Contents
Why we reccomend eToro for acquiring Tezos in India?
Why do we recommend it?
- Allows to imitate other investment moves
- You can go short
- It's very easy to operate
- Leverage is allowed
- There are lots of investment options
Main site: www.etoro.com/tezos
You should consider eToro in case you are thinking about investing in Tezos from India.
“Social trading”, an innovative investment method that consists in replicating techniques and moves from other experienced investors, has become popular thanks to eToro.
If you are still a newbie or do not have much experience in investments, eToro is great for you, since it automatizes your investment by replicating moves from other experienced people with a very long profit history. Additionally, in case you are an investor, the platform pays for your knowledge.
Besides, the interface of this site is amazingly manageable, great for a user who wants to start in the Tezos world, without getting crazy with lots of graphs and figures.
About ETFs
Have you heard about Exchange-traded funds or ETFs? They are similar to index funds and are known for combining the advantages of stocks and mutual funds, because they can be traded regularly at market price, but include a much wider diversity of assets and considerably lower rates.
Stocks
Stocks are the most common securities. Some publicly traded corporations divide their capital into portions: you can be one of those shareholders, but first, you should know where and how to make your investment.
There are two kinds of stocks: those that pay dividends and those that do not. Those that pay, at the end of the fiscal year, distribute earnings among the stockholders; the latter, on the contrary, do not. However, this is not to say that the latter have less to offer. If a company does not pay out dividends but has a lot of potential, it is also worth investing in it, since selling the shares in the future could pay much more.
On eToro, if you choose a company that distributes dividends, these will be deposited into your account, and you can withdraw your money or reinvest it. We suggest, if you don't need the money right away, that you take advantage of compound interest and reinvest it in the company itself.
Take into account that on eToro you can use leverage to “dope” your trades, but in that case, you will not receive interest as the trade would be a CFD. For long-term investments, it is not advisable to use leverage: you can end up losing money, because you will not receive dividends and, on top of that, you will have to pay commissions while your position is open.
Commodity market
Most investors trade with raw materials due to their stability. While other assets present higher fluctuation, raw materials prices vary less and offer safety against inflation or market volatility. However, prices do depend on supply and demand in the market, so if the fear of possible inflation provokes higher demand for a certain good, the price will also increase.
Consider that raw materials don't pay dividends. Therefore, the only potential further income would come from a sale of the asset.
There are two basic 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; while the latter are agricultural products, such as cocoa, soybeans, rice, or sugar, among many others.
Currency market
Forex or currency trading allows obtaining profits by converting one currency for another.
In case you want to trade EUR and USD, you speculate how many dollars it will take to buy a euro, with the expectation that the euro will raise its price 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, you'll be earning that margin.
Perhaps you already deducted this, but this kind of trading usually implies investing a lot, since variations are typically low, or using a lot of leverage, which is a bit like skating on thin ice, as you know. If you are just starting in trading, it is not a good idea to begin with this market, because it is very risky and complex.
eToro allows trading with the most known currency pairs. However, bear in mind that in this market sales are made through contract for differences, therefore you will not be the owner of the real asset.
Are you familiar with the term “leverage”? Just in case, we'll put it simply:
the good thing about trading is that it lets you invest even more than you can have in a given time. For instance, if you have $ 100 and you choose to leverage x2, the amount of your investment will be $ 200.
About leverage, Take Profit and Stop Loss
Let's say now that you know that Tezos is going to appreciate, thus you are thinking about “going long”.
You are completely certain that Tezos will rise, and you just have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
You could go to your bank, ask for a credit, wait for it to be accepted, wait for the money, and then obtain Tezos… Nevertheless, once you've managed doing all that, probably Tezos would be already much higher, and it wouldn't be a good idea to invest.
Leverage is exactly like a loan, but it is only a few clicks away! eToro allows you to invest (and earn) much more than what you have on the platform's wallet. It is really simple, before investing you will see the different options as in the screenshot:
Within other markets, the leverage you can choose is higher. This is because cryptocurrencies are a value that is invested in the medium-long term, and leverage is used especially for day trading or short-selling. Let's talk a bit more about how leverage works.
If for your investment of $ 1,000, you use leverage x2, your investment is 2 * $ 1,000, that is to say, $ 2,000. eToro would be “loaning” you the extra $ 1,000.
A couple of days later, as you predicted, Tezos has risen by 20% and the value of your investment is now $ 2,400. But you don't want to take too much risk, so it's time to sell.
First of all, the 1k $ of the leverage will be deducted. You have $ 1,400 left, of which $ 1000 is the money you put in yourself, so you'll have earned $ 400.
In conclusion, by investing $ 1000 you can make a profit of 40% (in the case you earn $ 400). That is quite good.
The trick is that the risk of losing out also increases. If everything goes as you planned, you will make more money in less time; however, if the value of the asset decreases, you will also lose more in less time.
For example: if instead of increasing by 20%, the price falls by 10%, you do not lose $ 10, but twice (the leverage) that figure, that would be $ 20. For that reason, when using leverage it is crucial to take into account Take Profit and Stop Loss.
Take Profit is an automatic order of selling once the asset achieves a certain price: you buy Tezos at $ 100 and you ask eToro to close your position as soon as the price reaches $ 120. It is very helpful to avoid being blinded by greed: we would all take a 20% profit when investing, but when you reach that 20% it is easy to ask yourself “what if this keeps increasing and it is a mistake to exit?”. It's like you got assured in advance that you will act prudently.
