Trading Stocks and ETFs on eToro

Stocks and ETFs are some of the oldest instruments available for trading, and eToro offers a great selection of both to choose from.

(NOTE: Before we continue, we have to give a disclaimer that the trading products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. CFDs are complicated instruments that are never guaranteed to provide you supplemental earnings.  In fact, Around 67% of all retail investors experienced a loss while trading CFDs. Make sure to keep this in mind before attempting to use the eToro platform yourself. All the information found on this website is not official trading advice and all practices shown are referenced for the use of the Demo account only.)

What are stocks?

Stocks are a type of equity which grants you with a partial ownership of the company in proportion to the number of shares purchased. Owning a stock gives you an opportunity to invest into companies of your choice all over the world. There are different types of shares, with common stock being the most widespread, granting dividends in case such are issued and also rights to vote on company’s decisions. There are also preferred stock which, as the name says, grant preferential rights and treatment for the investors, mainly related to cases of liquidation or bankruptcy.

Stocks on eToro

Opening a long position on stock means purchasing an actual underlying asset, and a non leveraged Buy position on the platform is a zero commission trade. You can also take short positions with leverage in stock on eToro using CFD’s, with different levels of leverage available. Do not forget about the associated capital loss risks.

eToro also allows you to trade fractional shares with a relatively small initial investment, for example 0.52 of a share with a minimum amount of 50$ as shown on the image below.

Stock prices are affected by many factors, such as general market trends, political, economic and company-specific news, and thus need to be traded with caution and sufficient preliminary knowledge. Don’t forget to learn key trading basics and strategies before investing your money.

Stocks may be suitable for traders with different investment horizons, usually from medium to long term.

In case the stock of your choice pays dividends, your account will be debited or credited accordingly i.e. a long position would add the dividends to your balance and a short position would deduct them. Beware that dividends represent an income and may be taxable depending on the laws and regulations of the country the registered company of the issued stock is registered in. eToro is also not an exchange so the trades completed on the platform cannot be transferred to another broker.

What are ETFs?

ETF stands for exchange traded fund and represents an assembly of securities, including various stocks, commodities, bonds, currencies and other kinds, that could be purchased with a broker. Many ETFs trace indexes by keeping the same assets proportionally to a market index, like S&P 500 or NASDAQ-100 for example.

ETFs are split into shares and are basically traded like stocks and offer several advantages, diversification being one of the main. Because of the ease with which such funds can be traded, you do not have to invest time to research, compose and balance individual constituent components yourself. They are also generally low cost compared to other assets because of small expense ratio and negligible management fees and may be more tax efficient due to low security turnover.

Trading ETFs

Exchange traded funds are priced in real time, unlike mutual funds for example, while offering similar diversification benefits. Purchasing an ETF allows you to follow the returns of the original investment into an asset portfolio.

eToro offers over 150 global ETFs to choose from. There are several kinds of ETFs offered depending on the securities they comprise to suit trader’s preferences, so for example some may be related to specific sectors, geographical locations or company sizes. You can learn  about each fund by clicking on the ETF of your choice, where you can find a quick overview, related news, statistics and charts. This may help you to get an idea of asset’s performance overview and the type of assets it holds.

Just like with stocks, purchasing an ETF makes you the owner of the underlying asset, so it is a zero commission trade on the platform but other types of fees may be applied.

Don’t forget to master your skills on a demo account before investing real money and good luck trading!

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eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.