eToro vs Freetrade

Should you choose eToro or Freetrade for your trading and investments?

Both platforms are considered amongst the best low-cost trading platforms for their features and user-friendly interfaces, but how do they compare?

In this comprehensive comparison, we will delve into the pros and cons, key differences, fee structures, trading platforms, customer service, and regulation and security of both eToro and Freetrade to help you decide on which platform is better suited for your investing journey.

eToro vs Freetrade: Pros and Cons

eToro vs Freetrade: Key Differences

1. Asset Range: eToro offers a wider range of assets, including stocks, ETFs, cryptocurrencies, commodities, indices, and forex. Freetrade, on the other hand, primarily focuses on stocks and ETFs, with a more limited selection of investment options.
2. Social Trading: eToro is known for its social trading features, allowing users to follow, copy, and interact with other traders on the platform. This community-driven approach can be beneficial for beginners looking to learn from experienced traders. Freetrade does not have social trading features.
3. Fee Structure: eToro’s fee structure is more complex and can be higher compared to Freetrade. eToro charges various fees, including withdrawal, overnight, and currency conversion fees. Freetrade, in contrast, offers a simpler, more transparent fee structure, with no commission on basic trades and no withdrawal fees (except for international withdrawals).
4. Trading Platform: eToro provides both a web-based trading platform and a mobile app, while Freetrade operates exclusively as a mobile app. This difference may be significant for users who prefer to trade on a desktop or laptop.
5. Demo Account: eToro offers a free demo account with $100,000 in virtual funds for users to practice and test their strategies. Freetrade does not provide a demo account.
6. Customer Support: Freetrade offers more customer support options, including email and in-app chat. eToro’s customer support is more limited, with no phone support available.
7. Tax-Efficient Accounts: Freetrade caters to UK investors by offering tax-efficient accounts like the Individual Savings Account (ISA) and the Self-Invested Personal Pension (SIPP). eToro does not offer these tax-efficient accounts for UK users.
8. Account Minimums: eToro requires a minimum deposit of $200 (or equivalent) to open an account, while Freetrade does not require a minimum account balance.

These key differences highlight the unique aspects of each platform and can help you determine which one is better suited for your investment goals and preferences.

eToro vs Freetrade Fees and Commissions

Freetrade is more affordable than eToro, based on our analysis, despite a recent hike in their subscription rates

Freetrade offers commission-free trading with a tiered subscription model. If you want access to the full range of stocks and a Stocks & Shares ISA, you’ll need to subscribe to the £4.99 per month plan, which amounts to nearly £60 per year. However, Freetrade’s foreign exchange fee of 0.45% is slightly lower than eToro’s 0.5% currency conversion fee. Crucially – unlike eToro – Freetrade does also not require you to complete every trade in USD as the default currency and then exchange it every time, which is a cost saving.

Freetrade has no withdrawal fee and no minimum deposit. If you’re specifically interested in trading pound-listed ETFs, Freetrade also emerges as a better option due to its commission-free structure for these assets.

While eToro claims to provide a completely free account, the platform makes money through currency conversion fees and spread fees for CFD trading. Additionally, eToro has a $5 withdrawal fee, minimum deposit requirement, inactivity fees, and ‘overnight’ and ‘weekend’ fees on open CFD positions.

eToro Fees:

1. Trading fees: eToro is mostly commission-free for stocks and ETFs, but they make money through spreads, which is the difference between a financial instrument’s bid and ask price.
2. Overnight fees: eToro charges overnight fees (also known as swap fees) for leveraged positions and short-selling. These fees vary depending on the instrument and the leverage used.
3. Currency conversion fees: eToro charges a currency conversion fee for non-USD deposits and withdrawals, ranging from 50 to 250 pips, depending on the currency pair.
4. Withdrawal fees: eToro charges a flat fee of $5 for each withdrawal; the minimum withdrawal amount is $30.
5. Inactivity fee: eToro charges a $10 per month inactivity fee after 12 months of no trading activity.

