For those looking to trade US and international stock markets from the Philippines, those looking to join the action in Bitcoin, in Gold or Oil trading, consider eToro. I opened my eToro account in 2018 as I wanted to diversify, explore international markets (especially US), and sharpen my skills further when it comes to stocks trading. So far so good in terms of experience. It’s like a new world of countless investment and trading opportunities opened up for me.
Back then, I wasn’t too actively trading as most markets I like (e.g. US market) open at 9:30pm and my bedtime is 10pm. LOL. But with the Covid-19 global pandemic, stock markets all over the world tanked and fell down, as expectations on economy, global trade, global consumption and demand, employment rates etc. suddenly looked grim and negative. In stock market parlance, quality companies suddenly became bargains. For some, I agree, bargains, but not all! It was during this time that I became more active in using eToro simply because there is much more excitement (and volatility) in international markets (sorry Philippine stock market, but I still love to trade you), much more choices, much more participants hence much more volume and movement. Caveat emptor.
Why Trade Foreign Markets?
As mentioned above, for me it’s diversification and self-improvement. There’s countless opportunities out there, thousands of quality companies. Imagine, given the Covid-19, our local market is falling and all we can do is wait for the bottom or trade the bounces, or trade the handful of names that will still profit despite the ECQ. But in foreign markets, money never sleeps!
- Perhaps you’ve heard that tech stocks FAANG (Facebook, Amazon, Apple, Netflix, and Google) – have staged strong recoveries early on despite the pandemic still worsening. Do we have the same options locally? Is Xurpas PSE: X considered a tech stock? Or perhaps PSE: TECH LOL.
- There’s also speculation in various REAL pharma stocks (Glaxo, Astra Zenica, Gilead Sciences, Pfizer, etc) as to who will be able to provide the world with the much needed vaccine against Covid-19 (while here we we’re playing with PSE: EURO and PSE: MED tsk tsk, they’re not even real pharma stocks).
- Beyond Meat (BYND) flew to highs as more people appreciated “meat” and “protein sources” made from plants.
- Zoom (ZM) stock went zoom as the majority of us used it for online meetings, despite the initial security concerns.
- PayPal also went up as mobile payments became more of the norm as we practiced social distancing and contactless payments (locally we have GCash and PayMaya mobile wallets but the closest stock market exposure you can get for these is via PSE: GLO and PSE: TEL)
- Of course there’s oil stocks (Aramco, BP.L, Shell, etc. and Oil commodity itself) and the monitored recovery as oil is still a barometer when it comes to global trade and global economic activity (while here we only have PSE: PCOR, SHLPH, PNX).
- Airline stocks fell down (though they bounced the last 2 days), there’s United Airlines, American Airlines, even Boeing (vs our CEB and PAL)
- Bitcoin had it’s 2020 halving and did not seem to care much about Covid-19. It raced up to 10K but went down again recently. There are a lot of ther cryptocurrencies tradeable internationally.
- There’s also Alibaba, Tencent, Samsung, giant companies from Asia.
- Plus the Pinoy household names like Coke, P&G, Unilever, Starbucks, Johnsons & Johnsons, Nike, Disney, Nestle, Citibank
- Other interesting plays: NVIDIA for gaming, microchips and processors and I heard they are also into hospital equipment, Intel, Buffet’s Berkshire Hathaways, Tesla for electric vehicles, Snapchat, Twitter
- For the liberal-minded, you can also trade cannabis (marijuana) stocks!
You get my point. There’s a diverse menu of companies out there compared to the limited choices here locally. Likewise, for the past months, foreign funds have been unloading our local stocks and without them, there’s only so much that local funds can do in terms of pushing our stock market higher. Where do foreign funds go then? The safe bet is that they’re going back home to the 1st world countries such as the US.
