Etorro and similar

Malthusian

jjmmww1 said:

Also worth using the fake account on etoro as you get to start on $100k and see what you can do with that before doing the $500 as they have had some many new sign ups.

The beauty of a demo account is that you can use it as many times as it takes to convince yourself that you have worked out a winning strategy that will let you get rich quick. If you lose your fake shirt 9 or 99 times before then, what does it matter? Do you know how many failed lightbulbs Edison invented bro?

There are two things that can happen with a demo account:

1) it goes down, and you either think "what a waste of time" and give up, or try again (see above)

2) it goes up, or down then up. (Which is what a day-trading account is statistically likely to do - the most common path is a sine wave trending downwards.) And you kick yourself for missing out on real profits, put in all your real money, and lose your shirt on the way back down.

Or of course there's 3), where you first make a pretend fortune, and then make a real one. But this requires being in the 1% of people who get lucky not just once but twice.

DrSyn

Trading with a fake account on Etoro, is like betting on roulette at home with "play money".
Your emotions kick in when its " £1000 real money"  as opposed to  "£1000 play money" and that always makes a big difference.

maxsteam

underground99 said:

The customers will simply pay the market price for the shares they buy, receive the market price for the shares they sell, and need to settle any related government taxes or levies associated with the buying, holding or selling of their investment.

There is always a spread, there is always stamp duty on UK share purchases and there are always costs for changing currencies to purchase shares overseas. Therefore it is dishonest to say that there are no fees or charges. I fail to see how anyone can seriously state either that these costs can be avoided or that these costs can be paid in such a way that there are "no fees or charges".

Something that I noticed today was that eToro offer the chance to copy other people's trades. Has anyone tried this on eToro? I know that people have tried to profit from following "successful traders" on Naga but invariably ended up losing control of trading decisions and losing money.

wmb194

maxsteam said:

underground99 said:

The customers will simply pay the market price for the shares they buy, receive the market price for the shares they sell, and need to settle any related government taxes or levies associated with the buying, holding or selling of their investment.

There is always a spread, there is always stamp duty on UK share purchases and there are always costs for changing currencies to purchase shares overseas. Therefore it is dishonest to say that there are no fees or charges. I fail to see how anyone can seriously state either that these costs can be avoided or that these costs can be paid in such a way that there are "no fees or charges".

Something that I noticed today was that eToro offer the chance to copy other people's trades. Has anyone tried this on eToro? I know that people have tried to profit from following "successful traders" on Naga but invariably ended up losing control of trading decisions and losing money.

Stamp duty and the spread aren't broker fees. Stamp duty isn't inevitable e.g., buying ETFs, bonds and shares in some individual companies like those on AIM and many of those that are domiciled abroad. The FX fee is clear when it applies and if you stick to London it doesn't apply.

underground99

maxsteam said:

underground99 said:

The customers will simply pay the market price for the shares they buy, receive the market price for the shares they sell, and need to settle any related government taxes or levies associated with the buying, holding or selling of their investment.

There is always a spread, there is always stamp duty on UK share purchases and there are always costs for changing currencies to purchase shares overseas. Therefore it is dishonest to say that there are no fees or charges. I fail to see how anyone can seriously state either that these costs can be avoided or that these costs can be paid in such a way that there are "no fees or charges".

If the market price to buy a share on the public market is 1002p and the broker lets you buy the share for 1002p without charging you a fee for the privilege, and doesn't charge you a fee for holding the share indefinitely, you have invested in the share 'for free'.

You are presumably not going to sell the share immediately, or you wouldn't have bought it. You will sell the share at some point in the future, when you feel that the bids in the market are at a high enough price to have met your objectives. Or perhaps, when it is not at a high enough price to meet your objectives but you fear the price will fall further so your objective becomes the sale of the shares at best available price without undue delay. When you come to sell the share, if the market price to sell shares is 998p, and you place your order to sell and the broker gets you the 998p, you have sold 'for free'.

It might be that in the stock market the offer price is 1002p at the same time as the bid price is 998p, because that's how a stock market functions. If you instruct the broker that you would like to buy at market price, and he gets you a buy at 1002p without commission on top, he has done his job. Investing for free. If you then immediately say you would like to sell at market price, and he gets you 998p of sales proceeds without charging a commission, he has done his job. Selling for free.

If you lost 4p on your investment adventure because you had a poor investing strategy, that's a consequence of you having a poor investment strategy, no? It doesn't mean that "invest for free- commission free unlimited instant trades" or "build and track the investment portfolio that suits you with no fees or charges" was a lie, or dishonest. 

