Contents
eToro, an advisable online brokerage for acquiring NEO from India
Some of its advantages are:
- There are tons of goods you can invest in
- Leverage is allowed
- User-friendly and simple
- Allows to copy investment moves
- Admits short-trading
Homepage: www.etoro.com/neo
You should certainly consider eToro if you are interested in purchasing NEO from India.
“Social trading”, an innovative form of investing by replicating techniques and moves from other experienced investors, has become popular because of eToro.
If you are a beginner or do not have much experience in investments, eToro is very helpful, since it automatizes your investment by repeating strategies from those who have been doing it for years. And for those skilled investors willing to share their techniques, eToro rewards your knowledge with money.
Another advantage is how intuitive the platform is, which turns out perfect for new users that are learning all about the trading world.
How does eToro work?
As we have mentioned before, one of the best features of eToro is its extraordinary simplicity: anyone can use it without having to read endless explanatory texts.
You won't have any problems with the interface if you have used any of the most common social networks.
We will talk about how to register and the different tabs you will find on the platform.
When you register, 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 intimidated, there is no right or wrong answer. The only intention is to know more about you and determine which financial instruments they should suggest according to your knowledge and experience.
Let's see what the different sections of the page are.
With the “Set Price Alerts” tool, you'll be able to program an alert when a security is at a certain price. This is ideal if you want to buy an asset and you are waiting for its price to fall.
The section “News Feed” allows users to interact and share their experiences and knowledge.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. And we discussed previously in this guide the kinds of assets on eToro:
- Cryptocurrencies
- ETFs
- Stocks
- Commodities
- Currencies
- 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.
Using the search box, you can find the investors that best suit your interests: by risk level, types of financial assets, average earnings… Just indicate the amount you want to invest and eToro will replicate the movements of the investor you selected, in proportion. This means that if you have $ 1000 and the trader puts 10% in an asset, eToro will invest also 10% of your funds (in this case $ 100) in that same asset.
In this section you will also find the three main types of CopyPortfolios, which are Top Trader, Market, and Partner.
Sometimes you might prefer copying to CopyPortfolios than to other users, because the former offer more diversity. Besides, the portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … You think that a certain industry is going to have success in the future? Then you will surely find a CopyPortfolio about it.
In case you still don't know what “leverage” is, we'll put it short. When trading, it's the capacity of increasing your investment without putting more money. For example, you can enter with $ 100, but if you use x2 leverage, you will be investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Let's assume that you know that NEO is going to rise, therefore you want to take a long position.
You are positive that NEO will rise, and you just have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
There's the possibility of requesting a credit, but you must know that all the process takes time, and by the moment you finally get the money, NEO might be already so expensive (if your guess was right) that trading wouldn't be convenient anymore.
Leverage is like a credit, but it is only a few clicks away! eToro allows you to operate with much more money than what you have on the platform's wallet. Before trading, you will how much leverage to use as in the image:
With other assets, the ability to leverage is greater. Why? Because leverage is regularly for short-term operations, and cryptocurrencies tend to be a medium or long-term investment. Let's talk a bit more about how leverage works.
If you have the $ 1,000 and use leverage x2, you will be investing $ 2,000. eToro would be “loaning” you the extra $ 1,000.
A few days later, as you predicted, NEO raises its price 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 back.
You need to pay back the $ 1,000. You have $ 1,400 left, of which $ 1000 was yours initially, so the net profit is $ 400.
In conclusion, by investing $ 1000 you can make a profit of 40% (in the case you earn $ 400). That is quite good.
But watch out: if everything goes ok and the asset increases, you will make profits. On the other hand, if the price goes down, you will also lose more money really fast.
For instance: if instead of increasing by 20%, the price falls by 10%, you won't lose $ 10, but twice (the leverage) that figure, that would be $ 20. That is why the terms “Take Profit” and “Stop Loss” are crucial when using leverage.
Take Profit is the automatic order to sell once the asset is above the entry price: you purchase NEO at $ 100 and you ask eToro to automatically close your operation as soon as the price goes up to $ 120. It is very useful to avoid being blinded by greed: a 20% profit is usually pretty good, but once you see the price has risen, you might think you can earn even more, which is not always the case. Consequently, you might lose money if you don't close on time. So, Take Profit helps you reduce risks when trading.
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). For that reason, it is vital to mark a Stop Loss lower than that suggested by eToro.
How are CFDs and futures different?
Here are the most important differences between CFDs and Futures, in case you want to know more:
- Counterparties
- Futures: the exchange is made with another investor.
- CFDs: the counterparty is eToro, the brokerage. That means you do not “play” against or with another individual but the bank.
- Expiry:
- Futures: they expire on a given date. Once the contract expires, it is closed even if you have losses.
- CFDs: they don't expire. It is possible to wait until you are in a good shape to close.
- Variety:
- Futures: options are much more limited
- CFDs: a lot of variety, there is a huge diversity and types of CFDs
- Minimum deposit amount or “trade size”:
- Futures: you need to get in with a larger amount
- CFDs: it is very low
- Trading costs and charges:
- Futures: costs are usually lower
- CFDs: higher (although not too much)
- Leverage:
- Futures: you can't leverage
- CFDs: completely available
Trading strategies
There are lots of cryptotrading methods: from buying and holding to day trading using price fluctuations in your favor.
My recommendation for those who are starting to trade is something in the middle: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
For instance, if you buy a cryptocurrency at $ 15, then it rises up to $ 25 and decreases again to $17, the stop-loss will close your position at $ 21 or $ 22. Hence, you will obtain a good profit.
It may sound way better to sell when the cost is at its peak, but that is simply not possible. The above strategy is much more down-to-earth and it can give great results.
Later on, you will be able to apply more sophisticated strategies, such as going short or using leverage.
How does a virtual account work?
Are you beginning as an investor? Using a demo account can be very helpful. You just need to set the virtual mode and you can start trading with “fake” funds.
A virtual portfolio can help you to practice and gain experience before starting to operate with real funds. When you create your demo account, you will begin with a virtual balance of $ 100.000, to trade with a variety of assets available on the platform, besides NEO.
Don't worry, since if you lose all your virtual balance, you can contact support so they can add back the $ 100k to your demo account and you can make a second attempt.
But remember that trading is mainly about being cautious, and demo account trading can have the opposite effect. It is completely different to risk your own money than to operate with virtual funds that you don't mind losing.
Evidently, the demo mode is kind of pointless if you intend to trade in the medium or long-term, since you would be wasting years to see the results. Demo accounts may be useful for trying out before trading in the short or medium-term.