Which is the spread fee formula in eToro?

Question

In their official website (in a pdf fees document), the equation they mentioned does not match reality (depending on my practice with their demo trading account), nor logic.

My equation is: spread fee = (ask-bid) * number of units

in their pdf file : spread fee = (ask-bid) * number of units * the share price

so If I want to buy one Amazon share (which was 4000 $ ; ask: 4007, bid: 4000) I assume I would pay 7 * 1 = 7 $ not 7 * 1 * 4000 = 28000 $

Is there an unintended mistake in their attached commission file?

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is it possible that they express bid-ask spread in percent (or bp) rather than cents? Also, since you buy at the ask and sell at the bid, I'd expect to pay only half the bid-ask spread, when compared to mid. — 0xFEE1DEAD, Apr 27 '21 at 17:39
you are correct, that's what I was wrong at. Thank you very much. — huab, Apr 28 '21 at 11:04
An interesting point, is "eToro" such a scam that questions about it actually should not be allowed on the site? — Fattie, Apr 28 '21 at 13:14
@Fattie maybe you could stop calling everything and anything a "scam"... — 0xFEE1DEAD, Apr 28 '21 at 13:42

score 2 · Accepted Answer · answered Apr 27 '21 at 19:27

I don't see where they're defining the formula as (ask-bid) * number of units * the share price, I see it defined as rate * units * price. If you look at their example, they list a "typical spread rate" of 0.18% for AAPL, which is what they're using in their formula.

In other words, they add 0.18% to the ask price as a commission (broker's fee, whatever you want to call it).

If I want to buy one Amazon share (which was 4000 $ ; ask: 4007, bid: 4000) I assume I would pay 7 * 1 = 7 $ not 7 * 1 * 4000 = 28000 $

No, you'd pay 0.18% (from their example) * 1 * 4007 = 7.21 in spread fees in addition to the ask price and other fees (overnight, etc.)

Which is the spread fee formula in eToro?

1 Answers1