it is important to know whether a broker offers web-based platforms as well.
Before signing up with any broker, make sure they offer an extensive educational center that includes explanations about the basics of trading and maybe even tutorials on how to use their platform. Also, keep in mind whether traders are required to pay for the educational center or not.
Ease Of Use:
Different brokers offer different types of platforms, so it is important to look at what type of platform each broker offers before choosing one. Some are less complicated than others, so traders should consider which one would work best for them.
Knowing what type of charting tools are available at different brokers can help traders choose one that they will be content with.
Some brokers offer copy trading, which allows traders to follow certain traders and automatically open trades with the same parameters as the people they are following. This is an efficient way to trade since it can help to diversify one's portfolio.
Now that we have learned about eToro and Interactive Brokers, let us understand some basics:
What Are Some Competitors Of eToro And Interactive Brokers?
XTB is a brokerage company that offers CFDs on lots of different commodities. When using XTB, you will have access to a platform with a lot of features that offer multiple languages. You can also open an account in London or Poland in order to avoid certain taxes.
The company also offers a demo account and has a variety of tools available for additional assistance. XTB offers a wide range of CFDs across several markets, including currencies, indices, and commodities. Trading is available on more than 1,700 stocks from AIM to Zurich, as well as ETFs and ETNs.
The company's range of CFDs includes everything from oil to silver and gold. Investing in commodities using CFDs allows you to trade without having to take physical delivery, which means that there are no storage costs involved.
Degiro is a Dutch broker established in 2008, and it has grown to be one of the biggest brokers available for private investors. Degiro is considered safe as it is regulated by top-tier financial regulators, the Netherlands Authority for the Financial Markets (AFM), and the Financial Services Authority (FSMA).
Degiro allows trading in shares and other securities such as exchange-traded funds (ETFs), bonds, options, and derivatives. However, Degiro does not provide direct market access and all the features you might expect from a regular stockbroker like advanced charting or research tools.
Degiro is available for self-directed traders in most European countries, excluding the UK, France, Ireland, and Nordic countries.
Which is better, eToro vs. Interactive Brokers? It's a difficult question to answer, as both brokers offer unique benefits and disadvantages. Both platforms are easy enough to use for beginners because the user interface is intuitive and practical.
However, more experienced traders might prefer Interactive Brokers due to its advanced trading platform and low commissions (you pay $1 per contract compared with eToro's commission of $20 + 2%). Interactive Brokers is one of the cheapest platforms for trading, with a minimum deposit of only $10,000 and no inactivity or monthly fees.
eToro, on the other hand, offers free deposits and withdrawals but has a higher commission (or "spread") on every trade you make.