Admittedly, I had an easier time trading the US market than ours. It seems the US market is more predictable, it respects whatever the indicators say most of the time, I don’t know why, maybe because it’s more robust and liquid, and transaction volume is really big. Unlike here locally, where when one big fund unloads, the trend and indicators get thrown out the window, given our small size, big funds affect the prices so much. That or other names are just very illiquid. Just my personal opinion though.
eToro Features We Like
Of course this is biased since I haven’t tried other trading platfoms for foreign markets. And so far, I have no intention of exploring other platforms (though for local trading, I already moved out from ColFinancial, another kwento for another day). I am not saying other platforms / apps don’t have the following features, you’re free to explore and shop, but for me, for now, I’m good with eToro. Here are the eToro features I like:
Buffet Menu and Watchlist
Again, access to so much more stocks and companies all over the world (above listing is just the tip of the iceberg)! Users can create multiple watchlists to segregate different names being monitored.
Crypto and Forex
They say it’s also good to learn ForEx because you can trade the two sides depending on who’s winning. Right now USD is getting weaker than PHP as our OFWs encash more PHP and there are less OFWs out there in other countries, more inside the country (so they need PHP to spend here, they sell the USD) so you side with PHP. Once we have more need of USD (e.g. BPOs and OFWs going out again), then you go long for USD. You can see this dynamic for other forex pairings.
If short-selling is done right, you’re able to profit from your investment even if the price goes down (assuming you bet from the onset that the name will go down). Of course this is easier said than done, but at least, here it’s doable compared to our local market where short-selling remains a dream, a future state.
You can get a boost of up to 5x, 10x of your traded amount. Caveat emptor. This is very risky, I seldom use it myself. But if done correctly, very powerful in growing one’s portfolio exponentially. Of course it can also wipe out one’s portfolio in a very short time. Simply put, leverage means if you trade $100, at 5x leverage, you’ll be able to buy $500 worth, and the movement will be magnified with such multiplier as well. So the small gains in a $100 trade becomes 5x more, but so are the losses if ever. There are fees of course if you keep your position overnight or over the weekend. Again, caveat emptor.
Stop-Losses and Trailing-Stops
This is important to me as I want to keep my risks managed, and this is also lacking in the major and more popular online trading accounts in the country. With this, I can sleep soundly at night knowing that when I wake up, I either gained some $$$ or lost some but within my stop-losses.
This one is cool, a cheat-sheet of sorts. You can search other traders all over the world and copy their trades with just a few taps on your mobile phone. You can also review their historical performance. Should you decide to “copy” them, eToro will replicate whatever is in their portfolio based on percentage distribution and apply that same distribution to the amount you intend to trade.
Changes to the copied portfolio will reflect in your portfolio as well, new positions, closed trades, etc. So their gains (and losses) moving forward will be your gains (and losses) too.
Another cool thing is that they won’t show you how much money the Copied traders are trading, just the percent distribution and gains / losses so at least there’s a level of privacy for the copied trader. The copied trader earns a certain percentage based on how much copiers have put in to copy them (not taken from your account, eToro pays them) — so to aspiring traders who will become legends one day, this can be another source of income for you. For me this is a big plus, and locally, I personally would want to see what the gurus are buying and trading, and decide for myself whether I want to copy them or not, without divulging how much these gurus are risking, losing or gaining (in terms of actual amount). And of course, another long term goal is to be a Copied trader too.
There’s also CopyPortfolio (like buying an index or basket of stocks ala UITF / mutual fund) but I haven’t tried this yet.
See what other users have to say about a particular stock or commodity or crypto. This is like the stocks forum of old. Just post anything and tag the stocks or names you like. If you like reading what other people’s thoughts are, if you like to be hyped or do the hyping, you can do it here. You can also follow other traders to see their posts and trades.
Ease of Account Opening & User Interface
The app is designed to be used via mobile phone so the interface is very mobile-friendly, Juan can buy and sell with a few taps on the screen. I wish local trading apps are like this. You can do your trading on the go, while lying in bed before going to sleep, or while doing #2. Account opening is also easy, just fill up the forms and need to take pics of some identification documents.
Ease of Funding
I only put a manageable amount in my eToro trading account because even though I trust them enough, they’re still a foreign company which means in case I need to chase them, they’re not locally available and the communication will be purely online. But so far, I haven’t had the need to chase them for any complaints.
Account can be funded via local online banking (DragonPay will link to your local online banking), credit card payment, PayPal. There are other ways but I’m not familiar with them. I only used the first three and crediting is fast. Note, I haven’t tried withdrawing any amount.
