Contents
Why we reccomend eToro for investing in Gram from India?
Why do we recommend it?
- You can learn from other investment tactics
- You can go short
- It is uncomplicated and manageable
- Leverage is allowed
- There are tons of possibilities for investments
Go to the official site in English: www.etoro.com/gram
You should absolutely consider eToro if you are interested in buying Gram from India.
This platform is famous for making “social trading” a trend, an ingenious way of investing in which users can replicate the movements of other traders who have been generating earnings for years.
If you are still a newbie or do not have much investment experience, eToro is great for you. You can rest assured that you are making a smart investment since the site emulates those from subjects with a long profit record. Additionally, in case you are an investor, the platform pays for your knowledge.
Another thing to mention is how easy the interface is, which turns out perfect for new users that are learning all about the trading world.
About Contracts for Difference
It is possible that you have seen the initials CFD repeatedly if you entered eToro before. We will come back to it, but first, you should know that CFDs on eToro are only possible when you are short-selling.
FYI, and if you are considering day trading cryptocurrency or other advanced practices, you will also find out about terms such as leverage and “going short”.
The advantage of eToro is that it allows you not only to bet if you are “in the black”, but through CFDs you can also bet “in negative”. In a hypothetical case: you believe that the Gram will fall, so perhaps it is obvious to think “if it is going to depreciate, I'll just wait until it does”. Nevertheless, if you really think that it's going down, why not making some profits out of it?
You can accomplish that by “going short”. More or less, it functions like this:
- You ask for a loan of, let's say, 100 units of Gram, which total price at the moment is $ 5,000 (obviously, these figures aren't real)
- Next, you sell them at their price at the moment, $ 5,000
- The Gram goes from $ 50 to $ 30 (as you predicted, it devaluates)
- Again, you purchase the 100 units, but at the current value, $ 3,000
- Then you return the 100 units to the loaner
- The difference is yours, so, you will have earned $ 2000
It is far more simple than it may seem. Just remember that by trading in Gram on eToro, you can make a profit when you anticipate the price will fall.
Futures Vs CFD
What are the main differences between CFDs and Futures?
- Counterparties
- Futures: operations are made with someone else, another investor.
- CFDs: the counterparty is the broker, in this case, eToro.
- Date of expiry:
- Futures: they expire. Once the contract expires, it is closed even if you have losses.
- CFDs: there is no expiration date. You can wait for your position to rise before closing.
- Variety:
- Futures: options are much more limited
- CFDs: there is an enormous amount of options for trading
- Minimum deposit:
- Futures: you have to invest much more
- CFDs: you can start with a lower trade size
- Trading costs and charges:
- Futures: as you have to pay more in the first place, fees are lower
- CFDs: higher (although not excessively)
- Possibility of using leverage:
- Futures: you can't leverage
- CFDs: completely available
If you still don't know what “leverage” is, we'll describe it briefly: it is, simply, the ability to use a higher amount than you actually have. That way, if you start with $ 100 and you use x2 leverage, you will be investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Let's say that you are confident that Gram will rise, and you want to “go long”, but you only have $ 1,000 available. However, it is possible to put more and earn higher profits.
You could go to your bank, ask for a credit, put an asset as collateral, wait for it to be accepted and receiving the money, send the money to eToro, confirm that it arrived, and then buy Gram… However, when you finish doing all that, probably Gram would be already much higher, and it wouldn't be a good idea to invest.
With leverage, you can obtain that amount really easily. It's like a loan, but much better: you will get it from eToro, which allows you to invest a lot more than you have on the platform. As in the image below, you will see the different options you have:
With other assets, you can use more leverage. The reason: cryptocurrencies are a value that is invested in the medium-long term, and leverage is used especially for day trading or short-term operations. 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 really invest $ 2,000, since eToro would put the other $ 1,000.
A week later Gram 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.
You will have to pay back the $ 1,000 of leverage and the net profit would be $ 400 (since the other $ 1,000 was your initial investment).
With $ 1000 you get $ 400, in other words, 40% more. That's not bad at all, right?
It may sound too good to be true. 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 happens, you will also lose more really quickly.
Let's say that the asset didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but $ 40, because of the leverage. That is why the concepts of Take Profit and Stop Loss are so important when using leverage.
Take Profit is an automatic order of selling once the asset achieves a certain price: you buy Gram at $ 100 and you ask eToro to automatically close your position as soon as the price reaches $ 120. It is very helpful to avoid being blinded by enthusiasm: a 20% profit is usually very good, but once you see the price has risen, you might want to gain a bit more and decide to wait, but this could be a mistake. So, Take Profit helps you to trade more safely.
