eToro vs Hotforex

eToro or Hotforex?

A wide range of instruments or access to MT4?

• Written by Marcus Taylor
• Founder & CEO

If you’re a trader looking for a broker that offers a wide variety of instruments to trade, eToro is likely the better option out of these brokers. However, if you want a broker that offers MetaTrader4 as a trading platform, Hotforex may be more suitable.

Which broker is more reliable?

You can determine a broker’s reliability & trustworthiness by looking at eight factors:

• Who are they regulated by?
• How long have they been around for?
• Do they hold your money in a separate bank account?
• Do they use reputable “tier-1” banks like Barclays, Goldman Sachs or HSBC?
• Have they been fined or penalised in the last five years?
• The popularity of their service/website
• Are they publicly listed?
• Where are they located?

Based on these eight factors, we consider eToro to be the more reliable broker. We’ve broken down why below:

Who are they regulated by?

eToro is regulated by Financial Conduct Authority, CySEC, ASIC, while Hotforex is regulated by CySEC.

XTB are also regulated by the Financial Conduct Authority.

How long have they been around for?

If a broker has been around for a long period of time, they’re likely to be more reliable (in comparison, most scam brokers only exist for several years before they disappear).

This also suggests that a broker has good risk management processes that have prevented them being caught out by major financial events, as was the case with Alpari UK going bust when they were there was a policy reversal of capping the Swiss Franc against the Euro.

eToro has been around for 15 years, while Hotforex have been around for 11 years. Our third alternative broker, XTB, have been around for 19 years.

Do they hold your money in a separate bank account?

You wouldn’t want your broker paying their staff out of the same bank account account that you’re depositing your trading funds into, would you?

Fortunately, all regulated brokers must use segregated bank accounts to hold client money. This is one of the reasons why we only feature regulated brokers here on BrokerNotes.

All three brokers above will hold your money in a separate bank account.

Do they use reputable “tier-1” banks like Barclays, Goldman Sachs or HSBC?

Most tier-1 banks like Barclays and HSBC have been around for over 100 years and manage trillions of dollars of assets, proving that they have stood the test of time.

Both eToro and Hotforex use tier one banks, but we are not sure of which bank specifically.

Have they been fined or penalised in the last five years?

If a broker has been penalised by a regulator in the past five years, it may mean that they were caught doing something they shouldn’t be doing - which may be of concern to you as an end client.

We’re not aware of any penalties or fines imposed by regulators on eToro or Hotforex in the past five years.

How popular is their service/website?

While not always the case, the number of traders a broker has can be a good metric for understanding how reputable a brokers is.

eToro is more popular with over 6,000,000 traders.

Are they publicly listed?

Companies that are publicly listed on a stock exchange tend to be considered more reputable as they will be required to disclose their financials, and aspects of their operations, to the public.

Both eToro and Hotforex are privately owned companies.

Where are they located?

Most reputable brokers tend to be headquartered in a major capital city or a financial hub such as Cyprus.

Both eToro and Hotforex are based in Limassol, Cyprus .

Do they offer the features you need?

Assuming the brokers you’re choosing between are reputable, the next point to consider is whether they offer all of the features you require to trade.

This can be broken down into three categories:

• Services & instruments
• Platforms & account types
• Trading features, risk management tools & funding methods

Services and Instruments

If you’re looking to trade currency pairs, both eToro and Hotforex offer forex trading. eToro have a slightly larger variety of currency pairs with 47 pairs, compared to offered by Hotforex. Also, if you’re looking to trade cryptocurrencies, eToro offers a handful of cryptocurrency CFDs to trade, including Bitcoin, Ethereum and Ripple.

If you’re looking to trade commodities like gold, silver or oil, eToro may be a better fit as Hotforex does not offer commodity trading.

eToro also offer social trading, which allows you to follow the trading activity, engage in discussion, and even copy the trades of other traders.

Platforms & Account Types

eToro also offer social trading, which allows you to follow the trading activity, engage in discussion, and even copy the trades of other traders.

In addition to the platform, you’ll also want to ensure that the broker you choose offers the account type best suited to your needs. eToro, for example, offer a mini account, standard account and VIP account.

Trading features, risk management tools & funding methods

If you have a certain trading style (e.g. scalping, hedging, or using EAs), you’ll want to double check that the broker you choose allows this, as not all of them do.

While Hotforex also allows scalping and hedging. You can't trade with EAs (expert advisors) on eToro but you can trade EAs (expert advisors) with Hotforex.

In terms of risk management tools, eToro doesn't offer negative balance protection, but Hotforex does. Negative balance protection prevents you owing your broker more than you’ve deposited.

eToro also offer stop losses, limit orders, and price alerts to help you automate aspects of your trading strategy.

eToro accept Paypal while Hotforex accept Neteller.

Are they affordable for what you need?

Comparing the fee structures of different brokers can be a minefield at times. The important thing to consider is what the spreads & fees are on the specific instruments and account type that you will be using.

For trading EUR/USD, eToro charges 3.00 points, while Hotforex charges 0.10 points. Therefore, Hotforex is the more affordable for this instrument. If you want to compare their spreads across more instruments, You can jump back up to our comparison of their currency pair & indice spreads above.

Another consideration is whether or not your broker charges inactivity, deposit/withdrawal fees, or commissions on trades. If you’re a frequent trader, inactivity fees are unlikely to be an issue.

The Verdict: eToro or Hotforex?

There’s no such thing as a perfect broker, but some are going to be a better fit for you than others.

Objectively, eToro is more reliable based on our criteria above. eToro has a wider range of instruments to trade. eToro offer lower spreads on popular forex instruments like EUR/USD and are used by more traders.

Both brokers offer demo accounts, allowing you to test their platforms to see which is suitable for you. You can test drive their demos using the links below:

• Try eToro’s demo account (71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.)
• Try Hotforex’s demo account (72.83% of retail investor accounts lose money when trading CFDs with HF Markets (Europe) Ltd.)
• Try XTB’s demo account (79% of retail investor accounts lose money when trading CFDs with this provider.)

Finally, if you’re really not sure you can always use our free tool (takes 15 seconds) that will help you find a suitable broker based on your precise requirements here.