Interactive Brokers vs eToro: in-depth comparison for traders and investors
In recent years, both Interactive Brokers and eToro have witnessed significant growth in terms of market share and performance. Currently, they hold prominent positions in the market.
While these two platforms have their distinct features, they also share certain similarities. In this article, we will thoroughly examine their characteristics and conduct a detailed comparison of Interactive Brokers Vs eToro.
History of Interactive Brokers vs eToro
History of Interactive Brokers
Interactive Brokers, established in 1978 by Thomas Peterffy, stands as a testament to his pioneering spirit in computer-assisted trading. Peterffy recognised the potential of computers in accessing global markets and executing trades at significantly lower costs compared to traditional brokerage firms.
The foundation of the company itself is remarkable, considering that Peterffy initially had only $100 from his parents, which he transformed into a substantial sum through the creation of a brokerage that has now earned immense prestige.
Initially, Interactive Brokers operated as a market maker on Nasdaq, actively participating in trading both sides of the market for several highly active over-the-counter securities. Presently, Interactive Brokers has evolved into an online brokerage firm, offering an extensive array of products and services tailored to both individual and institutional clients. The company provides a robust suite of trading tools and advanced technology, cementing its reputation in the industry.
History of eToro
The history of eToro traces back to its founding in 2007, driven by a vision to revolutionise the trading landscape.
In 2010, eToro introduced its inaugural trading platform and embarked on developing a distinctive market strategy, which has propelled the company to its current standing as a leading and highly regarded brokerage.
Today, eToro occupies a prominent position as one of the most recommended brokers in the industry, a testament to its innovative approach and success in reshaping the trading world.
Regulation and guarantees: Interactive Brokers vs eToro
When evaluating brokers, it is crucial to consider regulation and guarantees as essential factors. In the case of Interactive Brokers and eToro, which have garnered significant attention, it is important to understand the mechanisms in place to safeguard funds while trading on these platforms.
Regulation of Interactive Brokers
Interactive Brokers boasts the strictest regulation, having obtained approval from globally recognised agencies, including:
- The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA)
- The Financial Conduct Authority (FCA) in the United Kingdom
These regulatory bodies impose stringent requirements, making Interactive Brokers a highly secure option for traders.
Interactive Brokers guarantees | Is my money safe?
In addition to its regulatory compliance, Interactive Brokers provides clients with a guarantee fund to protect their capital. Securities accounts benefit from coverage of up to £85,000 (FSCS) in the event of bankruptcy, ensuring the safety of clients’ money.
eToro regulation
eToro adheres to various regulatory frameworks across different countries, ensuring compliance and investor protection:
- eToro (UK) Ltd. operates under the regulation of the Financial Conduct Authority (FCA) in the United Kingdom.
- eToro AUS Capital Limited, an Australian company, is authorised by the Australian Securities and Investments Commission (ASIC).
- eToro (Europe) Ltd., based in Cyprus, is regulated by the Cyprus Securities and Exchange Commission (CySEC).
eToro guarantees | Is my money safe?
eToro complies with all the regulatory guidelines as per the FCA in the UK. For example, it provides negative balance protection and all funds are held by eToro Money, a separate entity that protects investors’ capital in case of eToro’s bankruptcy.
Product offerings: Interactive Brokers vs eToro
When comparing the product and market offerings of Interactive Brokers and eToro, it’s important to consider the differences in assets and products, so you can choose the best broker for your strategy and objectives. Let’s delve deeper into their respective offerings.
Product offerings of Interactive Brokers
Interactive Brokers caters to experienced investors and traders, and their product range reflects this focus. The platform offers an extensive array of products:
- Real stocks and ETFs, including fractional shares
- Options from over 30 market centres
- Futures on over 30 market centres
- Spot forex with over 100 currencies available
- CFDs on forex, stocks, indices, and metals.
Additionally, Interactive Brokers operates in over 140 countries across five continents, offering a wide range of products suitable for diverse markets. The platform caters to experienced traders who possess in-depth knowledge of the available products, ensuring confident trading experiences.