Stop Loss is even more necessary, especially if you use leverage, since a reduced loss with leverage can be fatal for your wallet. Consider that eToro will recommend a limit for Stop Loss, but you should place it lower than that.
Trading strategies
There are many methods to operate cryptocurrencies: for example, you can buy and hold, or you can day trade using volatility of the market to your advantage.
If you don't have much experience in investment, our suggestion is a middle point: when you open your position, place a stop-loss 15-20% below the maximum price, and forget about the operation.
For example, if you purchase a cryptocurrency when its price is $ 15, it increases to $ 25 and decreases again to $17, the stop-loss will allow your operation to be closed, perhaps at $ 21 or $ 22. Thus, you will obtain a fine profit.
It may sound more appealing to sell when the price is at its peak, right before corrections, 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 techniques, such as using leverage or going short.
How to deposit funds into your eToro account
Among the payment methods that you will find on eToro are: bank transfer, PayPal, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Neteller, and Skrill. Depositing funds with eToro is so simple: click “Deposit funds”, set an amount and select the payment method you prefer.
(Keep in mind that you must be the account or credit card owner, for security policies).
The minimum amount allowed is $ 200, and there is a maximum limit for unverified accounts. Thus, if you aim to trade with large amounts, you will need to verify your account previously.
You can pay in any currency you want and eToro will automatically convert it to USD. But we suggest depositing directly in USD since the platform charges a commission.
Is eToro safe for purchasing Gram?
eToro is very rigorous with the data about past performances from investors, and its integrity has been tested several times times by independent organizations.
Legally, eToro follows all the demanding regulations requested by the European Union. Its head office is in Cyprus, where it is approved by the CySEC or Cyprus Securities Market Commission, which can cover up to € 20,000 of the debts from its clients (those from India included).
eToro responds to the European Financial Instruments Market (MiFID) in Europe, and to the Financial Conduct Authority or FCA in the USA. You should also know that 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.
It is also worth mentioning the good functioning of its customer service. You can use the online chat, and they also have a phone number available for assistance.
How does a virtual account work?
In case you are taking your first steps as an investor, the possibility to operate in “demo” mode may be useful. You only need to set the “virtual” option and you will be able to trade with an imaginary balance.
This is a great tool for those who are new to this world and want to give it a few tries before trading with real funds. When you create your account, you will start with $ 100,000 of virtual funds to do all the operations that you can think of: not only with Gram, you can also create a diverse portfolio with all the different instrument that are available on eToro.
The first attempt is not usually that good. But don't worry, since you can ask support to deposit back the virtual funds to your account.
Nevertheless, keep in mind that investing is mostly about being cold-minded, and using a demo account can have the opposite effect. It is completely different to risk your real savings than to trade with a false balance which loss does not suppose any drama.
Finally, the virtual mode is kind of absurd if you intend to trade in the medium or long-term (which almost assures you a profit only by replicating an index), since you would be wasting years to see the results. Virtual accounts may be helpful for practicing before investing in the short or medium-term.
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.
Everyone who has used Instagram, Facebook or any of the most common social networks, has enough knowledge to use eToro.
We will explain, roughly, the registration process and the different sections that you will see on the platform.
You will have to provide some personal data (like full name or address, for instance) when registering.
During the sign-up process, you will also find some questions about your previous experience as an investor.
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 annoying “incomplete profile” bar will disappear.
Let's review the different functions of the platform.
In the “Set Price Alerts” tab you can put alerts on the price of certain securities. It is a very useful tool for when you want to buy 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 share their experiences and knowledge.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. And we already mentioned the kinds of assets that are available on eToro:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Raw materials
- Currencies
- Index funds
In the section “People”, you can find the public profiles of eToro users and their performances. This is where the term “social trading” makes sense since you can copy with just one click the movements of the users that inspire you the most.
In this section, you will be able to search and find users according to your interests. You can apply filters like country, average profits, or financial market. 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 trader puts 20% of their funds in an asset, the platform will put $ 200 of your funds in the same asset as well.
You will also see the three main types of CopyPortfolios, which are “Top Trader”, “Market” and “Partner”.
The benefit of using CopyPortfolios instead of copying individuals is that this way the risk is more diversified. There are all kinds of portfolios that you can identify easily and are classified by sectors. Thus, if you suspect a specific sector, like biotechnology or oil, has good chances to succeed, you can find that specific portfolio and invest.