eToro Indices

Written by Mike Druttman

Fact checked by Nick Zelver

Updated Mar, 2024

High-profile benchmark indices like the Dow Jones, S&P 500, and NASDAQ 100 rank among the most actively traded in the world, and eToro's platform offers you the opportunity to trade on these indices. Your investment decisions can hinge on whether you predict an increase or decrease in their prices. Adding these indices to your portfolio is a smart way to achieve diversification.

eToro simplifies trading in these indices, enabling you to place Buy or Sell orders with ease. The platform also provides the unique benefit of observing and copying the strategies of experienced traders, all within an easy-to-use interface.

In this guide, I'll offer a detailed overview of the indices available for investment with this broker and demonstrate how to effectively engage in these markets. Drawing from my personal experiences and strategies on the platform, you'll gain insights into the nuances of indices trading and understand why investing in this asset class can be a prudent financial decision.

Reminder: You are Investing in Index CFDs

When you engage in indices trading on eToro, it's crucial to recognize that you are trading index derivatives, specifically Contracts for Difference (CFDs), rather than the actual indices themselves.

A CFD is an advanced financial instrument enabling you to speculate on the price movements of an underlying asset, such as the S&P 500, Dow Jones, or DAX, without owning the asset. Trading an index on eToro means you're entering into a CFD contract. Your profit or loss is determined by the difference in the price of the CFD at the time you open and close the contract.

One major advantage of CFD trading is the opportunity to benefit from price movements of assets without the complexities and costs associated with direct trading of stock indices. However, it's important to be aware of the risks involved in CFD trading, which can include significant losses, potentially encompassing your entire investment. As such, implementing risk management strategies, such as stop-loss orders, is essential to help mitigate these risks.

Indices Available for Investment

Listed below are the available indicies that you can trade on this investment platform:

Key Insights from My Index Trading Experience

My foray into index trading on eToro's platform has yielded several important insights:

• Minimum Investment Size: The minimum trade for an index order is $1000. This figure may include leverage. For instance, with an initial $100, you might need to apply a x10 leverage to reach the $1000 minimum.
• Use of Leverage: The platform supported leveraged trading, but the level of leverage available varies depending on your location and account type. For clients of eToro (Europe) Ltd, eToro (UK) Ltd, and eToro AUS Capital Limited, leverage can extend up to x20 for major indices and up to x10 for non-major equity indices. For eToro (Seychelles) Ltd clients, leverage can go up to x100 for major indices and x10 for non-major indices.
• You Can Copy Other Index Traders: The CopyTrader feature allows you to emulate the trades of seasoned index traders. This involves reviewing trader profiles, evaluating their performance, and deciding to copy their trades based on your risk and return preferences.
• 3rd-Party Automated Systems Not Accepted: They do not support third-party automated trading systems for indices or even other asset classes. However, I've found their risk management tools, like stop-loss and take-profit orders, to be very effective. The CopyTrader feature also offers a good alternative to automated systems.
• Risk Management Tools are Available: It's crucial to use stop-loss and take-profit orders for risk management. Setting these orders is simple: open an index trade, select "Set Order," and specify your desired stop-loss and take-profit levels. These orders will automatically execute when prices hit your set levels.
• US Residents Not Allowed: It's important to note that eToro does not provide indices trading for residents of the USA due to regulatory restrictions.
• Islamic Trading Accounts: This broker also offers Islamic trading accounts, or swap-free accounts, which cater to clients following Islamic finance principles. These accounts do not incur or pay interest on overnight positions, aligning with Islamic financial rules. However, traders should ensure that the indices they trade are compliant with Islamic principles.

Process of Trading an Index on the Platform

Participating in indices trading on eToro is a straightforward and efficient process. To start, use the search bar to locate your desired index (e.g. "DOW", "SP500"). Once you find it, you can enter your investment amount and configure the trade parameters. The final action is to click the "Open Trade" button, which will execute your transaction.

But before you begin, it's important to ensure that your account is verified and has sufficient funds for indices trading. Additionally, be aware that your position in an index will remain open until one of the following occurs:

1. You choose to close it manually.
2. It is automatically closed by a stop-loss or take-profit order.
3. The contract reaches its expiration date.

Making Use of the Live Rates & Charts

The trading platform provides real-time data, news updates, and live price charts, which are invaluable tools for traders of all experience levels. These resources are especially useful for analyzing historical and current price movements.

📈 Checking the accuracy of live charts

In my extensive review of the platform's live index rates and charts, I found them to be highly accurate and timely. To confirm this, I compared eToro's data with figures from trusted market data sources like MarketWatch and Wall Street Journal (WSJ). The index prices on eToro's platform were consistently in line with these sources. However, I did notice very slight delays in price updates on some occasions.

Honing Your Skills with the Demo Account

For those new to indices trading, I strongly suggest beginning with the demo account. When you register, you'll have access to this account, which comes preloaded with virtual funds. This feature enables you to practice trading various indices, including the Dow Jones, DAX, CAC 40, and others on eToro, in a completely risk-free environment.

Endnotes

This brings us to the end of our journey through indices trading on eToro. Considering the potential for significant returns, it's imperative to make informed decisions and effectively utilize the tools and strategies I've discussed in this guide. I hope that this has enriched your understanding and that my personal experiences have provided useful insights for successfully navigating indices trading with this broker.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

This communication is intended for information and educational purposes only and should not be considered investment advice or investment recommendation. Past performance is not an indication of future results.

Copy Trading does not amount to investment advice.  The value of your investments may go up or down.  Your capital is at risk.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.

Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which hasbeen prepared by our partner utilizing publicly available non-entity specific information about eToro.