If your investment in a financial instrument trading on the London stock market is a subset of the London-traded equities on which the government requires you to pay SDRT (rather than being stamp duty exempt like various non-UK domiciled trading companies, REITs, investment companies or ETFs which trade on the same exchange), Freetrade do not offer to pay that tax for you. Just like they won't offer to pay your income tax or capital gains tax on your investment activity or reimburse you for foreign withholding taxes you suffer. You will have to pay that yourself. The fact that your particular investment strategy incurs governmental taxation should not prevent them from advertising a brokerage service "without fees or charges", IMHO.

If you are going to complain about them misleading the great unwashed about lack of charges (though I don't believe you or others are misled), the only comment with some merit is around the FX conversion to allow you to buy or sell assets in foreign currencies with the pounds in your account. They do not provide that directly as a service themselves with a fee, as the account doesn't support holding multiple currencies. When the market maker sends them the prices for US stocks, the conversion from dollars to pounds is baked into the price. They don't control the exchange rate, just pass it on to the customers. Currently, the rate they get is the spot price + 0.45%, which they are open about - it is shown in the pricing schedule for all the various account types, and the rate obtained is shown in the app.

Buying US stocks is not something one needs to do, and many customers will stick to FTSE shares as you have advocated yourself to newbies on some threads, or use ITs or ETFs to get exposure to foreign markets. But a good chunk of their customers will be exposed to the conversion cost for currencies. Still, they're not paying a fee or charge, so much as paying the amount of currency needed to buy the stock at its current US price when routed through the party that achieves spot+.045% for the conversion. Perhaps it is semantics. No broker offers trading for small foreign currency orders at interbank spot rate (and even if they did, the interbank rates still have separate bid and offer rates for transactions in the billions).

So maybe you can complain that the conversion rate they pass on is akin to paying a fee or charge because if you had direct market access to the US exchanges and your own pile of dollars to do the settlement (having found a friendly fx broker to get the dollars for under 0.45%) it would be cheaper. 

But at the end of the day, nobody is compelled to buy foreign currency shares to use the platform. You can invest in GBP instruments easily, without fees, charges or FX. So I don't find their advertising 'grossly misleading' or 'dishonest'. And especially your suggestion that "it's not free because government requires you to pay tax on some transactions" or "it's not free because a functioning stock market has a spread between bid and offer price" are barking up the wrong tree.

Something that I noticed today was that eToro offer the chance to copy other people's trades. Has anyone tried this on eToro? I know that people have tried to profit from following "successful traders" on Naga but invariably ended up losing control of trading decisions and losing money.

Social media is full of people touting for likes and follows and it's no surprise people want to be able to hold on to the coat tails of those who look to be successful. To the victor the spoils, and those with the highest rates of return probably took the highest risk. Loading up your account and following one of them will probably not end as well as the followers hope, but the ones that got lucky will certainly be telling their mates to come and have a go, so bull markets can create great publicity and word-of-mouth for the platforms that offer these innovations

EToro and others offer this copy trading malarkey where you can automatically have traders placed for you to match a person you're following but without front running (ie it's not that they place a trade first and you copy it a moment later at a worse price; your trades are booked at the same time). I have an eToro account but never used the feature for the same reason you suggest -being out of control and trapped in someone else's strategy.

It certainly seems open to abuse - eg the 'successful' trader or influencer could still front run his published trades with a separate account on the same or other platform before using his eToro 'followed' one to add to the market demand a little later.

The real danger is that you don't know how the leader will run his strategy and what resources he has. For example he has a $100k account and you have $10k so you try to copy- follow his daytraded portfolio with transactions in the same positions but a tenth the scale.

At one point he's up to $150k and you're up to $15k, nice. But then he books and loses a bunch of leveraged bitcoin trades and is down to $5k while you're down to $500. Undeterred, he pulls out another $50k from his bank account and immediately quadruples his $55k on an weekly option bet so he's up to $220k again.

You didn't have $5k in your back pocket because the original $10k stake was all you had been expecting to risk. So you can't do a $5.5k stake when he does his $55k one. You can either use what's left in the account to do a $500 punt, and quadruple it to $2k (and still be 80% down from your $10k start) or you can give up following him and be despondent with your $500 being 95% down from your $10k start.   His track record shows he turned $100k plus $50k follow on money into $220k. Yours shows you turned $10k into $500 or $2k. Probably not get many people copying you with that track record...