eToro Forex

Introduction

Forex is a popular investment opportunity for those with limited capital. Forex traders trade currency pairs, which means that they can buy one currency while selling another for a different type of currency. Like when you used to exchange your native currency to the currency of the country you were travelling to at the airport, investing in a currency pair could be seen as just another form of translating money.

You can use eToro to invest in the world of currency trading. With it, you can buy and sell a range of currencies, including following the advice of professional traders, all on one platform.

There are few things to learn before starting with currency trading. The first thing you should know is that Forex can be done through two approaches - investing or speculating. Secondly, you need to understand what a pair is - a currency pair consists of a base currency and a counter currency. In this page, we will further discuss about forex trading and how you can invest on these FX pairs with this broker.

Forex Trading on eToro Explained

When trading forex on eToro, you are not actually buying or selling physical currencies. Instead, you are trading forex derivatives known as Contracts for Difference (CFDs).

For starters:
Actual forex trading refers to exchanging one currency for another, in order to take advantage of differing prices in different markets. It is mainly used by traders for speculation or hedging, not for long-term investing.

On the other hand...
A CFD is a financial instrument that allows you to speculate on the price movements of an underlying asset, such as a currency pair, without actually owning the asset. When you open a forex trade on eToro, you are essentially entering into a CFD contract with eToro. The profit or loss you make on the trade is calculated based on the difference between the opening price and the closing price of the CFD contract.

CFD trading allows you to benefit from the price movements of an asset without the need to own or physically deliver the asset. This can be a convenient way to trade forex, as it eliminates the need to deal with physical currencies, which can be complicated and costly.

Keep in mind: CFD trading involves risks, including the risk of losing your entire investment. It's important to understand the risks involved and to use risk management tools such as stop-loss orders to help limit your potential losses.

What Currency Pairs Can I Invest on eToro?

As of this writing, you will find around 50 currency pairs on the eToro online trading platform. This includes majors, minors and exotic pairs.

All the 7 major pairs are available for trading:

There are over 20 choices of minor pairs or crosses:

There's also around 20 exotic pairs to choose from:

How to Trade Forex on eToro?

Setting up forex CFD trades with eToro is easy. The following steps will guide you through the process:

1. Open the eToro platform and click on "Discover".

   

2. Select "Currencies".

   

3. Look for the currency pair you want to invest on and click "Buy" or "Sell".

   

4. Set the amount you wish to invest.

   

5. Configure the, leverage, stop-loss and take profit orders based on your trading preferences.

   

6. Click on "Open Trade" to execute the position.

   

Keep in mind that this particular position will remain open until:

• You decide to manually close it.
• It is automatically closed via the stop-loss or take-profit order.
• The contract expired.

Forex Copy Trading

eToro also has a social media aspect that allows users to connect with other users, share their ideas and learn from others’ experiences. It provides a social trading platform where investors can copy the trades of successful forex traders.

If you’re the type of investor who’s not interested in analyzing charts or looking for patterns then you can simply follow the instructions of professionals. This way, you can invest in forex with minimal risk by copying the trades of other traders who have already done the research and put in the time to find out which trade to take.

This is a good way for a trader who wants to learn how to trade on the forex market but does not have the time, skills or money to do it themselves. You can use this system as an opportunity to learn from others so you can make wiser trading decisions in the process.

Users can choose from a list of professional and amateur traders and choose how much of their portfolio to invest in them.

Best Forex Traders to Follow and Copy

Remember: Forex trading is a high-risk, speculative market. However, there are many forex traders who are actually successful in this field. These typically have a long-term view of this market and take calculated risks to make good returns from it.

It is possible to generate good returns by participating in copy trading on eToro. The platform is generally low risk and can yield sizable dividends. Nevertheless, choosing the right trader is important to make sure you're getting the returns for your risk. It is important that they have a long track record of success and make an acceptable yield margin.

You can find the best FX traders on eToro by using the filter function of their CopyTrader feature. You will be able to get a refined list of choices based on several parameters such as the user’s country, gain rate, period (months to years), number of copiers, active weeks, etc.

Trading with Leverage

The maximum leverage that eToro offers is currently x30 for major currency pairs. This means that if your account currently has a balance of $50, you could trade it for an equivalent of $150.

