We found 11 online brokers that are appropriate for Trading Leverage Platforms.
Leverage, in the context of finance, refers to using borrowed money or financial instruments to measure a company's or an individual's financial leverage. While it can provide significant advantages, such as the ability to finance assets and raise capital, it also comes with its fair share of disadvantages and risks. In this article, we will delve into the top 20 questions regarding the advantages and disadvantages of leverage and discuss the various aspects associated with this concept.
Financial leverage uses high risk debt financing or borrowed money to make investments or fund business operations. By utilizing borrowed funds, individuals and companies can increase their buying power and expand their investment opportunities beyond their money.
Financial leverage is commonly measured through the debt-to-equity ratio. Total company debt obligations to its equity or shareholder value. Debt to equity in terms of leverage is found by dividing the total debt by the equity multiplier. The formula for the debt-to-equity ratio is as follows:
Debt-to-Equity Ratio = Total Debt / Equity
Total debt includes short-term and long-term debt obligations, such as loans, bonds, or other borrowed funds. Equity shows the value of the company's assets that belong to the shareholders or owners.
By analyzing the debt-to-equity ratio, investors, financial analysts, and lenders can assess how much a company relies on borrowed funds compared to its equity. A higher debt-to-equity ratio indicates higher leverage, implying that the company relies more on borrowed capital. It can signify a higher risk profile for the company, as it indicates a larger portion of the company's financing is based on debt rather than equity.
It is important to note that the optimal level of consumer leverage varies on instrument type, the company's financial position, and risk tolerance. While some companies may benefit from higher leverage to finance growth opportunities, excessive leverage can pose significant risks, such as increased interest expense and financial vulnerability. Therefore, carefully considering the debt-to-equity ratio is crucial when assessing a company's financial leverage.
The advantages of leverage include:
Increased buying power: Leveraging allows individuals and businesses to access funds beyond their resources. By borrowing money, they can expand their purchasing power and afford investments or assets that would otherwise be unattainable.
Opportunity for business growth: Leveraging can provide businesses with the means to finance expansion, research and development, acquisitions, and other growth initiatives. Using debt financing, companies can raise capital to fund strategic projects and capitalize on market opportunities.
Optimal use of capital: Leveraging allows businesses to optimize their capital structure by combining borrowed funds with equity. It enables them to allocate their available capital more efficiently, potentially maximizing returns on investment.
Magnified returns: Leveraged investments can generate higher returns compared to using only personal or equity-based funds. By leveraging a portion of the investment, individuals and businesses can amplify their gains if it performs well.
Tax advantages: In some cases, interest payments on borrowed funds may be tax-deductible, providing potential tax advantages. It can help reduce the overall tax liability and enhance the financial position of individuals or businesses.
Flexibility and liquidity: Leveraging can offer flexibility in managing cash flow. Businesses can use debt financing to preserve their cash reserves for day-to-day operations or unexpected expenses. It can enhance their liquidity and provide a safety net during financial uncertainty.
Diversification opportunities: Leveraging can enable individuals and businesses to diversify their investment portfolios. By accessing borrowed capital, they can invest in various assets and markets, spreading their risk and potentially increasing overall portfolio performance.
Faster wealth accumulation: Leveraging can accelerate the process of wealth accumulation. By using borrowed funds to invest, individuals can benefit from the compounding effect of returns on a larger investment base, potentially building wealth faster.
Financial leverage allows investors to magnify their gains. The initial investment can be multiplied using borrowed money, potentially leading to higher returns. It can be beneficial when combined with an effective investment strategy.
Operating leverage is another form that focuses on a company's capital structure and ability to generate income. It refers to using fixed costs, such as rent or salaries, to generate higher profits when sales increase. However, it can also increase financial risk during low sales periods.
The disadvantages of leverage include:
Increased financial risk: One of the main drawbacks of leverage is the heightened financial risk it brings. Borrowing money to finance investments or operations exposes individuals and businesses to the risk of defaulting on debt payments. If the investment does not generate sufficient income to cover the interest and principal repayments, it can lead to financial trouble and potential losses.
Interest payments: Individuals and businesses must pay interest on borrowed funds when using leverage. The higher the leverage, the greater the interest expense. If the investment or business operations do not make enough to pay interest payments, it can strain cash flow and negatively impact profitability.
Limited control: Leveraging involves borrowing funds from external sources, meaning individuals and businesses have less control over their financial decisions. They are bound by the terms and conditions of the borrowed capital, including repayment schedules and potentially restrictive covenants imposed by lenders.
