ZuluTrade vs eToro

The purpose of this article is to specifically compare the eToro vs ZuluTrade social trading networks, currently the most popular networks in terms of members. At Social Trading Guru we believe we’re in a good position to compare ZuluTrade and eToro since we have been investing via both networks ourselves with “real” money for quite a few years. Before we continue we’d like to stress that we have no specific allegiance with either network and have similar amounts invested with eToro and with ZuluTrade. You can however also read our detailed eToro review and ZuluTrade review elsewhere on our website (these reviews also include screenprints). For the purpose of this article we’ll break-down the comparison per section.

Sign-up Process

Both networks allow you to sign-up for a free demo account before you start investing with “real” money. The sign-up procedures are very straightforward and only once you decide to invest with real money are you required to provided a copy of your passport/id card and proof of residence. eToro acts as the broker as well, so once you’re signed up to their network your broker account is created as well. ZuluTrade also have their own integrated broker (AAAfx). However, ZuluTrade also allows you to use one of over 40 other brokers (click here to see the full ZuluTrade broker list). This means you can choose a broker based in your country and using your currency of preference. A limitation of eToro is that accounts can only be held in $USD. On the other hand eToro doesn’t allow US customer where Zulu does.

Costs

Both eToro and ZuluTrade are totally free to join and none of these networks charge any account maintenance or success fees. The only cost with both networks is the broker spread when a trade gets executed in your live account. Because eToro acts as broker as well, that spread is pretty fixed. For EURUSD it’s about 3 pips. With ZuluTrade it varies a little more. If you use their own broker AAAfx it’s about 2 pips for EURUSD trades. If you use another broker, you may get better spreads, though you have to take into account the pip commission per trade the broker charges you for using ZuluTrade and hence you’ll end up at about 2 to 3 pips as well. If we also include the slippage per trade (i.e. difference between the price you get and the trader you follow got) at ZuluTrade (with eToro it’s negligible) we’d say that overall your total spread costs (and hence total costs) between both networks are very similar.

Trader Research Features

“Trader research features” are the data, graphs and tools available to you to help you make a decision on which traders to follow. On this criteria we feel that ZuluTrade has a significant edge. Not only do they provided you with the data of every single trade the trader executed on the network before, but they also provide more advanced research tools (e.g. simulation) and a wider choice of graphs than eToro. Below is a list of key features:

  ZuluTrade eToro
Trader’s trading history Full trading history is available in the ZuluTrade interface and can be exported to in Excel format for further analysis. Only the historic trades over the past 1 year are available to view (not export).
Performance indicators and graphs Traders can be ranked using 13 indicators and 8 graphs available. Traders can be filtered using 18 and ranked using 13 indicators. and 3 graphs available.
Simulate Online simulation tool allows you to simulate performance of selected traders based on their historical data. No online tool available though the eToro VIP account managers can run some simulations for you.
Social Network ZuluTrade customers can freely leave feedback and ratings on the trader’s pages, and add comments to the “Social Charts”. Traders can also leave comments but not many do so on a regular basis. eToro customers can interact via the newsfeed (though comments are moderated by eToro). Traders more actively interact and leave updates, though not all do.

Risk Management Features

“Risk Management Features” allow you to assign how much you want to invest/risk per trader and ultimately are there to protect your account. The approaches of both eToro and ZuluTrade are fairly different in terms of risk management.

eToro certainly has the more simple and intuitive approach. If you select a trader you want to follow and copy, you assign a monetary amount to them (e.g. 20% of your $500 account = $100). From then any trade this trader does in their account will be done proportionally in your account based on this amount. E.g. if the trader risk 5% on a trade, $5 of your account will be risked. Hence the risk management of your allocation is very much in the hands of the traders you select. To avoid you losing your full eToro account balance on one trader, you can set a percentage or $ value stop level, and when this is reached you’ll no longer copy them and open trades will be closed. As default this is set to 40% but you can change it from 5% to 95%.

