Contents
eToro, recommended trading platform for those who want to buy Bitcoin from Bangladesh
Why do we recommend it?
- There are uncountable investment opportunities
- You can trade leveraged
- User-friendly and simple
- Allows to learn from other investment strategies
- You can go short
Homepage: www.etoro.com/bitcoin
In case you are interested in buying Bitcoin from Bangladesh, eToro may be the best way to do it.
eToro is famous for making “social trading” fashionable, an ingenious way of investing in which users can replicate the movements of other traders who have been generating profits over time.
eToro has solutions for you, even if you are still a novice user in trading, since it automatizes your investment by repeating strategies from experienced traders with a very long profit history. On the contrary, if you are an investor and decide to share your abilities with other traders, eToro rewards you with money.
Besides, the platform is so uncomplicated, ideal for a user who wants to begin in the Bitcoin world, without ending up overwhelmed with tons of numbers and information.
How do Contracts for Difference Function?
If you already accessed eToro, you must have noticed that the acronym CFD appears over and over. Before we explain this further, you should know that CFDs on eToro are only possible when you go short.
In case you are interested in day trading cryptocurrency and other more advanced operations, you will also find out about terms such as going short and leverage.
Even if you don't have a positive balance, you can still bet on eToro with CFDs. In a hypothetical case: you are sure that the Bitcoin will go down, so perhaps it is obvious to think “if it is going to depreciate, I simply refrain from getting in and I'll go in when it has gone down”. However, if it really goes down, it is possible to earn some money out of that.
You can do this through what is known known as “going short” which consists in something like the following:
- You ask someone for a loan of, let's say, 100 units of Bitcoin, which total value at that moment is $ 5,000 (these figures aren't real)
- You make $ 5,000 by offering them at their price in the market
- The price falls, as you calculated, and the unit of Bitcoin now costs $ 30 instead of $ 50
- You purchase the 100 units again, but at $ 3,000
- Now you give back the 100 units
- You keep the $ 2000 difference!
Take into account that it sounds much more complex than it really is: we can summarize this whole operation by saying that by trading in Bitcoin you can also make money if you anticipate it will go down.
Differences between futures and CFDs
What are the main differences between CFDs and Futures?
- Who is the counterparty? With Futures, the counterparty is another investor. In CDFs, it’s the brokerage, in this case eToro
- Date of expiration Futures expire in a variable given date. CFDs don’t expire
- Markets available for trading The market for Futures is narrower. CFDs include a wide range of possibilities.
- Minimum investment amount or “trade size” Costs for Futures are higher than costs for CFDs.
- Is it possible to leverage? With Futures, it isn’t possible; while with CFDs it is.
Are you familiar with the term “leverage”? We'll put it simply:
the good thing about trading is that it lets you invest even more than what you really have. That is, if you have $ 100 and you put them with x2 leverage, the amount of your investment will be $ 200.
About leverage, Take Profit and Stop Loss
Suppose now that you know that Bitcoin is going to rise, therefore you are thinking about “going long”.
You are absolutely sure that Bitcoin will rise, but you can only invest $ 1,000. Despite that, why miss the opportunity to make more money?
There's the possibility of asking for a loan, but it is a process that takes time, and when you receive the money, Bitcoin might be already so expensive that investing wouldn't be convenient anymore.
Thanks to leverage, you can get that amount with two clicks. It's exactly like a loan, but much better: from eToro itself. You can get financing to invest much more money than you actually have on the platform. Before trading, you will be able to choose between the different leverage options as in the image:
Trading with other assets allows you to use higher leverage. Why? Because leverage is regularly for short-term operations or day trading, and cryptocurrencies tend to be a medium or long-term investment. But let's deepen a bit more on how all this works.
If you have the $ 1,000 and use leverage x2, you will be investing $ 2,000. eToro gives you the remaining amount to reach that figure.
A week after that, Bitcoin goes up and now the value of your investment is 20% higher, which means, you have $ 2,400 in Bitcoin. But you don't want to be too greedy, so you decide, wisely, to sell again.
First of all, the 1k $ of the leverage will be deducted. You have $ 1,400 left, of which $ 1000 was yours initially, so you'll have earned $ 400.
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment.
But not everything is wonderful. If all goes as you intended and the price rises, you will make money. However, if the asset decreases, you will also lose more money in the blink of an eye.
For instance: if the price falls by 10%, you do not lose $ 10, but twice (the leverage) that figure, that would be $ 20. Because of that, the concepts of Take Profit and Stop Loss are crucial when trading with leverage.
Take Profit is used as a form of reducing risks when trading. When you enter, you can set a profit limit and ask that your position is automatically closed when the asset reaches a price.
If you purchased Bitcoin at $ 100, you program eToro to close once it reaches $ 120. That way, you make sure you won't be blinded by greed and decide to keep waiting in case it keeps going up, which could make you lose it all.
Stop Loss is even more necessary, mostly if you use leverage, because a reduced loss with leverage can have a significant impact on your wallet. You always need to set a Stop Loss lower than that suggested by the broker.
About ETFs
Exchange-Traded Funds or ETFs are similar to index funds. We can say that ETFs are somewhere between stocks and funds: they are publicly traded, that means they can be commercialized at any moment at market price. However, their advantage is that they are more diversified compared to stocks, and have lower fees.