Potential for loss: Leveraged investments can amplify both gains and losses. While leverage has the potential to magnify returns, it can also lead to potential losses if the investment performs poorly. If the value of the investment declines, individuals or businesses may lose the initial investment and remain liable for the borrowed funds.
Impact on cash flow: Debt obligations resulting from leverage can strain cash flow. The need to make regular interest and principal repayments can limit the availability of funds for other purposes, such as operating expenses or further investment.
Reduced financial flexibility: Excessive leverage can reduce flexibility and limit future borrowing capacity. A high level of debt can make it difficult to secure additional financing when needed, particularly if lenders perceive the borrower's financial position as risky or overleveraged.
Dependency on favorable interest rates: Leverage is sensitive to changes in interest rates. If interest rates rise after borrowing money, it can increase the cost of borrowing and put an additional financial strain on individuals or businesses. High-interest rates can make it more challenging to service debt and negatively impact profitability.
Loss of assets: In some cases, lenders may require collateral to secure the borrowed funds. If the borrower fails to meet their debt obligations, the lender may have the right to seize the assets pledged as collateral, resulting in a loss of assets for the borrower.
Negative impact on creditworthiness: Excessive leverage and difficulties in meeting debt obligations can hurt an individual's or company's creditworthiness. It can lead to a lower credit rating, making securing future loans or financing on favourable terms harder.
It is crucial for individuals and businesses to carefully evaluate their financial position, risk tolerance, and ability to manage debt before utilizing leverage as a strategy. Effective debt management, thorough risk assessment, and realistic cash flow projections are essential in mitigating the potential disadvantages of leverage.
Leverage can be calculated by dividing the total debt by the equity multiplier. This ratio provides insights into the amount of borrowed money compared to the company's equity or shareholder value.
The risks associated with leverage include:
Financial risk: Leverage amplifies financial risk by increasing potential losses. Suppose the investment or business operations do not perform as expected. In that case, the borrowed funds still need to be repaid, putting individuals or businesses at risk of defaulting on their debt obligations.
Interest rate risk: Leverage is sensitive to changes in interest rates. If interest rates increase, the cost of borrowing increases, leading to higher interest payments. Straining cash flow and adversely affecting profitability, particularly when the investment or business operations fail to generate enough income to offset the heightened interest expense, is a common outcome.
Market risk: Leveraged investments are exposed to market volatility. Fluctuations in asset prices, exchange rates, or market conditions can affect the value of the investment and potentially lead to losses. The higher the leverage, the greater the impact of market movements on the investment.
Liquidity risk: Leverage can create liquidity risk, particularly if the borrowed funds must be repaid on short notice or in adverse market conditions. If individuals or businesses face difficulties generating sufficient cash flow to meet their debt obligations, it can lead to liquidity problems and potential default.
Counterparty risk: Leveraging involves dealing with financial institutions or lenders. There is a risk that the counterparty, such as a bank or lender, may face financial difficulties or fail to honour their commitments. It can challenge accessing borrowed funds or result in unfavourable terms and conditions.
Overleverage risk: Excessive leverage increases the risk of overburdening debt and may lead to financial distress. If the level of debt becomes unsustainable or exceeds the ability to generate income, individuals or businesses may struggle to meet their debt obligations and face severe financial consequences.
Operational risk: Leveraging can increase operational risk, especially for businesses. If the borrowed funds are not utilized effectively, or business operations do not perform as anticipated, it can result in financial losses and operational difficulties. Poor management or unforeseen events can further exacerbate operational risks.
Creditworthiness risk: High leverage can negatively impact an individual's or company's creditworthiness. A significant level of debt relative to income or assets may lead to a lower credit rating, making it more challenging to secure future financing or loans. It can limit opportunities for growth and investment.
Dependency on economic conditions: Leveraging introduces a level of dependency on economic conditions. If the economy experiences a downturn, individuals or businesses may need help generating sufficient income to meet their debt obligations. Economic factors such as unemployment rates, inflation, or changes in consumer behaviour can impact the ability to service debt.
It is crucial for individuals and businesses to carefully assess and manage these risks when considering the use of leverage. Proper risk management strategies, including diversification, thorough due diligence, and stress testing, can help mitigate the potential risks associated with leveraging.
Interest rates play a crucial role in leverage. Higher interest will increase borrowing costs, making it more challenging to secure financing. Additionally, if interest rates rise after borrowing money, it can result in higher interest payments, and financial strain.
Leverage affects a company's capital structure by introducing debt obligations. While debt financing can provide growth opportunities, too much leverage can make a company vulnerable and hinder its ability to raise capital in the future.
Leveraged finance refers to how to borrow money to invest in assets or undertake business operations. It involves leveraging a company's assets and future cash flows to secure financing.
