Contents
eToro is an outstanding broker for those in Bangladesh who want to buy Tether
Why do we recommend it?
- It is possible to invest in thousands of different goods
- Leverage is allowed
- It is very user-friendly
- It offers other successful investment strategies so you can replicate them
- Admits short-trading
Official main site: www.etoro.com/tether
In case you are considering purchasing Tether from Bangladesh, eToro is certainly the best option nowadays.
eToro is known for making “social trading” fashionable. Social trading is an ingenious way of investing in which traders can emulate the moves of other investors who have been generating income over time.
If you are still a newbie or haven't gained much investment experience, eToro is great for you. You can rest assured that you will be doing a smart investment move when replicating those from subjects with a long profit record. On the other hand, if you are an investor and decide to share your techniques with other traders, eToro rewards you with money.
It is also very convenient how easy is to manage the platform, excellent for new traders who are starting in the investment world.
About ETFs
ETFs or Exchange-Traded Funds are similar to index funds. We can say that ETFs are somewhere between stocks and funds: they are traded in the market like stocks, during the day. However, their main benefit is that they are more diversified compared to stocks, and have lower fees.
What is an ETF?
ETFs or Exchange-Traded Funds are a type of passively managed fund, similar to index funds. We can say that ETFs are somewhere between stocks and funds: they are traded in the market like stocks, during the day. Their main benefit is that they are more diversified compared to stocks, and have lower fees.
Index Funds
Index funds are the best alternative for those who want to invest for the long term, mostly for beginners. If you don't need to take back your money in less than five or ten years, index funds offer you variety and lower risks.
Unlike a lot of people think, beating the benchmark is far from being a piece of cake and very few fund managers achieve that, apart from some famous cases.
If someone brags about having beaten the index, they probably did it for a short time or on particular occasions, or perhaps the commissions are so high that indexing would be a better decision anyway (with minimal commissions).
Index funds offer answers for that: most of the time, they beat active managers in the long term, and the fees are lower than you imagine.
Currency market
Forex or currency trading allows obtaining profits by exchanging one currency for another.
If you decide to exchange the EUR/USD pair, you purchase euros and pay with dollars, with the expectation that the euro will increase compared to the dollar. Therefore, if you purchased each euro at 1.15 USD and you sell them back when they are worth 1.20 USD, that margin will be yours.
Perhaps you already deducted this, but trading with currencies usually implies large resources, because prices rarely increase that much, or using a lot of leverage, which implies an extra risk. Our recommendation for those starting in the world of trading is to choose another market to begin with, since Forex is not the safest.
You can trade with almost all well-known currency pairs on eToro. Nevertheless, bear in mind that Forex trading functions through contract for differences, thus you will not be the owner of the real asset.
Raw materials
The major benefit of trading with raw materials is that their price fluctuates less than that of other financial products. In fact, their intrinsic stability is what makes people often invest in raw materials, to take refuge from market volatility or inflation. Even so, the cost of commodities depends on supply and demand, so if faced with the fear of inflation, demand rises a lot, so will the price.
Consider that raw materials don't pay dividends. So, the only potential further earnings would come from a future sale of the asset.
Commodities can be divided into two main types: hard raw materials and soft raw materials. The former are precious metals (such as gold, silver, copper, and platinum), industrial metals, and oil; and the latter are agricultural goods, such as sugar, coffee, corn, soy, among many others.
Are you familiar with the term “leverage”? Just in case, we'll define it simply:
the good thing about trading is that it lets you invest more money than what you really have. For instance, if you have $ 100 and you choose to leverage x2, you will be actually investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Assuming that, for instance, you are sure that Tether is going up, and that you have $ 1,000 for “going long”, you should know that you can increase your investment and make more money.
You could consider requesting a credit at your bank, but you must know that all the process takes time, and by the moment you finally get the money, Tether might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Using leverage, you can obtain that amount of money really easily. It's like a loan, but much easier and quicker, and with the advantage that you will be getting it directly from eToro which will let you invest much more than you have on the platform. Before trading, you will find the leverage options as in the screenshot:
Trading with other assets allows you to use even more leverage. This is because cryptocurrencies are a value that is invested in the medium-long term, and leverage is used mostly for short-term operations or day trading. But let's explain how this works in the practice.
You start with $ 1,000 and decide to use leverage x2, which means you would have $ 2,000 to invest, since eToro would put the other $ 1,000 (which is double your initial amount).
A week later turns out that Tether goes up by 20% and now your investment costs 2,400. But you don't want to be too greedy, so you decide, wisely, to sell back.
First of all, the 1k $ of the leverage will be deducted. You have $ 1,400 left, of which $ 1000 is the money you invested yourself, so you'll have earned $ 400.
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment. That is pretty good.
Does it sound too wonderful? The trick is that the risk of losing out also increases. If everything goes as you planned, you will earn profits in little time; but if the opposite occurs, you will also lose more really quickly.
