Contents
Why we reccomend eToro for acquiring Stellar in India?
Why do we recommend it?
- User-friendly and simple
- You can learn from other investment tactics
- Allows you to go short
- You can leverage
- You can make investments in tons of other products
Official homepage: www.etoro.com/stellar
In case you are considering it, eToro is the best option today to purchase Stellar from India.
“Social trading”, an innovative way of investing by replicating techniques and strategies from other experienced investors, has become popular because of eToro.
eToro is very helpful if you don't have much experience in trading, since it automatizes your investment by repeating strategies from experienced traders with a long profit history. Oppositely, if you are an expert in the subject willing to share your abilities with other traders, eToro rewards you with money.
Besides, the interface of the platform is so uncomplicated, great for users who want to begin in the Stellar world, without ending up overwhelmed with tons of diagrams and numbers.
Is eToro trustworthy for purchasing Stellar?
eToro has been tested by independent organizations once and again to verify its integrity in the treatment of data from previous users. Every time, it has been confirmed that eToro is rigorous with the information.
The main office of eToro is located in Cyprus, and the platform is approved by the CySEC or Cyprus Securities Market Commission, which can cover up to € 20,000 from its client's debts. On the other hand, eToro meets all the strict policies of the European Union.
It is also supported by the European Financial Instruments Market (MiFID), and in the USA it is under the control of the Financial Conduct Authority (FCA). In addition to all these regulations, eToro has more than 20 million users worldwide, and it has been operating for the last fifteen years. In short, we can be certain that our money is in good hands.
It is also worth mentioning the great customer service. You can use the online chat, and they also have a phone number available for assistance.
How to deposit funds into your eToro account
When it comes to depositing money on eToro, there is not much to say, since it is pretty simple. Just click “Deposit funds”, set an amount, and choose your payment method. You can pay with PayPal, bank transfer, credit card, Skrill, or Neteller.
(Keep into consideration that you must be the account or credit card owner, for security reasons).
You can start from $ 200, and there is a limited maximum for unverified accounts. Thus, if your intention is to deposit larger sums, you should contact Support to verify your account.
Also, remember that you can make the transfer in any currency because eToro defaults all deposits to USD, although it charges a fee, so it is better to make the transfer directly in USD.
What's the difference between CFDs and futures?
How are Futures and CFDs different?
- Which are the counterparties? With Futures, the counterparty is another trader. In CDFs, it’s the broker (eToro)
- Expiry date Futures expire in a variable given date. CFDs don’t expire
- Variety of options for trading The market for Futures is narrower. CFDs include a wide range of possibilities.
- Minimum deposit 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.
In case you haven't heard about “leverage”, we'll put it short: it is, simply, the ability to invest a higher amount than you actually have. For example, you can enter with $ 100, but if you leverage x2, your initial investment will be $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Let's say that you have complete certainty that Stellar will rise, and you consider “going long, but you only have $ 1,000 available. However, it is possible to put more money and earn higher profits.
Possibly, you could ask a financial company for a loan, put an asset as a guarantee, wait for it to be accepted and receiving the money, and then obtain Stellar… However, once you've managed doing all that, probably Stellar would be already at a much higher price (if your prediction got confirmed), and investing wouldn't be a good idea at that moment.
Leverage is exactly like a credit, but it is only a few clicks away! You will be able to invest (and earn) much more money than what you have on the platform. Before trading, you will find the leverage options as in the image:
Within other markets, the ability to leverage is greater. The reason: cryptocurrencies regularly represent medium-long term investments. However, leverage is used mostly for short-term operations or day trading. That said, I'm going to explain better how leverage works:
- If you want to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 (remember that$ 1,000 are a “loan” from eToro).
- Then, turns out that Stellar does increases, as you assumed, and now the price of your investment is $ 2,400 (20% higher), so you decide to sell back.
- The $ 1k of leverage will be deducted, and you will have $ 1,400 left; which means you've earned $ 400, since the other $1,000 was yours from the beginning.
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment.
But there's always a drawback. If all goes as you intended and the asset increases, you will make profits. However, if the asset decreases, you will also lose more money than you invested.
Supposing that the price didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but double, $ 40. For that reason, the concepts of Take Profit and Stop Loss are so important when operating 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 Stellar at $ 100, you request 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 going up, which could make you lose it all.
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 lead to a substantial loss. That is why it is vital to establish a Stop Loss lower than that suggested by the platform.