Yes, leverage can be used in household finances as well. For example, taking on debt, such as a mortgage or car loan, allows individuals to purchase assets they may not be able to afford with their own money. However, excessive household debt can lead to financial trouble and reduce disposable income.
Leverage amplifies investment risk. While it can magnify gains, it also increases the potential for losses. Individuals and companies must carefully consider the risks associated with leverage before making investment decisions.
Combined leverage refers to integrating both operating and financial leverage. By utilizing both types of leverage, companies aim to optimize their capital structure and achieve specific growth objectives.
Too much leverage can have serious consequences. If a company or individual becomes highly leveraged and cannot meet debt obligations, it can lead to bankruptcy or insolvency. Similarly, excessive leverage in investment portfolios can result in substantial losses.
Leverage can affect a company's ability to secure loans. Lenders assess the level of debt relative to a company's equity when deciding whether to grant financing. A company may need to help secure additional loans if it is already highly leveraged.
The break-even point in leverage is when the income generated from an investment or business operation covers all the costs, including the interest payments on the borrowed funds. Beyond this point, any additional income contributes to profit.
Financial markets provide a platform for individuals and companies to access leveraged investments. Various financial instruments, such as margin accounts or leveraged exchange-traded funds (ETFs), enable investors to amplify their positions and potentially enhance their returns.
Leverage can impact net income both positively and negatively. When investments generate higher returns than interest payments, leverage can increase net income. Conversely, the additional interest expense can decrease net income if the investment underperforms.
The advantages of leverage include the ability to finance assets, raise capital, and magnify profits. However, the disadvantages of leverage include the risk of financial trouble, potential losses, and increased financial risk. It is crucial for individuals and companies to carefully evaluate their financial position and consider the potential consequences before employing leverage as a strategy.
We have conducted extensive research and analysis on over multiple data points on Advantages and disadvantages of leverage to present you with a comprehensive guide that can help you find the most suitable Advantages and disadvantages of leverage. Below we shortlist what we think are the best Leverage Trading Platforms after careful consideration and evaluation. We hope this list will assist you in making an informed decision when researching Advantages and disadvantages of leverage.
Selecting a reliable and reputable online Leverage Trading Platforms trading brokerage involves assessing their track record, regulatory status, customer support, processing times, international presence, and language capabilities. Considering these factors, you can make an informed decision and trade Leverage Trading Platforms more confidently.
Selecting the right online Leverage Trading Platforms trading brokerage requires careful consideration of several critical factors. Here are some essential points to keep in mind:
Our team have listed brokers that match your criteria for you below. All brokerage data has been summarised into a comparison table. Scroll down.
When choosing a broker for Leverage Trading Platforms trading, it's essential to compare the different options available to you. Our Leverage Trading Platforms brokerage comparison table below allows you to compare several important features side by side, making it easier to make an informed choice.
By comparing these essential features, you can choose a Leverage Trading Platforms broker that best suits your needs and preferences for Leverage Trading Platforms. Our Leverage Trading Platforms broker comparison table simplifies the process, allowing you to make a more informed decision.
Here are the top Leverage Trading Platforms.
Compare Leverage Trading Platforms brokers for min deposits, funding, used by, benefits, account types, platforms, and support levels. When searching for a Leverage Trading Platforms broker, it's crucial to compare several factors to choose the right one for your Leverage Trading Platforms needs. Our comparison tool allows you to compare the essential features side by side.
All brokers below are Leverage Trading Platforms. Learn more about what they offer below.
You can scroll left and right on the comparison table below to see more Leverage Trading Platforms that accept Leverage Trading Platforms clients.
