eToro under scrutiny: stop losses triggered and CFDs in question
A stop loss set at 100 was executed at 4 during a dip that reversed within a minute. The broker refunded nothing. CFDs are in the spotlight.
English · Original discussion in Spanish · Published
eToro under suspicion: when the stop loss works against you
A stop loss on eToro, placed at a prudent distance on a large-cap stock, guarantees nothing. An investor has just described how his order was executed in the middle of a flash dip, only for the price to return to previous levels minutes later. The broker's response was that everything was within normal parameters. And no refund of the money.
Contracts for difference (CFDs) place the broker as the direct counterparty. Liquidity and spread are set by the marketer, not the real market. This is not an isolated case: there are instances of stops set at 100 that were executed at 4 during a dip to 2, with an immediate price recovery. In practice, the investor absorbs losses that cannot be justified by market behaviour.
Alternatives do exist. Interactive Brokers allows trading with margin accounts without resorting to CFDs, something many investors in Spain are unaware of. The new MiCA regulation has made the use of crypto exchanges more complicated, but the problem is not just the vehicle, it is the broker's business model that plays against you.
eToro's ease of use does not make up for a system where the stop loss can be an invitation to a hunt. The unsettling fact: in the very minute the stop was executed, the price returned to its previous level. Coincidence or design, the result for the retail investor is the same.
A stop loss on eToro, placed at a prudent distance on a large-cap stock, guarantees nothing. An investor has just described how his order was executed in the middle of a flash dip, only for the price to return to previous levels minutes later. The broker's response was that everything was within normal parameters. And no refund of the money.
Contracts for difference (CFDs) place the broker as the direct counterparty. Liquidity and spread are set by the marketer, not the real market. This is not an isolated case: there are instances of stops set at 100 that were executed at 4 during a dip to 2, with an immediate price recovery. In practice, the investor absorbs losses that cannot be justified by market behaviour.
Alternatives do exist. Interactive Brokers allows trading with margin accounts without resorting to CFDs, something many investors in Spain are unaware of. The new MiCA regulation has made the use of crypto exchanges more complicated, but the problem is not just the vehicle, it is the broker's business model that plays against you.
eToro's ease of use does not make up for a system where the stop loss can be an invitation to a hunt. The unsettling fact: in the very minute the stop was executed, the price returned to its previous level. Coincidence or design, the result for the retail investor is the same.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (12 replies).
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