Freetrade Fees:

1. Trading fees: Freetrade offers commission-free trading for basic trades (instant trades have a fee of £1). They make money through their premium subscriptions. Standard costs £4.99 per month, while a Freetrade Plus subscription costs £9.99 per month.
2. FX fees: For non-GBP stocks, Freetrade charges a 0.45% foreign exchange fee on the trade value.
3. ISA account fee: To use an ISA, you must be on at least the Standard plan for £4.99 per month.
4. SIPP account fee: Freetrade charges a monthly fee of £9.99 for a SIPP account.
5. Withdrawal fees: Freetrade does not charge withdrawal fees for domestic transactions. However, international withdrawals

eToro vs Freetrade Trading Platforms and Apps

Its lack of a web-based platform lets down Freetrade: App-only. However, it is a very well-designed trading APP, simple and user-friendly.

eToro – as you would expect from such a significant platform – has a range of well-designed trading APPS and a web-based platform.

eToro Trading Platforms:

1. Web-based platform: eToro offers a comprehensive, user-friendly web-based trading platform that allows users to access various assets, perform research, and execute trades with ease. The web platform also features social trading tools, such as CopyTrader and CopyPortfolios, enabling users to follow and copy the trades of successful investors.
2. Mobile app: eToro’s mobile app is available for both Android and iOS devices. The app is designed to provide a seamless trading experience, featuring most of the functionalities found on the web-based platform. Users can monitor their portfolios, access social trading tools, and execute trades on the go.

Freetrade Trading Platforms:

1. Mobile app: Freetrade is a mobile-first platform operating exclusively as a mobile app, available for Android and iOS devices. The app is designed with simplicity in mind, offering an intuitive and user-friendly interface that caters to beginners and experienced investors alike. The app allows users to trade stocks and ETFs, manage portfolios, and acessentialbasic research tools.

Freetrade does not offer a web-based trading platform, which may be a limitation for users who prefer trading on a desktop or laptop. Conversely, eToro provides both a web-based platform and a mobile app, catering to users’ preferences and offering more flexibility regarding access and trading experience.

eToro vs Freetrade Customer Service

eToro Customer Service:

1. Help Center: eToro has an extensive Help Center with many articles and FAQs addressing common questions and issues that users may encounter.
2. Email and ticket system: Users can submit a support ticket through the eToro platform and email eToro’s customer support team. Response times may vary, but users generally receive a response within 1-3 business days.
3. Live chat: eToro offers a live chat function only toToro Club members
4. Social media: eToro maintains a presence on various social media platforms, where users can find updates and additional support.

eToro does not offer phone support, which may be a drawback for users who prefer to speak directly with a customer service representative.

Freetrade Customer Service:

1. Help Center: Freetrade provides a comprehensive Help Center with articles and FAQs addressing various topics related to the platform, trading, and investing.
2. Email support: Users can email Freetrade’s customer support team for assistance with questions or issues.
3. In-app chat: Freetrade offers an in-app chat function, allowing users to communicate directly with the support team through the mobile app. This feature is handy for urgent queries and troubleshooting issues.
4. Social media: Freetrade is active on various social media platforms, providing updates and engaging with users.

eToro vs Freetrade Regulation and Security

eToro Regulation and Security:

1. Regulation: eToro is regulated by multiple financial authorities worldwide, including the Cyprus Securities and Exchange Commission (CySEC), the Financial Conduct Authority (FCA) in the UK, and the Australian Securities and Investments Commission (ASIC). These regulatory bodies ensure that eToro operates within the guidelines set to protect investors.
2. Account protection: eToro uses Secure Socket Layer (SSL) technology to encrypt data and protect users’ personal and financial information. The platform also has two-factor authentication (2FA) available for users, adding an extra layer of security.
3. Investor protection: eToro clients in the UK and Europe benefit from investor protection schemes, such as the Financial Services Compensation Scheme (FSCS) in the UK and the Investor Compensation Fund (ICF) in Cyprus provide compensation in case the broker becomes insolvent.

Freetrade Regulation and Security:

1. Regulation: Freetrade is authorized and regulated by the UK’s Financial Conduct Authority (FCA). As a UK-based platform, Freetrade adheres to the strict regulatory standards set by the FCA, ensuring the platform operates in a compliant and secure manner.
2. Account protection: Freetrade employs bank-grade encryption to protect users’ personal and financial data. The mobile app also offers biometric authentication, such as fingerprint and facial recognition, to provide an additional layer of security.
3. Investor protection: Freetrade clients in the UK are covered by the Financial Services Compensation Scheme (FSCS), which compensates up to £85,000 per eligible case if the broker becomes insolvent.