About Contracts for Difference
If you already have been on eToro, you probably realized that the acronym CFD appears repeatedly. Before we explain this further, you should know that CFDs on eToro are only possible when you are short-selling.
We will also refer to terms such as going short and leverage, in case you are considering day trading cryptocurrency or other more advanced operations.
Even if you aren't “in the black”, you can still bet on eToro with CFDs. In a hypothetical case: you are sure that the Stellar will go down, so perhaps it is obvious to think “if it is going to depreciate (go down in price), I'll just wait until it does”. Nevertheless, if it really goes down, it is possible to earn some money out of that.
You can accomplish that by “going short”. More or less, this is how it works:
- You get from a loan 100 units of Stellar, with a total value of $ 5,000 (these are completely imaginary numbers)
- You make $ 5,000 by selling the 100 units
- The Stellar devaluates from $ 50 to $ 30
- Again, you buy the 100 units, but at the current value, $ 3,000
- Then you give back the 100 units
- The difference is yours, so, you will have earned $ 2000
It is far more simple than it may seem. Just take into account that by trading in Stellar on eToro, you can make money if you anticipate downs in the price.
How to use eToro
We said before that eToro is very easy to manage. Anyone can start investing without having to read endless explanations.
You won't have any problems with the interface if you have used any of the most common social networks, like Facebook or Whatsapp.
We will explain, roughly, the registration process and the different tabs that you will find.
You will have to provide some personal information when registering.
Additionally, you will have to answer some questions about your experience as an investor.
However, it's not like they're testing you or anything. They are only measures to know how much knowledge you have and what type of assets they can suggest. For example, if it is your first experience in the investment world, they will not recommend that you invest in futures.
As soon as you are registered and have completed your profile, you will stop seeing the “incomplete profile” message.
Let's see what the different sections of the page are.
In the “Set Price Alerts” tab you can put alerts on the price of certain securities. You only need to click on the three points at the end of the line and you will be able to program a price alarm. This is very useful when you are after an asset which price is decreasing, but it seems to you that it will decrease even more.
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”. And we discussed previously in this guide the different financial instruments on eToro:
- Cryptocurrencies
- Exchange-Traded Funds
- Shares
- Commodities
- Currencies
- Index funds
In “People” are all the profiles and historical performances of other investors, and you can replicate their strategies with just one click. This is where the “social trading” term is best applied.
You will be able to find those users that you find more interesting. When you select an investor and indicate how much you want to invest, eToro will automatically replicate their movements, proportionally. If you invest $ 1000 and the user puts 20% of their funds in an asset, eToro will also invest 20% of your money in the same company or instrument, in this case, $ 200.
You will also find the CopyPortfolios divided into three main kinds: “Top Trader”, “Market” and “Partner”.
In some cases, it might be better to copy from CopyPortfolios than to other traders, since the former offer more diversity. There are all kinds of portfolios that you can identify easily and are classified by sectors. Thus, if you suspect a specific industry, like e-commerce or healthcare, has good chances to succeed, you should probably look for that specific portfolio.
Trading strategies
When trading cryptocurrencies, there are different possible methods or strategies, such as day trading or buying and holding, for naming just a few.
In case you are just beginning in the world of trading, I suggest something in the middle: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
Therefore, if for example you acquire a cryptocurrency at $ 10, it reaches $ 20, and after that it decreases to $ 12, your stop loss will take you out of the trade at $ 16-17 and you will obtain a pretty good profit.
You may be wondering: why not selling when the cost is at its highest? But unless you are a psychic, that is just not possible. The mentioned strategy can work perfectly and give good results.
Later on, you will be able to apply more complex strategies, such as short-selling or using leverage.
Practice account
In case you do not have much experience investing, you can start by practicing with a “demo” option. Setting a virtual account and trading with fictional funds is very simple.
This tool is great for those who are new to this world and want to put their talents to the test before playing for real funds. When you create your account, you will start with $ 100,000 of virtual balance to do all the operations that you can think of: not just with Stellar, you can also work with a diverse portfolio.
If your performance is not that good and you lose your funds, you can always ask the platform to replenish $ 100k of virtual funds. You'll probably do better on the second try.
But remember that you need to be prudent for trading, and demo account trading can have the opposite effect. It is not the same to risk your real savings than to do operations with virtual funds which loss does not suppose any drama. Also, using fake money can prevent you from learning to control your emotions, as a true investor should.
Finally, if you are interested in trading in the long or medium-term, there is no point in using the virtual mode and having to wait for years. But it can be very useful if you want to practice short and medium-term investment.