Broker to Trading

The question 'eToro vs Forex' is an an interesting one as may point to conceptions about Forex trading and eToro. To answer this question, this page will examine what is Forex and what is eToro.

What is Forex ?

Forex is Foreign Exchange and Forex in this contect refers to trading Forex. The way one trades Forex is to trade pairs of currency, which represent the exchange of one currency for another. Hence EUR/USD is the value of the US dollar in the Euro currency. Forex values are based on Interbank rates, this is the foundation, however the value quoted at a broker can differ from this. The difference between the buy and sell price of the Forex pair is the bid/ask spread, and this is a headline figure used to show how tight spreads are. Forex pair values fluctuate, for a wide range of reasons, as the underlying currencies strengthen or weaken.

As Forex pair values are based on currencies, the trader can analyse currencies using fundamental analysis, for example economic strength or weakness of the currencies countries. However Forex values are a function of their value in the Forex market, and traders use this as a foundation for analysis. Thus fundamental analysis can be focused on the effect of an economic data release on the value of a Forex pair in the market. Technical analysis looks solely at the chart, and uses a variety of means to analyse chart movement, i.e. on changes in value of Forex pairs.

The trader trades based on assumptions, typically using analysis about the change in value of a Forex pair in the Foreign Exchange Market. The trader will find that Forex is a complex market and it can be extremely hard to get a trade to work put. Forex pairs move in complex ways tracing out patterns on a chart. These patterns are themselves the basis for much technical analysis.

Are there other ways to try and deal with the complexity of this market ? Brokers and other participants, who provide a platform to trade Forex pairs, offer and have developed a range of tools. These include technical indicators, news feeds, graphical objects and for analysis based on chart price types, representation of value movement such as candlestick charts.

The trading process can be a solitary one for the trader, thus some brokers have tools on their platform which lets the trader connect with other traders, to discuss the market, or to see what traders are doing. This is known as social trading. Some brokers let the trader follow the trades of other traders. This is a kind of trading automation, known as copy trading. The trader can let social trading information be part of their analysis and can copy trade to the extent they wish. If they want they can trade without using social or copy trading. However beginner traders may find social treading at least to be helpful as they navigate through this complex market.

What is eToro ?

eToro is a broker. It offers a range of markets to trade which are available along with trading tools on its online trading platform. Thus the trader signs up to eToro, deposits the minimum deposit ($200) and trades markets. eToro lets the trader switch between a demo and live account from the trading platform, thus the trader can practice trading whenever they wish. These markets include Forex.

eToro's platform is a user friendly platform, it is straightforward to use and has a clear design. It offers a range of the usual tools for analysis including technical indicators and chart price types. Thus the trader can trade Forex at eToro. However eToro has social trading and copy trading on its platform. Thus the trader may use social trading information when making Forex trades or can let the trades of other traders be copied into their trading account. eToro offers 45+ Forex pairs to trade.

eToro vs Forex

So a trader can trade Forex at eToro and in this respect is like any other broker offering Forex pairs to trade. However the trader can additionally use social trading information and copy trading, both of which are available on the platform. Other brokers may offer this functionality on their platform or may offer a third party platform with social and copy trading, that is to say not including it directly in the trading platform.