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IC Markets
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Roboforex
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eToro
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XTB
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XM
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Pepperstone
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AvaTrade
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FP Markets
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EasyMarkets
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SpreadEx
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FXPro
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Regulation | Seychelles Financial Services Authority (FSA) (SD018) | RoboForex Lid is regulated by Belize FSC, License No. 000138/7, reg. number 000001272. RoboForex Ltd, which is an (A category) member of The Financial Commission, also is a participant of its Compensation Fund | FCA (Financial Conduct Authority) eToro (UK) Ltd (FCA reference 583263), eToro (Europe) Ltd CySEC (Cyprus Securities Exchange Commission), ASIC (Australian Securities and Investments Commission) eToro AUS Capital Limited ASIC license 491139, CySec (Cyprus Securities and Exchange Commission under the license 109/10), FSAS (Financial Services Authority Seychelles) eToro (Seychelles) Ltd license SD076 | FCA (Financial Conduct Authority reference 522157), CySEC (Cyprus Securities and Exchange Commission reference 169/12), FSCA (Financial Sector Conduct Authority), XTB AFRICA (PTY) LTD licensed to operate in South Africa, KPWiG (Polish Securities and Exchange Commission), DFSA (Dubai Financial Services Authority), DIFC (Dubai International Financial Center), CNMV (Comisión Nacional del Mercado de Valores), KNF (Komisja Nadzoru Finansowego), IFSC (Belize International Financial Services Commission license number IFSC/60/413/TS/19) | Financial Services Commission (FSC) (000261/4) XM ZA (Pty) Ltd, Cyprus Securities and Exchange Commission (CySEC) (license 120/10) Trading Point of Financial Instruments Ltd, Australian Securities and Investments Commission (ASIC) (number 443670) Trading Point of Financial Instruments Pty Ltd | Financial Conduct Authority (FCA), Australian Securities and Investments Commission (ASIC), Cyprus Securities and Exchange Commission (CySEC), Federal Financial Supervisory Authority (BaFin), Dubai Financial Services Authority (DFSA), Capital Markets Authority of Kenya (CMA), Pepperstone Markets Limited is incorporated in The Bahamas (number 177174 B), Licensed by the Securities Commission of the Bahamas (SCB) number SIA-F217 | Australian Securities and Investments Commission (ASIC) Ava Capital Markets Australia Pty Ltd (406684), South African Financial Sector Conduct Authority (FSCA) Ava Capital Markets Pty Ltd (45984), Financial Services Agency (Japan FSA) Ava Trade Japan K.K. (1662), Financial Futures Association of Japan (FFAJ),, FFAJ, Abu Dhabi Global Markets (ADGM)(190018) Ava Trade Middle East Ltd (190018), Polish Financial Supervision Authority (KNF) AVA Trade EU Ltd, Central Bank of Ireland (C53877) AVA Trade EU Ltd, British Virgin Islands Financial Services Commission (BVI) BVI (SIBA/L/13/1049), Israel Securities Association (ISA) (514666577) ATrade Ltd, Financial Regulatory Services Authority (FRSA) | CySEC (Cyprus Securities and Exchange Commission) (371/18), ASIC AFS (Australian Securities and Investments Commission) (286354), FSP (Financial Sector Conduct Authority in South Africa) (50926), Financial Services Authority Seychelles (FSA) (130) | Cyprus Securities and Exchange Commission (CySEC) (079/07) Easy Forex Trading Ltd, Australian Securities and Investments Commission (ASIC) (Easy Markets Pty Ltd 246566), British Virgin Islands Financial Services Commission (BVI) EF Worldwide Ltd (SIBA/L/20/1135), Financial Sector Conduct Authority South Africa (FSA) EF Worldwide (PTY) Ltd (54018), FSC (Financial Services Commission) (SIBA/L/20/1135), FSCA (Financial Sector Conduct Authority) (54018) | FCA (Financial Conduct Authority) (190941), Gambling Commission (Great Britain) (8835) | FCA (Financial Conduct Authority) (509956), CySEC (Cyprus Securities and Exchange Commission) (078/07), FSCA (Financial Sector Conduct Authority) (45052), SCB (Securities Commission of The Bahamas) (SIA-F184), FSA (Financial Services Authority of Seychelles) (SD120) |
Min Deposit | 200 | 10 | 50 | No minimum deposit | 5 | No minimum deposit | 100 | 100 | 25 | No minimum deposit | 100 |
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Used By | 200,000+ | 730,000+ | 35,000,000+ | 1,000,000+ | 10,000,000+ | 400,000+ | 400,000+ | 200,000+ | 250,000+ | 60,000+ | 7,800,000+ |
