Contents
Why we reccomend eToro for acquiring Monero in USA?
Why do we recommend it?
- It is uncomplicated and user-friendly
- It uses techniques and moves from skilled investors so you can copy them
- Accepts “shorting” or short-selling
- You can trade leveraged
- There are uncountable products you can invest in
Official homepage: www.etoro.com/monero
You should definitely consider eToro in case you are interested in purchasing Monero from USA.
eToro is known for making “social trading” fashionable, an ingenious way of investing in which traders can repeat the moves of other investors who have been generating income over time.
eToro has solutions for you, even if you don't have much experience in trading. You can rest assured that you are making a smart investment since the site emulates those from subjects with a great deal of expertise. On the contrary, if you are an investor willing to share your techniques with others, eToro rewards you with money.
Another thing to mention is how intuitive the interface is, which turns out perfect for new users that are learning all about the trading world.
Can you rely on eToro?
eToro has been independently tested once and again to certify its integrity in displaying previous performance statistics. And it has been confirmed every time that eToro is meticulous with the figures.
The main headquarters of eToro is located in Cyprus, and therefore the broker is approved by the Cyprus Securities Market Commission (known as CySEC), which covers debts up to € 20,000 from its clients, including those from USA. Furthermore, eToro follows all the strict requirements of the European Union.
It is also supported by the European Financial Instruments Market or MiFID, and in the USA it is under the control of the Financial Conduct Authority (FCA). Besides all these regulations, eToro has been active for fifteen years, with more than 20 million users, so we can rest assured that our money is in good hands.
It is also worth mentioning the good functioning of its customer service. You can use the ticketing system, an online chat, and they also have a phone number available for assistance.
How to deposit funds into your eToro account
When it comes to payment on eToro, there is not much to say, since it is pretty simple. You only need to select “Deposit funds”, type an amount, and choose your payment method. You can pay with PayPal (available for some countries), bank transfer, credit card, Skrill, or Neteller.
Consider that for security reasons, you need to be the owner of the account or the credit card.
The minimum you can deposit is $ 200 and there is a limit of how much you can deposit if you are not verified. Therefore, in case you plan to operate with higher amounts, contact Support previously to verify your account.
The platform allows deposits or transfers in any currency, but charges a fee for making the conversion to USD. So it is better to use USD from the beginning.
How are CFDs and futures different?
What are the main differences between Futures and CFDs?
- Who is the counterparty? With Futures, the counterparty is another trader. In CDFs, it’s the broker (eToro)
- Expiration date Futures expire in a variable given date. CFDs don’t have expiry date
- 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” Costs for Futures are higher than costs for CFDs.
- Leverage With Futures, you can’t leverage; while with CFDs leverage is always available.
In case you still don't know what “leverage” is, we'll describe it briefly: it is the possibility to use a higher amount than you actually have. That way, if you start with $ 100 and you leverage x2, your initial investment will be $ 200.
Leverage, Take Profit and Stop Loss
Suppose now that you know that the price of Monero is about to raise its price, therefore you want to “go long”.
You are certain that Monero will rise, and you have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
You could go to your bank, request a loan, wait for it to be accepted, wait for the money, and then purchase Monero… However, when you finish doing all that, probably Monero would be already at a much higher price, and it wouldn't be a good idea to invest then.
Thanks to leverage, you can obtain that amount with two clicks. It's just like a loan, but much better: you will get it from eToro, which lets you invest much more than you have on the platform. As in the image below, you will see the different options you have:
When trading with other assets you can use even more leverage. Why? Because 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 for your investment of $ 1,000, you use leverage x2, you will be investing $ 2,000. eToro puts the remaining amount to reach that figure.
A few days later, as you thought, Monero increases 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.
You will have to give back the $ 1,000 of leverage and the net profit would be $ 400 (since the other $ 1,000 was your initial investment).
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment.
But there's always a downside. If everything goes ok and the asset increases, you will make money. On the contrary, if the price falls, you will also lose more money than you invested.
Let's imagine 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 terms “Take Profit” and “Stop Loss” are so important when using leverage.
Take Profit is a trading limit you can set for your assets: you program your operation and ask the platform to sell them once they get to a point above the entry price. For instance, you can buy Monero at $ 100 and request that your position is closed automatically when it reaches $ 120. It is very helpful to avoid being blinded by greed: a 20% profit is usually pretty good, but once you see the price has risen, you might consider you can earn even more, which is not always the case. As a result, you might lose money if you don't close on time. So, Take Profit helps you to trade more safely.
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 it is better to set it lower than that.
About ETFs
ETFs or Exchange-Traded Funds are a kind of passively managed fund, similar to index funds. We can say that ETFs are halfway between stocks and funds: they are traded in the market like stocks, during the day. However, their advantage is that they are more diversified compared to stocks, and the rates are much lower than those of an actively managed fund.
Foreign exchange market
Forex or currency trading allows obtaining profits by converting one currency for another.
If you decide to exchange euros and dollars, for example, you speculate how many dollars it will take to buy a euro, hoping that the euro will rise compared to the dollar. Therefore, if you bought each euro for 1.15 USD and you sell them back when their price is 1.20 USD, that margin will be yours.
