In this article, we will be comparing two ultra-popular brokerage companies used by millions of traders around the world: eToro and Interactive Brokers.
Taking several factors into account, we’re giving a slight overall edge to Interactive Brokers, mostly because of Interactive Brokers’ superior offering of investments and research tools. Interactive Brokers also decidedly wins the match on fees. But in the matchup of eToro vs Interactive Brokers, part of the consideration includes the stage and sophistication of the investor as well.
Interactive Brokers covers a wide cross-section of markets and products that will be attractive for professional traders. However, eToro is a solid choice for beginner and intermediate traders in some cases, with a streamlined desktop and mobile user experience that is among the most accessible on the market.
For beginners and traders who aren’t as interested in deep research or a variety of tools, eToro does offer an easy-to-use platform that can be appealing. For traders who value deep education and market research, Interactive Brokers is superior.
Both platforms offer powerful trading platforms. However, eToro offers a unique advantage by providing a social trading option which allows users to interact with trading communities and high-profile investors, something Interactive Brokers does not offer.
Keep reading to learn more about these two powerful trading platforms.
Let’s take a closer look at both eToro and Interactive Brokers to understand how they work, what they have to offer, and how they compare.
eToro is an Israeli social trading and multi-asset brokerage company founded in 2007 with over 20 million users in 140 countries worldwide. eToro focuses on providing financial and copy-trading services such as forex and cryptocurrencies. eToro users can begin trading cryptocurrency on the platform for as little as $10, meaning eager users don’t have a high barrier-to-entry they might experience on other platforms with minimums of $100, $200, or more. Simply put, eToro is one of the easiest-to-use trading platforms available, with a great desktop and mobile interface that even a beginning traded can easily navigate.
eToro offers a wide variety of cryptocurrencies for trading (17), more than some other major platforms. The process involved in opening an account can be done very simply and quickly. Perhaps its most attractive and unique element is its social trading platform, which lets investors connect with other investing communities and invest in the same positions as expert traders with winning track records, step-by-step (this feature is called CopyTrade).
eToro has an easy-to-use, beginner-friendly user experience. For cryptocurrency investors and investors interested in social (sometimes called “copy”) trading, eToro is a powerful platform.
eToro Pros and Cons
- eToro has low minimum deposits; users can get started with only $10.
- eToro has 17 cryptocurrencies available for trade.
- eToro offers a relatively seamless account opening process; it’s very easy to get started even for newer investors.
- Investors can “mirror” expert traders, trade-for-trade, and enjoy an immersive social trading experience. The ability to learn and copy the exact trades of world-class investors has helped eToro become the dominant player in the social investing space.
- Continuing the social trading features, eToro users can copy up to 100 traders simultaneously through eToro’s CopyTrader feature. Users can also view millions of other traders’ portfolios, statistics, risk scores, and more.
- eToro’s non-trading fees tend to add up and tend to skew on the higher end in general, including inactivity fees, $5 withdrawal fees, and more.
- eToro’s customer service definitely leaves much to be desired.
- With eToro’s CFD (contract for difference) trades, 68% of retail investor accounts lose money when trading through the platform.
- For US-based customers, eToro is only available in 44 U.S. states, and while eToro offers forex and equity trading in other countries, US-based eToro customers can currently only participate in cryptocurrency trades.
Interactive Brokers Overview
Interactive Brokers is an established, time-tested platform that is popular among seasoned active traders with low pricing per share, a sophisticated trading platform, a wide selection of tradable securities including forex and ETF’s, and unbearably low margin rates. In fact, it’s new IBKR Lite platform offers traders commission-free trades for stocks and ETFs.
With Interactive Brokers’ IBKR Lite perform, traders have unlimited free trades of stocks and exchange-traded funds on U.S. exchanges. If a trader is interested in trading options, futures, mutual funds, fixed income and others, a trader has access to 135 exchanges in 33 countries.
Because Interactive Brokers is generally geared toward experienced traders, the per-share pricing of $0.005 per share (with a minimum of $1) is quite attractive for high-volume, in-depth trading. Interactive Brokers offers a highly sophisticated trading platform, an impressive range of tradable securities, including foreign securities, and unbeatably low margin rates.