It goes without saying that there will be forex differentials and slippage, since we have PHP and the main curreny used in eToro is USD, there will be exchange rate considerations.
Minimum Amount to Trade
Mostly for stocks, $50 to $100 is enough to open a position (that’s just P5,000) but in the Philippines, they say trade a minimum P8,000 to maximize the fees and charges. eToro does not charge commissions, instead they use spreads if you trade with them as they are a CFD broker. Juan can also order (meaning own the underlying asset) but this will typically have a minimum trade amount of $1000.
Though this is a limited offer (first 10 only), it’s still a good-to-have, especially for us here in the Philippines, the freebie is already attractive enough. Imagine that’s $500 of additional buying power.
If you get to invite your friends to sign-up, you and your friend will get USD50 in your respective trading accounts, provided that your friend funds his/her own account and starts trading. Once you open your own account and fund it, eToro will send you your own referral link. For now, you may use my referral link to explore more of eToro, no commitments involved, no one will force you to open an account or fund it.
Some Things We Don’t Like Much
Wow so many things I like, I’m really biased. Again, this is not a solicitation for your to open an account with eToro (or any online platform for that matter). Just sharing my experiences with them.
Spreads & Fees
We like free but there’s no such thing as free lunch. Admit it, every one doesn’t like fees and charges or commissions but it cannot be avoided. eToro in general does not have commissions and management fees. Instead they use spreads. Though we don’t like it, that’s the way it is. At the end of the day, they are a business and they need to earn. The typical spread is 0.09% (as of this writing) which means if you buy a stock via CFD, you buy it at 0.09% higher than market prices because that extra amount is your payment to eToro. So upon opening a trade, you’re down by 0.09%. Same banana actually, just like how commissions work locally, you incur costs during buying and selling. If you buy the stock itself though (higher minimum trade amount), there are no extra costs and spreads.
Again, you are more than welcome to shop for other platforms with lower spreads (if there is), I’m just sharing with you my eToro experience since this is the broker I’m using now. Also don’t forget there are fees should you use leverage.
Mind you there’s also inactivity fee of $10 after 12 months of no login so make sure you are active enough. Don’t be ningas kugon, follow through!
Right now, the withdrawal fee is $5. Again, I haven’t tried withdrawing so nothing much I can say here.
Minimum Amount to Trade
Yes I mentioned this in my likes, but for commodities (oil, gold) and forex, they require a higher minimum amount. If you won’t trade the CFD of the stock and want to purchase the stock itself, minimum trade amount is higher too, something like $1000 per transaction. I guess you can’t have it all.
The in-app charts are decent enough to add a few indicators but can’t be customized enough and if you’re the type who uses exotic indicators, you’ll need to do your charting outside the app (this is common with local stock brokers too, very bare charting tools). And frankly, I never liked doing charting via phone that’s why I rarely see mobile phone charting tools that meet my expectations, but if you’re on the go, or lying in bed before you sleep, I guess the charts will do. Personally, I use Investagrams to do my charting (yes you can access charts of some international names via investagrams). I’m sure there are other charting tools out there.
Likewise, the stocks chart settings reset if you suddenly view a line chart. For example, I set my charts for stocks in candlesticks with RSI and MACD. Then I decide to view the historical performance of a CopyTrader I’m following. The historical performance is only available in line chart format – so I see a line chart. But when I go back to stocks charts, the previous settings, candlesticks and all, have all reverted back to line charts.
Limited Stop-Loss and Trailing-Stops
I mentioned that eToro has stop-loss and trail-stops which is good. But they have a limit on the minimum loss amount you can tolerate. Sometimes, if I’m feeling a bit more conservative or I feel that the trade is very volatile, I’d like to keep a very tight stop loss (e.g. lose maximum $5) but eToro has a built in minimum stop loss (e.g. minimum stop loss should be $10 or higher) which means I’m forced to increase my stop-loss threshold.
I think this is because it’s very costly and heavy in server space if there’s so much customization going on for all the users all over the world, and they decided to limit the customization for this feature. Just my hunch. I guess it’s better than having no stop loss at all.
That’s it for now. I guess the next best thing is for you to explore eToro on your own and see for yourself if this is the platform that will allow you to trade US stocks, plus a whole lot more.
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