Forex trading
What is known as Forex trading consists in the trading of currencies. It's the conversion between currencies to make a profit through the operation.
In case you decide to exchange EUR and USD, you purchase euros and pay with dollars, thinking that the euro will increase compared to the dollar. Then, if you purchased each euro at 1.15 USD and you sell them back when their price is 1.20 USD, that margin will be yours.
As you may have already inferred, trading with currencies requires a large capital, since fluctuations tend to be low, or using much leverage, which could be incautious, as you know. Our recommendation for those who are new in the world of trading is not to start with Forex, but with a safer and more secure market.
You can operate with almost every popular currency on eToro but consider that in this market sales are always made through CFDs, which means the underlying asset won't be yours.
About Index Funds
This is the best option for people who can invest in the long term, mostly for beginners, because it is less expensive, diversified, and safer.
You may think differently, but beating the benchmark is far from being a piece of cake and very few fund managers have done it, apart from some specific cases.
If a fund manager brags about having beaten the benchmark, they probably have done it for a chor period or on particular occasions, or sometimes the rates are so high that indexing would be a better decision (with minimal commissions).
Index funds offer these two advantages: they usually beat active managers in the long term, and the commissions are lower than you imagine.
Commodities (raw materials)
Most investors trade with raw materials because of their stability. While other assets tend to fluctuate more, commodity prices vary less and offer safety against inflation or market volatility. However, prices are subject to supply and demand, so if an economic situation produces greater demand for a certain good, the price will also rise.
Consider that commodities don't pay dividends. Therefore, by trading with these you will only have a further profit by selling them back.
There are two main kinds of commodities: hard raw materials and soft raw materials. The former include precious metals (such as gold, silver, copper, and platinum), industrial metals (like aluminum, iron, or zinc), and oil; and the latter are agricultural resources, like sugar, coffee, corn, soy, among many others.
Payment methods on eToro
When it comes to payment on eToro, there is not much to say, since it is really straightforward. You only need to select “Deposit funds”, put an amount, and choose the payment option you prefer. You can pay with PayPal (available for some countries), bank transfer, credit card, Skrill, or Neteller.
Consider that for security policies, you must be the owner of the account or the credit card.
The lowest amount is $ 200, and there is a maximum authorized for unverified accounts. Therefore, if you plan to operate with larger sums, contact Support previously to verify your account.
Also, know that you can make the transfer in any currency because eToro converts it to USD, but charges a commission for it, so it is preferable to make the transfer directly in USD.
Is eToro trustworthy for purchasing Bitcoin?
eToro is very careful with the data about past performances from traders, and its integrity has been tested many times by independent organizations.
The main office of eToro is located in Cyprus, and the platform is approved by the Cyprus Securities Market Commission (known as CySEC), which covers debts up to € 20,000 from its clients. On the other hand, eToro meets all the strict regulations of the European Union.
eToro is backed by the European Financial Instruments Market (MiFID) in Europe, and by the Financial Conduct Authority or FCA in the USA. Apart from the above, it has a trajectory of fifteen years, with more than 20 million users all over the world. So, you can be sure that your finances are safe.
Finally, their excellent customer service is also worth mentioning. They have a phone number for assistance, a ticket system to track any claim, and a live chat.
How to use eToro
We mentioned before that one of the best features of eToro is how simple it is. It isn't necessary to read a lot or have previous knowledge to start trading.
You won't have any issues with the interface if you are familiar with any other social network, like Facebook or Whatsapp.
We will explain the registration process and the different tabs that you will see on eToro.
When you open your account, you will have to enter all the information that eToro asks for: first and last name, address…
To complete your profile, you will see that they ask you some questions about your experience as an investor.
But don't feel like you are taking an exam. They only intend to find out about your previous experience and knowledge to know which financial instruments to recommend for you.
Let's see what the different sections of the site are.
In “Set Price Alerts” you can set alerts on the price of certain securities. It is a very useful tool for when you are after an asset that is falling, but perhaps you think that it has not finished falling yet.
The section “News Feed” allows users to interact and learn from each other by sharing their opinion and experiences.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. As we discussed in this guide, the trading instruments that eToro offers are:
- Cryptocurrencies
- Exchange-Traded Funds
- Shares
- Raw materials
- Forex
- Index funds
The term “social trading” makes sense in the section “People”: that is where you can copy the movements of the users you find most inspiring with just one click. You'll be able to see all their profiles and historical performances.
You can search for those users that best suit your interests: by average earnings, types of instruments or risk level, for example. You just have to choose the amount you want to invest and eToro itself will replicate the movements made by the selected investor, in proportion. “In proportion” means that if you put $ 1000 and the investor puts 10% of their capital in Amazon, eToro will invest $ 100 of your money in the same company.
In this part you will also find the three main types of CopyPortfolios, which are Top Trader, Market, and Partner.
The benefit of using CopyPortfolios instead of copying individual traders is that this way the risk will be more diversified. There are all kinds of portfolios that you can find easily and are classified by sectors. Thus, if you think a specific industry, such as e-commerce or oil, has a good chance of prospering, you should look for that specific portfolio.