With ZuluTrade the risk management is totally up to you and requires some basic knowledge of ‘lot sizes’. I.e. you decide how much you invest each time a trader you copy executes a trade. This can range from 1 micro lot per trade to multiple lots per trade. Obviously the higher amount, the more money you’re risking. ZuluTrade does however provide a wide range of features to allow you to further manage the risk. E.g. you can limit the total number of trades a trader you copy can open at the same time, limit the total drawdown amount of open trades, limit which Forex pairs the trader can open in your account, restrict the times at which signals are copied and more.

Early 2016 ZuluTrade also introduced (in Beta) the possibility to copy traders “Pro-Rata”. This means you assign a % value and trades will be copied proportionally. E.g. if you set it to 10%, then when the trader you copies trades 1 lot, 1 mini lot will be traded in your account. You can use a ratio higher than 100% as well if you want to increase your risk.

While both networks give you plenty of options to limit the downside risk of copying a trader, ZuluTrade allows you to leverage your account balance more and increase your risk pretty much exponentially.

We should also mention here that ZuluTrade introduced social binary options trading in 2015 (i.e. you can copy other successful binary option traders). Most new investors or traders tend to find binary options trading simpler and easier to control than forex trading. The is because the choice is dual (up or down) and as investor you’ll know in advance the exact amount of potential profit or loss of the option. Obviously if this feature is something you’ll like to try, then you’ll need to sign up with Zulu Trade since at the moment this isn’t offered by eToro.

Performance

This is obviously the $1 million dollar question: “Which of the networks, eToro or ZuluTrade, will make me the most money?”. Unfortunately there’s no straightforward answer to this question as it very much depends on the quality of the traders you select to copy and the risk you’re willing to take.

With regards to the quality of the traders, both networks have some good traders which have been profitable over time as well as some rogue traders that lost 100% of their account value. View the latest ZuluTrade traders list and ranking here or find the current eToro ranked traders list here.

Overall with eToro you’ll notice that most are longer term traders. I.e. they tend to leave positions open over a longer duration of time (several days to months). All of them do trade from own real money account and they get rewarded based on the amount of people and account values copying them. Because the trades in your eToro account are executed proportionally in relation to your actual account balance, your weekly or monthly account gains or losses will normally be smaller than with ZuluTrade where people tend to use leverage.

Because people can become traders on ZuluTrade using demo accounts and several use trading robots (which automatically execute trades) there tends to be a higher amount of risky traders on ZuluTrade. However the choice of traders is larger and some also use “real money” accounts. Traders on ZuluTrade also only get their commissions paid in months they’re profitable, so their incentive is to be consistent. In addition, the amount you risk is ultimately up to you depending on how much you invest per trade. In theory you can double your account in 1 day, though you’re also as likely to lose that money in 1 day if that’s the risk you take.

With regards to performance, if you’re looking for exceptional results and are willing to take the risk associated with it then ZuluTrade would be the better network because they allow you to leverage your capital more and take more risk per trader. If you want a more managed approach which automatically limits the risk you can take then eToro would be the better solution. As always please consider that the more risk you take, the higher your chance of making losses.

Support

Both eToro and ZuluTrade offer web chat, e-mail and telephone support. eToro provides more educational information on their website, including an active blog, trading videos, live webinars and interactive trading courses for both traders and investors. eToro also provides dedicated account managers for customers who invest over $20,000 and organises regular events for their customers in their local offices around the world.

Summary

It’s difficult to call one of these networks better than the other. As social trading networks go, both ZuluTrade and eToro are probably the most advanced and popular offerings on the market and each will appeal to certain investors. eToro is very much targeted at novice investors with an easy to use interface and network level risk management. It is however the simplicity and limitations of eToro in terms of trader research features and risk taking opportunities which will make ZuluTrade more appealing to the more experienced investors. The fact that eToro only manages accounts in $ USD may also make ZuluTrade more popular with people who want to invest in other currencies such as Euros, GB pounds, Australian dollars, Russian roubles or Japanase Yen.

In any case, both social trading networks offer free demo accounts, so the easiest way to find out which one is more suitable for you is to try a ZuluTrade demo account and/or an eToro demo account. In addition we also have some very detailed and useful eToro tips and ZuluTrade tips which you can read and which hopefully will help you manage your risk appropriately and select the best traders to copy.
Last updated: April 28, 2016

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