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eToro vs Coinbase: Which Is Best for Trading?
With the sheer range of trading services and brokerages all over the world — whether it’s for cryptocurrency, stocks and shares, or CFDs — it can get pretty complicated when trying to choose the right platform, especially if you’re a relatively novice investor who might not know what you should be looking for.
They cater to slightly different markets (given the financial assets available to trade on the respective platforms), but two of the most prominent trading platforms in the world are eToro and Coinbase, and each of them comes with slightly unique features since the latter is tailored entirely to cryptocurrencies and the former is for all financial assets.
Still, separating the two of them in terms of how much utility you’ll get out of either platform can be a bit of a challenge in itself.
Throughout this article, we’re going to be taking a close look at both trading platforms — ultimately trying to conclude which service is the best value and worthy of your investment.
Table of Contents:
Introduction to eToro and Coinbase ➡️
To kick things off, let’s provide a little bit of background information about each service so you’re coming into the article with some context:
eToro USA LLC: The Social Trading Platform
eToro was originally founded in 2007, so it has around five years’ worth of experience under its belt in relation to Coinbase, which was founded in 2012.
Still, since 2007, eToro has grown a lot, and most investors regard the trading platform as one of the most reputable and well-established services that there is.
Aside from the massively impressive social trading aspect, which we’ll get onto a little bit later in the article, eToro’s a platform with millions of users all over the world who like to trade in a bunch of — different trading assets — including things like stocks, commodities, and, of course, crypto assets — whereas you’re only able to invest in cryptocurrency with Coinbase.
eToro AUS Capital Ltd ACN 612 791 803 AFSL 491139. OTC Derivatives are speculative and leveraged. Capital is at risk. See PDS.
As touched on, it’s the social trading platform eToro has that really makes it stand out among some of its contemporary platforms — Binance, Plus500, and Coinbase, for instance.
In essence, social trading (commonly referred to as copy trading) is basically an opportunity for you to observe, follow, and even automatically copy all of the trades that experienced investors on the platform make, and you can choose which traders you like the most and add them to a favourites list, too.
Obviously, this is something that can be particularly helpful if you’re only just starting your trading journey — whether you like investing in crypto or stocks and shares — since you’ll be learning from some of the most successful and profitable investors in the market.
Having said this, anyone with a decent level of trading experience knows how easy it can be to get sucked into social trading and forget to learn any real trading skills of their own — solely relying on what other investors have to say without ever really understanding what they’re doing.
So, take a look around the social trading platform if you’re going to use eToro and use it temporarily, but remember to not get complacent and ultimately try to focus on learning how to become a better trader independently.
Coinbase: The User-Friendly Crypto Exchange
As we mentioned previously, the Coinbase exchange was formed a little bit later than eToro, but they’ve since become one of the more user-friendly and accessible crypto exchanges out there and is commonly regarded as the go-to for tradable crypto assets.
Obviously, this is a pretty high accolade to boast — especially given the popularity of its competitors (Binance, Kraken, Gemini, for example) — but it’s mostly due to the fact that you’re only able to get involved with spot trading when investing on Coinbase, nothing else.
Essentially, what this means is that while other crypto trading platforms such as Binance allow their users to trade crypto futures contracts, even providing access to certain trading tools like leverage and margin, you can only hold crypto assets in the spot section of your Coinbase wallet — you’re not able to invest in derivatives or any other risky kind of trading practice.
As such, it’s actually the perfect introduction to cryptocurrency and trading in general if you’re a beginner investor since you’re far less likely to lose massive amounts of money when you steer clear of the futures market and leverage, as these are well-known to wreck newcomers’ portfolios due to the inherent risk involved.
Still, it’s worth remembering that Coinbase, for all the excellent features and utility you’ll get out of the platform, is only of any interest to crypto traders — you will not be able to access the same range of financial trading instruments as eToro since the latter is a multi asset platform (with things like Forex, Commodities, Stocks, etc.
So, while the crypto trading elements of eToro are definitely less impressive in relation to Coinbase, eToro might ultimately be the better platform if you’re more interested in traditional investment products outside of the crypto market.