Interactive Brokers is well-suited for advanced traders (with their Lite platform better suited for casual traders), day traders and options traders, traders who want to deep-dove into research and data, and international investing.
Interactive Brokers Pros and Cons
- Interactive Brokers’ IBKR platform offers a range of tools for not only seasoned traders but more casual investors as well, including unlimited free trades for stocks and exchange-traded funds (ETF’s) available on U.S. exchanges.
- Interactive Brokers offers a wide range of trading for multiple types of investments including options, futures, fixed income, mutual funds, and many more on 135 exchanges in 33 countries.
- Interactive Brokers offers research tools and information/learning options that are unparalleled in the industry, and are perfectly suited for sophisticated traders.
- Interactive Brokers offers a per-share pricing of $0.005 per share (with a minimum is $1) and unbeatably low margin rates on trades.
- Interactive Brokers is not for the faint of heart. Interactive Brokers provides dense information and research on the platform, but easily extrapolating the information you desire can be tricky.
- Various contingent commission and fee structures, while generally low, can make it hard to predict costs at times
- If you’re not an experienced trader with deep, multifaceted knowledge about institutional, broker, and proprietary trading accounts, it can be easy to become overwhelmed.
Feature Comparison: Fees
As any investor/trader expands their experience and craft, they learn the impact fees, interest rates, and other expenses have. While every platform has to impose fees in order to pay for its operating costs, it has to find the best blend of fees with user experience in order to be a winning platform.
There’s no question about it: eToro has very high non-trading fees, including charges such as $10 per month after a year of inactivity, a withdrawal fee of $5, and more.
Interactive Brokers’ fee structure and margin rates are generally more palatable, with no inactivity fees, transfer fees, closing fees, or account fees.
Winner: Interactive Brokers
Feature Comparison: Setup/Ease of Use
A tool is only as good as your ability to use it. Both eToro and Interactive Brokers have a setup and user experience that offers different benefits, but there are differences.
For eToro, the setup and user learning curve is minimal. One can create and start using an account in less than 10 minutes, and the process of navigating a trade, running comparisons, and executing almost any move is clearly explained and straightforward. eToro is very beginner friendly and empowering for the casual investor.
Interactive Brokers’ setup and user-experience process is definitely more detailed, and the platform doesn’t hold a user’s hand like eToro does. If you’re not a sophisticated investor with decent experience, Interactive Brokers might take a few Google searches to break down things like margin rates for a particular trade, how to navigate a foreign exchange, and more.
Feature Comparison: Information and Research
Executing a great series of trades depends heavily on your ability to decipher market trends, anticipate changes, and see things before they happen. Having a robust influx of information and securities research is crucial to making the right decisions; it’s the final factor in the decision process for executing trades.
eToro, while it offers the unique option of being able to “mirror” sophisticated and successful investors’ trades, isn’t as developed in terms of helping the average user understand the background, market conditions, and so on, behind why a world-class investor might have made the moves they did. eToro isn’t generally designed for investors/traders who want to commit time and mental capital to deep market research, however; the platform is focused on other things. If you’re a quickly growing investor who wants more information and depth to aid in your decision making over time, eToro might grow less useful.
Interactive Brokers offers quite a bit more in terms of research and information via a robust and constantly updated pipeline of company and market data reflecting various industries and countries. This data is curated by decades’ worth of investment sophistication to help traders find exactly what they need, assuming they know how to look for it.
Winner: Interactive Brokers
eToro vs. Interactive Brokers: The Winner
Interactive Brokers is our winner.
Interactive Brokers’ combination of time-seasoned investment sophistication,
deep information/research readily available and constantly updated, minimal fees, and deep market exposure make it a powerful platform for growing investors who want a tool that can handle all of their needs.
For beginner investors who are getting started and want to learn from a platform that specializes in breaking down trades from world-class investors as a teaching resource, eToro is the ideal platform. It’s easy to use, has a minimal setup process, and feels streamlined for the average user.
For intermediate and seasoned investors who don’t want to get hampered by fees and want access to powerful information and research to help develop a broader investment strategy, including deep and multifaceted market access, interactive brokers is by far the better solution.
To get started trading on Interactive Brokers, visit https://www.interactivebrokers.com.
To get started trading on eToro, visit https://www.etoro.com.