Also, if you use leverage you absolutely need to place a Stop Loss order (take into account that any small loss is greater with leverage). Consider that eToro will recommend a limit for Stop Loss, but you should set it lower than that.
Can you rely on eToro?
eToro is very rigorous with the information about past performances from investors, and its reliability has been tested once and again by independent organizations.
In the legal aspect, eToro complies with all the demanding policies of the European Union, legislation in which it is found. Specifically, its head office is in Cyprus, and it is approved by the CySEC or Cyprus Securities Market Commission, which protects up to € 20,000 of the debts from its clients, including those from India.
It is also supported by the European Financial Instruments Market or MiFID, and in the USA it responds to the Financial Conduct Authority (FCA). In addition to all these regulations, it should be mentioned that eToro has been active for fifteen years, with more than 20 million users around the world, so we can be sure that our money is safe.
It is also worth mentioning the great customer service. They have a phone number for assistance, a ticketing system to track any claim, and a live chat.
eToro payment methods
Among the payment methods available on eToro are: bank transfer, PayPal, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Neteller, and Skrill. Making a deposit on eToro is so simple: click “Deposit funds”, set an amount and pick the payment method you prefer.
Consider that for security policies, you need to be the owner of the credit card or the account.
The minimum first time deposit is $ 200, and there is a maximum limit for unverified accounts. Thus, if you intend to trade with large amounts, you will need to verify your account previously.
eToro accepts deposits in any currency, but you will have to pay a fee for the conversion to USD. That is why we recommend, if it is in your hands, using USD directly.
How are CFDs and futures different?
What are the differences between Futures and CFDs?
- Counterparty
- Futures: the exchange is made with someone else, another investor.
- CFDs: the counterparty is the brokerage, in this case, eToro.
- Date of expiration:
- Futures: there is an expiry date. At that moment, your position is closed even if you are in losses.
- CFDs: on the contrary, they do not have an expiry date. This means that you can wait for your position to rise before closing.
- Variety:
- Futures: it is very limited
- CFDs: a lot of variety, there are CFDs of practically anything
- Minimum deposit amount or “trade size”:
- Futures: minimum investment is higher
- CFDs: you can start with a small initial deposit
- Cost of trading and charges:
- Futures: as you have to invest more, costs are lower
- CFDs: higher (although not too much)
- Possibility of using leverage:
- Futures: you can't leverage
- CFDs: completely available
How do Contracts for Difference Work?
It is possible that you have seen the initials CFD now and then if you already accessed eToro. Before we come back to it, we must say that CFDs on eToro are only possible when you short sell or use leverage over x2 (although this is not even available on the platform).
We will also refer to terms like leverage and “going short”, in case you are considering day trading cryptocurrency or more advanced practices.
Even if you don't have a positive balance, you can still bet on eToro with CFDs. For instance, you are sure that the Tezos will go down, so you obviously think “if it is going to depreciate or go down in price, I'll just wait and bet when it has gone down”. Nevertheless, if it really falls, it might mean extra money for you.
You can accomplish that by “going short”. Here's how it works:
- You obtain from a loan 100 units of Tezos, valued at a total of $ 5,000 (these are completely made up figures)
- You sell them at their price at the moment, $ 5,000
- The Tezos goes from $ 50 to $ 30 (as you calculated, it devaluates)
- You purchase the 100 units again, but at $ 3,000
- Now you pay back the 100 units to the loaner
- The difference is yours, so, you will have made $ 2000
Take into account that it is much easier than it sounds: we can summarize this whole operation by saying that by trading in Tezos you can also earn money if you foretell it will go down.
How to use eToro
We mentioned before that one of the best features of eToro is that the platform is very friendly and easy to use. You don't need 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 of the most common social networks.
We will explain the registration steps and the different tabs that you will find.
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 registration, you will see that they ask you some questions about your experience at investing.
But don't feel like you are taking an exam. They only intend to find out how much you know and which financial instruments to recommend for you.
As soon as you are registered and have completed your profile, the “incomplete profile” bar will disappear.
Let's review the different tabs of the page.
With the “Set Price Alerts” tool, you'll be able to program an alert when a security is at a certain price. Just click the tab and you will be able to set it. This is helpful in case you want to purchase a security and you are waiting for it to decrease.
The section “News Feed” allows users to interact and learn from each other by sharing their opinion and experiences.
In “Discover” you will find the tabs: “Instruments”, “People” and “CopyPortfolios”. As we mentioned previously, the six types of instruments on eToro are:
- Cryptocurrencies
- ETFs
- Stocks
- Raw materials
- Forex
- Index funds
In “People” are all the profiles and historical performances of other users, and you can replicate their movements with just one click. This is where the “social trading” term is best applied.
You can find those traders that you find more interesting. You can search by risk level, financial instruments, or average profits, among other filters. When you choose an investor and indicate how much money you want to invest, eToro will automatically replicate their movements, in proportion. If you invest $ 1000 and the user puts 20% of their funds in an asset, the platform will also invest 20% of your money in the same company or instrument, in this case, $ 200.
You will also see the three main types of CopyPortfolios, which are classified into “Top Trader”, “Market” and “Partner”.
The benefit of using CopyPortfolios instead of copying individuals is that this way the risk will be more diversified. There are all kinds of portfolios that you can identify easily and are divided by sectors. So, if you think a specific industry, like e-commerce or healthcare, has good chances to succeed, you should look for that specific portfolio.