Product offerings of eToro
eToro’s product offering is slightly more streamlined compared to Interactive Brokers.
It includes stocks, ETFs, and cryptocurrencies, and CFDs on various financial assets such as stocks, currencies, futures, indices, and commodities. eToro provides investment options across short, medium, and long-term durations, with or without leverage.
Furthermore, eToro’s standout feature is copytrading, where clients can choose to replicate the portfolios of master traders, adding an element of social interaction to the platform and the ability to trade the markets successfully but passively.
Interactive Brokers vs eToro: costs
When comparing Interactive Brokers vs eToro in terms of costs, it’s easy to notice that the two brokers are very different and cater to different audiences, as discussed in the next sections.
Interactive Brokers: commissions and fees
Interactive Brokers offers competitive and low commissions across different markets. However, its cost structure may appear quite overwhelming and confusing. Trading costs and non-trading costs differ according to markets and products, as exemplified below.
Stocks and ETFs
Interactive Brokers generally maintains low commissions for stocks and ETFs. The commissions are based on volume, where the commission per share is calculated as a percentage of the trading value, with minimum and maximum thresholds. The fees for ETFs align with those for stocks.
| Market | Commission/share | Minimum | Maximum |
| North America | |||
| United States | $0.005 | $1 | 1% |
| Canada | CAD 0.01 | CAD 1 | 0.5% |
| Mexico | 0.1% | MXN 60 | No |
| Europe | |||
| United Kingdom | 0.05% | £3 | No |
| Belgium, France, Germany, Spain, Italy, Netherlands | 0.05% | €3 | No |
| Switzerland | 0.05% | CHF 5 | No |
| Austria | 0.10% | €4 | No |
| Poland | 0.1% | PLN 15 | No |
| Norway, Sweden | 0.05% | NOK/SEK 49 | No |
| Portugal | 0.15% | €6 | No |
| Estonia, Latvia, Lithuania | 0.2% | €10 | No |
| Hungary | 0.1% | HUF 200 | No |
| Asia-Pacific | |||
| Australia | 0.08% | AUD 6 | No |
| Hong Kong | 0.08% | HKD 18 | No |
| Japan | 0.08% | JPY 80 | No |
| Singapore | 0.08% | USD 2.5 | No |
Forex
Interactive Brokers charges a volume-based commission, meaning that higher trading volumes result in lower commission rates.
| Monthly traded amount | Commission | Minimum |
| USD ≤ 1,000,000,000 | 0.20 basis points of the trade value | $2.00 |
| USD 1,000,000,001 – 2,000,000,000 | 0.15 basis points of the trade value | $1.50 |
| USD 2,000,000,001 – 5,000,000,000 | 0.10 basis points of the trade value | $1.25 |
| USD > 5,000,000,000 | 0.08 basis points of the trade value | $1.00 |
Mutual funds
Non-U.S. residents have the advantage of purchasing thousands of mutual funds outside the U.S. without transaction fees. However, most other funds have a commission of €4.95 per trade (or currency equivalent).
The fee structure is percentage-based:
| Country of the fund | Fee | Minimum | Maximum |
| US funds with no transaction fees | 0% | $0 | $0 |
| Euronext fixed pricing structure | 0.1% of the trade value | €4 | €29.00 |
| Other funds | €4.95 | N/A | N/A |
Bonds
Interactive Brokers maintains generally low bond fees, which are based on trading volume and include a minimum amount.