Let's suppose that the asset didn't increase by 20%, but it went down also by 20%, you won't lose $ 20 but double, $ 40. Because of that, the terms “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 Tether at $ 100, you can ask eToro to close when it reaches $ 120. That way, you make sure you won't be blinded by greed and decide to wait a bit longer in case it keeps rising, which could be a mistake since the price could go down again really fast.
On the other hand, when using leverage you also have to use Stop Loss, because a small decrease in the price of an asset can have a big impact on your wallet. That is why it is essential to mark a Stop Loss lower than that suggested by the broker.
How are CFDs and futures different?
What are the differences between Futures and CFDs?
- Which are the counterparties? With Futures, the counterparty is another investor. In CDFs, it’s the brokerage, in this case eToro
- Expiry date Futures have a determined expiration, while CFDs don’t expire
- Markets available for trading The market for Futures is narrower. With CFDs you can trade in several different markets.
- Minimum deposit amount or “trade size” Being higher numbers, Futures require, proportionally, lower fees. Costs for CFDs are a bit higher.
- Use of leverage With Futures, you can’t leverage; while with CFDs leverage is always available.
What are Contracts for Difference?
If you browsed eToro before, you probably realized that the acronym CFD appears frequently. We will explain its meaning now, but first, you should know that CFDs on eToro are only possible if you short sell.
We will also refer to terms such as leverage and “going short”, in case you are considering day trading cryptocurrency or more advanced operations.
eToro allows you not only to bet “in the black”, but with CFDs you can also bet “in red”. Let's say that you are sure that the Tether will go down, so probably you consider that the best thing to do is refrain from getting in until it does. However, if it really goes down, it is possible to earn some money out of that.
You can do that by “going short”. Here's how it works ,roughly:
- You ask someone to lend you, for instance, 100 units of Tether, which total value at that moment is $ 5,000 (these numbers are made up)
- You sell the 100 units and earn $ 5,000
- The Tether devaluates from $ 50 to $ 30
- You purchase the 100 units again, but their current value is now $ 3,000
- Then you return the 100 units
- You save the $ 2000 difference!
It is far more simple than it may seem. Just take into account that by trading in Tether on eToro, you can make money when you anticipate downs.
eToro Interface
As we have mentioned among the positive aspects of eToro, the best thing about this platform is its simplicity: anyone can use it without having to read endless explanations.
You won't have any issues with the interface if you are familiar with any of the most common social networks, like Facebook or Whatsapp.
Let's talk about the registration process and the different tabs you will find on the platform.
First of all, you will have to enter your personal data.
Also, you will have to answer some questions about your experience at investing.
However, it is not like you are answering an exam. It is only a way of finding out how much knowledge you have and what type of financial instruments they can suggest. For instance, if you have never invested before, they will not recommend that you invest in futures.
As soon as you are registered and have completed your profile, the annoying “incomplete profile” bar will disappear.
Let's review the different tabs of the interface.
“Set Price Alerts” allows you to put alarms on the price of certain securities. You just have to click on the three points at the end of the line and you will be able to program a price alert. This is very helpful when you are after an asset which price is decreasing, but it seems to you that it has not finished falling yet.
“News Feed” is for social purposes. This is the section where users can share opinions and learn from each other.
In “Discover” you will find the investment tabs: “Instruments”, “People” and “CopyPortfolios”. As we mentioned previously, the types of financial assets that eToro offers are:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Commodities
- Forex
- Index funds
The concept “social trading” makes sense in the section “People”: that is where you can replicate the trading strategies of the best investors with just one click. You'll be able to see all their profiles and historical performances.
Using the search box, you can find the investors that best suit your interests: by risk level, types of financial instruments, average earnings… Just indicate the amount you want to invest and eToro itself will replicate the movements of the selected investor, in proportion. This means that if you have $ 1000 and the trader puts 10% of his or her balance in an asset, eToro will invest also 10% of your money (in this case $ 100) in that same asset.
Also, here you will see CopyPortfolios classified into: Top Trader, Market, and Partner.
The advantage of copying to CopyPortfolios instead of individuals is that this way you will diversify the risk. There are all kinds of portfolios that you can find easily and are classified by sectors. So, in case you suspect a specific sector, such as e-commerce or drones, will have good incomes in the future, you can look for that specific portfolio and invest in it.
How does a virtual portfolio work?
If you do not have much experience as an investor, you can start by practicing with a “demo” option. Setting a virtual account and operating with fictional money is very easy.
This can be a great way of gaining experience and confidence before starting to trade with real money. The platform will give you an amount of $ 100.000 (“fake” or virtual, of course) to begin with, and you will be able to operate with a variety of assets in your portfolio, not only with Tether.
Don't worry, since if you lose all your virtual funds, you can contact support so they can add them back to your portfolio and you can try again.
Keep in mind that investing is mainly about being cautious, however, using a virtual portfolio might have the opposite effect. It is not the same to operate with your own money than with fake funds, which you can lose without a problem.
And of course, if you intend to invest in the medium or long-term, with profits almost guaranteed just by duplicating an index, it is absurd that you invest in the virtual mode and wait for years. On the other hand, short and medium-term trading is perfect to try out with the virtual mode.