Note: The x30 leverage is the maximum for retail clients as per the guidelines and restrictions of the European Securities and Markets Authority (ESMA).

If you would like to use a higher leverage (x50, x100, x200 or x400) then your account needs to be categorized as a Professional. This specific account type has certain conditions, experience and trading knowledge that you need to meet in order to qualify. You can click on the x50 to x400 leverage to trigger the Enable High Leverage Trading pop-up notification and proceed with the Professional Client application.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% 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.

What are the Forex Trading Fees or Charges?

One additional benefit of using eToro for currency trading is the low transaction costs. You can do many trades with the main fee being the spread between buy and sell prices.

Forex Spreads

The spread is the difference between the Buy and Sell prices of a certain asset. It's calculated by taking the difference between either side of a trade - one side being to buy and one side being to sell.

The spread is a profit margin that a Forex broker takes, and it's usually between 15 and 50 pips, depending on how volatile the currency pair is.

When you trade with eToro, the spread is the fee charged per transaction. Spreads range from 1 pip to 50 pips depending on the currency pair.

Forex Trading Hours

The forex market is the world’s largest market, with a daily trading volume of more than 5 trillion dollars! It is an international, over-the-counter market and trading on it happens 24 hours a day, 5 days a week. There is no set time for it. It can happen when people exchange foreign currencies.

Trading in the forex market is available to retail investors. The volume of foreign currency traded every day exceeds that of the stock market and all other traded financial products combined.

The bottom line?
The forex market provides great opportunity for traders at all levels of experience and capital because it has low transaction costs and relatively low spreads (difference between buying and selling prices). Forex can potentially generate good yields whether one is interested in speculation or in hedging against adverse movements in their own currency.

Frequently Asked Questions (FAQ)

Can I trade forex on eToro with a demo account?
Yes, eToro allows you to trade forex using their demo account. When you sign up for an eToro account, you are automatically given a demo account with virtual funds that you can use to practice trading forex or any other financial instrument that eToro offers.

What is the minimum deposit required to start trading forex on eToro?
The minimum deposit required to start trading forex and any other instrument on the eToro platform will depend on your location and the account type you choose. For most countries, the minimum first-time deposit on eToro is $200 for a basic account. However, in some countries, the minimum deposit may be higher, so it's best to check the eToro website or contact their customer support for the specific minimum deposit requirements in your country.

What forex trading instruments are available on eToro?
eToro offers a wide range of forex trading instruments, including major currency pairs, minor currency pairs, and exotic currency pairs. There are currently around 40+ available.

Can I trade forex on eToro with leverage?
Yes, eToro offers leveraged forex trading. The leverage that is available to you will depend on the regulatory requirements in your jurisdiction and the type of account you have.

For example, if you are a resident in Europe, you are subject to the restrictions of the European Securities and Markets Authority (ESMA), which limits the maximum leverage for retail clients to 1:30 for major currency pairs and 1:20 for non-major currency pairs. However, professional clients may be eligible for higher leverage.

Clients in other regions may have access to different leverage levels, so it's important to check the eToro website or contact their customer support to find out the specific leverage available to yo

Can I use automated trading systems for forex trading on eToro?
No, eToro does not allow the use of third-party automated trading systems on their platform. Instead, you can use their risk management tools, such as stop loss and take profit orders, to manage your trades. Additionally, you can use the CopyTrader feature, which allows you to automatically copy the trades of experienced traders on the platform. This can be a way for you to follow the strategies of successful traders without having to rely on automated trading systems.

Can I set stop-loss and take-profit orders on eToro forex trades?
Yes, you'll be able to set stop-loss and take-profit orders on forex trades on eToro's platform. These are essential risk management tools that can help you manage your trades and limit your potential losses. To set stop-loss and take-profit orders on eToro, simply open the trade you want to modify and then click on the "Set Order" button. From there, you can select the stop-loss and take-profit levels that you want to use for the trade. Once you've set your orders, they will be automatically executed if the price reaches the specified levels.

Does eToro offer Islamic forex trading accounts?
Yes, eToro offers Islamic forex trading accounts for clients who follow Islamic principles of finance. Islamic forex trading accounts are also known as swap-free accounts, as they do not charge or pay any interest on overnight positions, which is prohibited in Islam.