| Bonds | Volume | Commission | Minimum | Maximum |
| US Corporate | Nominal value ≤ $10,000 | 0.10% * nominal value | $1 | $250 or 1% of market value, whichever is lower |
| US Treasuries | Nominal value ≤ $1,000,000 | 0.002% * nominal value | $5 | No |
| United Kingdom | Market value ≤ £10,000 | 0.10% * market value | No | No |
| Hong Kong Government | Market value ≤ HKD 15,000,000 | 0.08% * market value | HKD 18 | No |
Futures
Similar to options, Interactive Brokers charges commissions based on the number of contracts traded for futures. Here are some examples:
| Futures | Commission per contract |
| United Kingdom | £1.70 |
| United States | $0.85 |
| Canada | CAD 2.40 |
| Australia | AUD 5 |
| Hong Kong | HDK 20 |
CFDs
Interactive Brokers offers low CFD trading fees:
| CFD | Monthly traded amount | Commission per share | Minimum |
| CFD on US stocks | ≤ $300,000 | $0.005 | $1.0 |
| CFD on European stocks | ≤ 10,000,000€ | 0.05% | €3.0 |
| CFD on Australian stocks | ≤ 10,000,000 AUD | 0.05% | AUD 5.0 |
| CFD on Hong Kong stocks | ≤ HKD 300,000,000 | 0.05% | HKD 12.0 |
| CFD on Japanese stocks | ≤ 9,000,000,000 | 0.03% | JPY 100.0 |
| CFD on US 500 index | – | 0.005% | $1.0 |
| CFD on UK 100 index | – | 0.005% | £1.0 |
| CFD on Japan 225 index | – | 0.01% | JPY 40.0 |
| CFD on currencies | ≤ 1,000,000,000 | 0.20 basis points * trade value | $2.0 |
Additionally, Interactive Brokers stands out for its minimal non-trading service commissions. There are no commissions for deposits, inactivity, or account maintenance. However, a small commission applies to subsequent monthly withdrawals (£10 per withdrawal, but the first one per month is free).
eToro: commissions and fees
eToro’s cost structure is significantly more straightforward. eToro charges a few types of fees:
- Conversion fee – eToro’s account can only be opened in USD, so you will have to cover a variable conversion fee when depositing or withdrawing GBP.
- Spread – variable cost built into the prices shown on the platform, as detailed below.
- Overnight fee – applicable only if you leave CFD positions open overnight.
- Withdrawal fee – there is a fee of $5 per withdrawal.
- Inactivity fee – charged after 12 months of inactivity.
eToro charges 0% commissions. However, you do need to cover the spread, which is exemplified below:
| eToro Fees | |
| Asset | Spread |
| Currencies | Starting from 1 Pip |
| Commodities | Starting from 2 Pips |
| Stock Indices | Starting from 0.75 points |
| Stocks and ETFs (CFDs) | 0.15% |
| Cryptocurrencies | 1% |
Trading platform: Interactive Brokers vs eToro
After analysing the commissions and fees, let’s focus on the platforms through which you can trade. If there is one thing that Interactive Brokers and eToro have in common, it is that both have their own platforms designed by themselves, which provides them with great value and competitive advantage.
Interactive Brokers platform
Interactive Brokers provides a feature-rich interface with a wide range of tools and resources, catering to specialised investors. The platform is available as both a web-based application and a downloadable application for PC and MAC. Notably, there are two web platforms to choose from: the Client Portal and Webtrader.
However, it’s important to note that the Interactive Brokers platform is primarily designed for professional investors and may require some time to familiarise oneself with its features and functionalities. It may not be as intuitive for novice traders.
Additionally, Interactive Brokers offers a mobile platform available for iOS and Android devices, allowing clients to trade and manage their investments on the go.
Find out more about this broker by checking our in-depth Interactive Brokers Review.
eToro platform
eToro also offers its own proprietary platform, which is known for its user-friendly and intuitive interface. The platform caters to a broader range of traders, including both novice and experienced investors and traders.
The eToro platform is web-based and can be accessed through a web browser, eliminating the need for software downloads. It provides a seamless trading experience, allowing clients to trade various financial assets such as stocks, ETFs, currencies, cryptocurrencies, and more.
eToro boasts two distinctive innovations, CopyTrader and Smart Portfolios. The CopyTrader feature enables users to replicate the portfolios of popular investors on eToro, making it particularly appealing for beginners, passive investors, and many other individuals. By exploring the profiles of these traders, users can assess their past performance on an annual and monthly basis, as the portfolios are publicly accessible.