Aside from this, though, Coinbase is, of course, completely sound as far as compliance and adherence to regulatory standards go — they’re fully registered and cooperative with the United States Securities and Exchange Commission (SEC).
Security and Compliance 🛡️
Naturally, how seriously the platform that you’re going to be investing a substantial amount of time and money onto takes plays a massive role in determining how good the service is, so let’s explore what kind of measures are in place for both Coinbase and eToro customers:
eToro Security Measures
Let’s start with eToro:
eToro USA Securities Inc
In the United States, eToro USA Securities Inc. is actually regulated by the Financial Industry Regulatory Authority, which is one of the more significant regulatory bodies in terms of the level of compliance with security standards that they set.
As for the user, this means that you generally don’t have anything to worry about in terms of your eToro account being vulnerable or losing your money due to any other kind of fraudulent activity, so you can continue trading free of stress.
Coinbase Security Measures
Moving forward, let’s take a look at Coinbase’s security protocols:
Cold Storage and Insurance
As you’d expect with whichever crypto trading platform you choose, Coinbase stores pretty much all of its users’ funds in cold storage, disconnected from the internet, rather than in hot wallets where they’re far more susceptible to hacking or any other kind of exposure that could ultimately result in you losing your money.
Aside from this, it also provides insurance coverage for all of the crypto assets stored on its platform, so you’ve got even more peace of mind there.
Fees and Costs 💰️
Finally, our last section of the article is dedicated towards the kind of additional costs you’ll pick up from using either option:
eToro Trading Fees
It’s hard to give specific figures given that interest rates, leverage, and a range of other factors constantly influence whatever eToro’s current trading fees are, but it does still charge a spread on the buy and sell prices.
Fortunately, though, eToro doesn’t seem to impose any hidden fees or secret commissions like a lot of other brokers.
Coinbase Trading Fees
Coinbase offers Coinbase Pro for anyone looking for lower fees and an opportunity to earn crypto rewards — just bear in mind the platform is a little less intuitive since it’s designed for users with a better understanding of trading.
Final Thoughts 🤔️
To round the article off, it’s not exactly an easy call to make when it comes to concluding which trading platform is best — it’s ultimately down to your particular investing style, how skilled a trader you already are, and what you’re looking for out of the platform (i.e. if you prefer trading crypto then Coinbase would be a better choice, but eToro has a range of other financial instruments if you’re less interested in that).
Having said that, the only major difference that separates the two is the fact that you’re exclusively able to trade crypto assets on Coinbase and nothing else — other than that, both eToro and Coinbase are excellent trading platforms in their own regards and can be used by investors with relatively little experience without much hassle.
Just remember that regardless of which platform you ultimately decide to settle on, the potential to lose a substantial amount of money as new retail traders is significantly high, and there’s a serious possibility that this will happen to you if you’re unprepared.
As touched on previously in the article, both eToro and Coinbase offer quite a lot of resources for you to digest in order to become a more educated trader — with the latter option even providing a free crypto incentive simply for learning about crypto and DeFi assets and what their use cases are.
Ultimately, though, experience is the only real way you’ll develop as a trader, so try to stay away from signals/telegram groups and focus on developing your own trading style that’s based on technical analysis.
How Does Cryptocurrency Trading Differ from Stock Trading?
Generally speaking, cryptocurrency and stock trading, while obviously fairly similar, are completely different in terms of the assets that you’re trading — crypto is for trading various digital assets like Bitcoin and Ethereum, but you focus more on tangible, publicly listed companies when you’re trading stocks and shares in the stock market. Unlike crypto, there are also open and closing times in the stock market.
What Role Does Emotional Discipline Play in Trading?
Whether you’re a novice trader or a seasoned pro, the ability to manage your emotions in a disciplined manner is one of the most important skills you can have when investing. Just make sure you avoid making any kind of impulsive decision that’s based on fear or greed — know your trading plan, have conviction, and stick with it until your ‘take profit’ or ‘stop loss’ orders have been met.
Can I Trade With a Small Amount of Money?
While the minimum amount that you’re able to trade with generally differs from platform to platform, most services do let you trade with a fairly small amount of capital. Having said this, the transaction costs you’ll rack up relative to your investment are definitely still something you need to keep in mind — especially when you’re working with a limited budget.
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