What do I purchase when I buy stocks on eToro?
Some of the stocks on the eToro platform are traded as real assets, while others use CFDs:
- Underlying asset
When you open a non-leveraged BUY (long) position on a stock, you are investing in the underlying asset*, and the stock is purchased in your name. This also applies to fractional shares: for example, on eToro, you can invest as little as $50 to purchase part of a share whose price per unit is $1,000.
When you invest in the underlying asset, you will pay zero commission — no markup, no ticket fee, no management fee.
* All trades on the Saudi Arabia stock exchange are executed as CFDs. For clients residing in Finland, positions on stocks traded on the Helsinki exchange are executed as CFDs due to local regulatory restrictions.
- CFD stocks
eToro also offers additional functions using CFD trading. With CFDs, you can open SELL (short) positions and use leverage. Keep in mind that if you hold a CFD stock position, you do not actually own the stock. Any CFD trade will be marked 'CFD' in the trade line.
The eToro investment platform is not an exchange or a market. This means that you can BUY or SELL stocks within the eToro investment platform, but it is not possible to move open positions out of your eToro account to another broker or to another person. You can, however, close positions and withdraw your funds should you choose to. If you open a stock position on the eToro investment platform, eToro will hold the stocks on your behalf in a segregated omnibus account. Should the company issue dividends, your balance will be updated in accordance with your holdings. Currently, eToro clients can use the allocated voting rights only for US stocks.