To further assist users in their decision-making process, eToro assigns a risk score to each trader. Additionally, users can access a wealth of supplementary statistics for each profile, including the number of trades per week, average holding period, performance charts, and even detailed profiles and news comments.
It’s worth noting that the minimum investment amount for utilising this feature is $200, allowing users to tailor their investments according to their preferences and risk tolerance.
eToro’s Smart Portfolios is another innovative offering, providing users with automated investment solutions. These portfolios are intelligently designed and diversified, aiming to optimise returns based on users’ specified risk levels and investment goals.
Here are some examples:
- Theme-based Investing: Users can invest in portfolios centred around specific themes such as future payment systems, drone tech, renewable energies, and many more.
- Investing in “Star” Traders: Another option is to invest in portfolios composed of multiple standout traders on the platform.
Notably, there are no management fees or additional commissions associated with these portfolios, apart from any fees related to the assets included within each portfolio. The allocation of CFDs within a particular Smart Portfolio is clearly indicated, allowing users to verify performance, asset distribution, and access the investment strategy.
eToro’s Smart Portfolios are created using the platform’s algorithms, which leverage machine learning and data science techniques. Alternatively, external partners of eToro may also contribute to the creation of these portfolios.
While this may seem complex, the bottom line is that eToro provides a user-friendly solution that allows investors to easily access a wide range of investment opportunities across diverse assets.
Find out more about this broker by checking our in-depth eToro review.
Deposits and withdrawals of funds: Interactive Brokers vs eToro
When considering the choice between Interactive Brokers and eToro, it is essential to analyse the process of depositing and withdrawing funds. Understanding how these transactions are conducted, any associated conditions or requirements, and potential overlooked details is crucial. Let’s examine these aspects separately for each platform.
Deposits with Interactive Brokers
To deposit funds into your Interactive Brokers account, access the platform and navigate to the “fund transfer” option in the menu. From there, select your payment method and choose the desired currency.
Next, provide the necessary information to deposit the specified amount in the chosen currency. Click the “Finish” button, and the deposit will be processed within a short time. Occasionally, the processing time may vary, so patience is advised.
Withdrawal of funds from Interactive Brokers
To initiate a fund withdrawal from Interactive Brokers, access the platform and navigate to “your portfolio” and select the “withdraw” option. Choose the currency and follow the provided steps.
It’s important to note that Interactive Brokers allows free fund withdrawals only once per month. Additional withdrawals within the same month will incur a charge, as discussed above.
Deposits with eToro
Depositing funds into eToro is a straightforward process. Access the platform, click on “deposit funds,” enter the desired amount, and choose the preferred payment method. Unlike Interactive Brokers, eToro offers multiple options, including PayPal, bank transfer, Klarna, Skrill, card payments, and more.
Withdrawal of funds from eToro
To withdraw funds from eToro, access the platform and select the “withdraw funds” option. Choose the desired amount and withdrawal method, which will default to the same method used for the deposit. If necessary, change the currency, as the default option is in dollars.
Confirm the transaction and the funds will be processed for withdrawal. The average processing time is typically around two days, similar to Interactive Brokers. The minimum balance required for a withdrawal is $30.
Customer service: Interactive Brokers vs eToro
Another crucial aspect to consider when comparing Interactive Brokers and eToro is the quality of customer service. Prompt resolution of any issues is vital, so let’s explore how these brokers approach customer support.
Customer service at Interactive Brokers
Interactive Brokers provides various contact methods for customer service. The primary option is a 24-hour active phone line. Additionally, customers have the choice to reach out via email, chat, or utilise the “search in frequently asked questions” section on the platform.