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Platforms | MT5, MT4, MetaTrader WebTrader, Mobile Apps, iOS (App Store), Android (Google Play), MetaTrader iPhone/iPad, MetaTrader Android Google Play, MetaTrader Mac, cTrader, cTrader Web, cTrader iPhone/iPad, cTrader iMac, cTrader Android Google Play, cTrader Automate, cTrader Copy Trading, TradingView, Virtual Private Server, Trading Servers, MT4 Advanced Trading Tools, IC Insights, Trading Central | MT4, MT5, R Mobile Trader, R StocksTrader, WebTrader, Mobile Apps, iOS (App Store), Android (Google Play), Windows | eToro Trading App, Mobile Apps, iOS (App Store), Android (Google Play), CopyTrading, Web | MT4, Mirror Trader, Web Trader, Tablet, Mobile Apps, iOS (App Store), Android (Google Play) | MT5, MT5 WebTrader, XM Apple App for iPhone, XM App for Android Google Play, Tablet: MT5 for iPad, MT5 for Android Google Play, XM App for iPad, XM App for iOS (App Store), Android (Google Play), Mobile Apps | MT4, MT5, cTrader,WebTrader, TradingView, Windows, Mobile Apps, iOS (App Store), Android (Google Play) | MT4, MT5, Web Trading, AvaTrade App, AvaOptions, Mac Trading, AvaSocial, Mobile Apps, iOS (App Store), Android (Google Play) | MT4, MT5, TradingView, cTrader, WebTrader, Mobile Trader, Mobile Apps, iOS (App Store), Android (Google Play) | easyMarkets App, Mobile Apps, iOS (App Store), Android (Google Play), Web Platform, TradingView, MT4, MT5 | Web, Mobile Apps, iOS (App Store), Android (Google Play), iPad App, iPhone App, TradingView | MT4, MT5, cTrader, FxPro WebTrader, FxPro Mobile Apps, iOS (App Store), Android (Google Play) |
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Risk Warning | Losses can exceed deposits | Losses can exceed deposits | 61% of retail investor accounts lose money when trading CFDs with this provider. | 69% - 80% 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. | CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.12% 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. | 75-95 % of retail investor accounts lose money when trading CFDs | 71% of retail investor accounts lose money when trading CFDs with this provider | Losses can exceed deposits | Your capital is at risk | 65% of retail CFD accounts lose money | 75.78% of retail investor accounts lose money when trading CFDs and Spread Betting with this provider |
Demo |
IC Markets Demo |
Roboforex Demo |
eToro Demo |
XTB Demo |
XM Demo |
Pepperstone Demo |
AvaTrade Demo |
FP Markets Demo |
easyMarkets Demo |
SpreadEx Demo |
FxPro Demo |
Excluded Countries | US, IR, CA, NZ, JP | AU, BE, BQ, BR, CA, CW, CZ, DE, ES, EE, EU, FM, FR, FI, GW, ID, IR, JP, LR, MP, NL, PF, PL, RU, SE, SJ, SS, SL, SI, TL, TR, DO, US, IT, AT, PT, BG, HR, CY, DK, FL, GR, IE, LV, LT, MT, RO, SK, CH | ZA, ID, IR, KP, BE, CA, JP, SY, TR, IL, BY, AL, MD, MK, RS, GN, CD, SD, SA, ZW, ET, GH, TZ, LY, UG, ZM, BW, RW, TN, SO, NA, TG, SL, LR, GM, DJ, CI, PK, BN, TW, WS, NP, SG, VI, TM, TJ, UZ, LK, TT, HT, MM, BT, MH, MV, MG, MK, KZ, GD, FJ, PT, BB, BM, BS, AG, AI, AW, AX, LB, SV, PY, HN, GT, PR, NI, VG, AN, CN, BZ, DZ, MY, KH, PH, VN, EG, MN, MO, UA, JO, KR, AO, BR, HR, GL, IS, IM, JM, FM, MC, NG, SI, | US, IN, PK, BD, NG , ID, BE, AU | US, CA, IL, IR | AF, AS, AQ, AM, AZ, BY, BE, BZ, BT, BA, BI, CM, CA, CF, TD, CG, CI, ER, GF, PF, GP, GU, GN, GW, GY, HT, VA, IR, IQ, JP, KZ, LB, LR, LY, ML, MQ, YT, MZ, MM, NZ, NI, KP, PS, PR, RE, KN, LC, VC, WS, SO, GS, KR, SS, SD, SR, SY, TJ, TN, TM, TC, US, VU, VG, EH, ES, YE, ZW, ET | BE, BR, KP, NZ, TR, US, CA, SG | US, JP, NZ | US, IL, BC, MB, QC, ON, AF, BY, BI, KH, KY, TD, KM, CG, CU, CD, GQ, ER, FJ, GN, GW, HT, IR, IQ, LA, LY, MZ, MM, NI, KP, PW, PA, RU, SO, SS, SD, SY, TT, TM, VU, VE, YE | US, TR | US, CA, IR |
You can compare Leverage Trading Platforms ratings, min deposits what the the broker offers, funding methods, platforms, spread types, customer support options, regulation and account types side by side.
We also have an indepth Top Leverage Trading Platforms for 2025 article further below. You can see it now by clicking here
We have listed top Leverage Trading Platforms below.
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. 61% 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.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Crypto investments are risky and highly volatile. Tax may apply. Understand the risks here.
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.
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 has been prepared by our partner utilizing publicly available non-entity specific information about eToro.