You may be thinking that trading with currencies requires high investments, and you are not wrong, since variations are usually minimal, and if you use a lot of leverage to counter that, you will take a considerable risk. If you are a novice in trading, we don't recommend beginning with this market, because it is very risky and intricate.
The most known currency pairs are available on eToro but take into consideration that Forex works with contract for differences, which means the underlying asset won't be yours.
About ETFs
Exchange-Traded Funds or ETFs are a kind of passively managed fund, similar to index funds. They can be described as a merge between stocks and mutual funds, including the best of both. They can be traded like regular stocks, but include a wide diversity of assets and have lower fees.
About Index Funds
This is the best option for people who can invest in the long term, mostly for those who are starting to trade, because it is less expensive, diversified, and safer.
Contrary to common perception, it is not easy at all to beat the market (yes, you have probably heard of managers who achieve huge returns).
But putting aside some remarkable cases, not everything is as good as it sounds: when someone brags about having beaten the market, it was probably for a short time, or their charges are really high. In the end, indexing is better because commissions are minimal. Besides, past performances do not ensure a future one.
With index funds, you won't be concerned about that: although in the long term, they regularly beat active managers, and the commissions are minimal.
Commodities or raw materials
The major advantage of investing in commodities is that their price varies less than that of other financial assets. In fact, their intrinsic stability is what makes most people trade with commodities when facing market volatility or inflation. However, the prices of commodities are defined by their demand. Therefore, if a generalized fear of inflation causes higher demand, the prices will also rise.
Consider that, unlike stocks, raw materials don't pay dividends. So, by investing in them you will only have a further profit by selling them back.
Commodities are generally categorized into two kinds: first, we have hard raw materials, which are precious metals (gold, silver, copper, and platinum), industrial metals, and oil; in second place are soft raw materials, which are agricultural goods such as coffee, rice, soy, or sugar.
How do Contracts for Difference Work?
If you already registered on eToro, you probably noticed that the initials CFD appear all the time. Before we come back to this, you should know that CFDs on eToro are only possible when you are short-selling.
We will also explain concepts like short-selling and leverage, in case you are interested in day trading cryptocurrency or more advanced practices.
eToro allows you not only to bet “in the black”, but through CFDs you can also bet “in negative”. For instance, you believe that the Monero will go down, so probably you consider that the best thing to do is wait until it does and then go in. However, if you are convinced that it is going down, why not making some profits out of it?
You can do that by “going short”. Basically, it works like this:
- You get from a loan 100 units of Monero, which cost $ 5,000 (these are completely imaginary figures)
- You earn $ 5,000 by offering them at the market price
- The price is reduced, as you guessed, and the unit of Monero now costs $ 30 instead of $ 50
- You purchase all 100 units once again, but now they are worth $ 3,000
- Now you give back the 100 units
- The difference is yours, so, you will have earned $ 2000
Take into account that it sounds much more complicated than it is: we can summarize this whole operation by saying that by trading in Monero you can also make money if you anticipate it will go down.
How does eToro work?
We said before that eToro is very friendly and intuitive. Anyone can start using it without having to read endless explanations.
If you are familiar with any of the most popular social networks today, such as Instagram or Facebook, you can perfectly manage this platform.
We will talk about how to register and the different tabs you will find on the page.
You will have to fill in some requested data when registering.
During the sign-up process, you will also find some questions about your previous trade experience.
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 recommend. For example, if it is your first experience in the investment world, they will not recommend that you invest in futures.
Let's review the different tabs of the page.
“Set Price Alerts” allows you to put alarms on the price of certain assets. You just have 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 helpful when you are after a security 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.
In “Discover” you will find the investment tabs: “Instruments”, “People” and “CopyPortfolios”. As we mentioned before, the types of financial instruments available on are:
- Cryptocurrencies
- ETFs
- Stocks
- Commodities
- Currencies
- Index funds
In the tab “People” are all the profiles and historical performances of other investors, and you can replicate their movements with just one click. This is where the “social trading” concept is best applied.
You can search for those users that you find more interesting: by average earnings, types of instruments or risk level, for instance. You just have to type the amount you want to invest and eToro itself will replicate the movements of the selected investor, in proportion. This means that if you put $ 1000 and the investor puts 10% of their capital in Amazon, eToro will invest $ 100 of your balance in the same company.
Also, here you will see CopyPortfolios classified into: Top Trader, Market, and Partner.
The advantage of using CopyPortfolios instead of copying people 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. Thus, if you think a specific sector, like biotechnology or oil, will prosper in the future, you can find that specific portfolio and do your investment.
Trading strategies
You can operate cryptocurrencies in many different ways: from buying and waiting to day trading using price fluctuations to your advantage.
My recommendation for those who are starting to invest is something in the middle: when you open your Monero position, place a stop-loss order 15-20% under the maximum price, and let the rest happen on its own.
For instance, if you purchase a cryptocurrency when it is worth $ 15, it rises up to $ 25 and falls again to $17, the stop-loss will allow your operation to be closed, perhaps at $ 21 or $ 22. Therefore, you will get a pretty good income.
You may be wondering: why not selling when the price is at its peak? But unless you are a psychic, that is just not possible. The mentioned strategy can work perfectly and is more realistic.
Later on, you will be able to apply more sophisticated strategies, like short-selling or using leverage.