Customer service at eToro
eToro facilitates customer support primarily through a live chat and the “help” option on the platform panel, which allows users to open support tickets. The response time is generally quick, ensuring timely assistance.
eToro also provides a comprehensive section dedicated to frequently asked questions, addressing common queries. However, it’s important to note that eToro does not offer a phone line for inquiries or complaints.
Conclusions | Which broker is better: Interactive Brokers vs eToro
When evaluating Interactive Brokers vs eToro, it’s important to consider that both brokers are highly reputable and offer an extensive range of financial products.
Notably, both brokers are regulated by the Financial Conduct Authority (FCA) of the United Kingdom. They also provide 24/7 customer support via different channels.
In terms of product offering, Interactive Brokers stands out with its comprehensive and professional service. While eToro focuses on stocks, ETFs, currencies, and CFDs across various assets, Interactive Brokers provides access to a wide range of assets and financial derivatives, including futures, options, currencies, stocks, ETFs, and CFDs. This makes Interactive Brokers one of the most versatile and complete brokers in the market.
However, one key distinction is eToro’s social trading feature, which allows users to copy the portfolios of successful investors and traders on the platform. This feature makes it one of the best copytrading brokers and presents an opportunity to replicate the investment strategies of others and potentially boost profits. eToro’s platform is designed with the average user in mind, emphasising user-friendly technology.
Regarding costs, eToro offers a more competitive pricing structure, positioning itself as one of the best brokers for beginners and one of the best commission-free brokers. While Interactive Brokers operates on a percentage-based system with maximum and minimum thresholds, eToro provides free investments in ETFs and stocks and offers affordable pricing for CFDs.
Lastly, the user experience and platform usability differ based on the investor’s or trader’s profile. Interactive Brokers caters more towards advanced individuals who deal with larger monetary volumes, which may also benefit from the best brokers for intraday trading or the best brokers to trade CFDs.
Meanwhile, eToro focuses on small investors, offering an affordable, intuitive, and user-friendly platform, and it also offers cryptocurrency. If you reside in the UK, the crypto offering is extremely limited, as outlined in the best crypto brokers article.
In conclusion, Interactive Brokers targets investors and traders with substantial experience and high trade volumes, while eToro serves as a versatile market maker broker primarily aimed at small investors with limited knowledge. Both brokers enable the development of diversified investment portfolios across various assets.
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Summary of the comparative analysis of Interactive Brokers vs eToro
| Aspects to compare | Interactive Brokers | eToro |
| Regulator | CySEC FCA | CySEC FCA ASIC |
| Financial assets | Stocks and ETFs Currency pairs Futures Bonds Options CFDs | Stocks and ETFs Currency pairs Indices Ready-made protfolios CFDs Cryptocurrencies |
| Commissions | Variable, based on trading volume | 0% |
| Customer service | Phone, mail, chat, website form | Live chat, ticket support |
| Platform | All platforms supported | Browser-based, mobile phone |
| Strengths | ✅Access to countless assets ✅24/7 customer service ✅Platform for professional traders | ✅Social trading (Copytrading). ✅0% commissions ✅Real assets & CFDs, cryptocurrency |
| Weaknesses | ❌Not very intuitive | ❌Base currency is USD only ❌Minimum bank transfer of $500 ($50 via other methods) |
| Investor/Trader profile | Recommended for experienced traders/investors | Recommended for beginners Experts can join the social trading programme for extra income |
Interactive Brokers vs eToro: FAQ
Is eToro a regulated broker?
Yes, eToro is a regulated broker. It operates under multiple regulatory bodies, including the FCA in the UK.
Can I trade cryptocurrencies on Interactive Brokers?
No, Interactive Brokers does not offer cryptocurrency to UK residents. If you want to buy and sell crypto, you may want to consider eToro instead.
What is the minimum deposit required to open an account with Interactive Brokers?
Interactive Brokers has different minimum deposit requirements depending on the type of account you wish to open. For individual or joint accounts, the minimum deposit is $0, meaning there is no specific minimum requirement. However, to trade on margin or access certain features, a minimum deposit of $2,000 is typically required.
