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eToro, our favorite platform for purchasing Bitcoin Cash in USA
Advantages:
- Lets you make investments in thousands of other goods
- eToro allows leverage
- User-friendly and simple
- It offers other successful investment strategies so you can replicate them
- Admits “shorting” or short-selling
Go to the official site in English: www.etoro.com/bitcoin-cash
eToro is probably the best way to buy Bitcoin Cash from USA.
This broker is famous for making “social trading” a trend. Social trading is a revolutionary way of investing in which traders can emulate the strategies of other investors who have been making profits for years.
eToro is very useful if you don't have much experience in trading, because it puts your investment on autopilot by emulating moves from traders with a long profit history. Also, in case you do have experience in investment, eToro pays you for sharing it with the community.
It is also worth mentioning how easy is to manage the platform, excellent for new traders who are starting in the investment world.
About ETFs
Exchange-Traded Funds or ETFs are similar to index funds. We can say that ETFs are halfway between stocks and funds: they can be traded like regular stocks, but include a wide diversity of assets and have lower fees.
Stocks
The most well-known financial instruments are stocks: these are the parts in which an enterprise that chooses to go public is divided. You can be a shareholder of a company and have returns, but you must know where to invest your money.
Basically, there are two kinds of stocks: the ones that payout at the end of every fiscal year to the investors, and those that don't. The former ones are great, of course, but investing in the latter can be a good idea too since the profit you can make by selling the shares can be even larger.
If you invest in equities that payout, you will receive the funds into your eToro account, and you can withdraw them or invest back. Nevertheless, you can take advantage of compound interest, so our suggestion is that you reinvest.
If you trade with stocks on eToro, you can use leverage. But it is not advisable, since it would be a CFD and you would not receive dividends. Also, shares are regularly long-term investments, and you have to pay commissions during the time your operation is open.
Raw materials
The major advantage of trading with raw materials is that their price fluctuates less than that of other financial assets. Actually, their stability is what makes most investors trade with raw materials when facing possible inflation or market volatility. However, the cost of commodities depends on supply and demand, so if faced with the fear of inflation, demand rises a lot, so will the price.
Note that commodities don't pay dividends. Thus, the only potential further earnings would come from a future sale of the asset.
Raw materials are commonly classified 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 like coffee, rice, soy, or sugar.
Foreign exchange
Forex or currency trading allows obtaining profits by exchanging one currency for another.
If you decide to trade EUR and USD, for instance, you speculate how many dollars it will take to buy a euro, therefore you hope that the first currency (the euro) will revalue compared to the second (the dollar), to make a profit by selling it. Let's say you entered when the price of one euro is 1.10 USD and you leave when it reaches 1.15: consequently, you will gain that margin.
You may be thinking by now that this form of trading requires high investments, and you're right, since fluctuations are usually minimal, and if you use a lot of leverage to counter that, you will take a considerable risk. Our recommendation for those who are new in the world of trading is not to start with Forex, but with a safer and more secure market.
Most currencies are available on eToro. Still, consider that this market functions with contract for differences, which means you will not own the underlying asset.
Have you heard about “leverage”? We'll put it simply:
trading lets you invest more money than what you really have. Let's say that you enter with $ 100 and you put them with x2 leverage, you will be actually investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Assuming that, for example, you are sure that Bitcoin Cash is going up, and that you have $ 1,000 for “going long”, you must know that you can increase your investment and make more money.
Possibly, you could ask your bank for a credit, wait for it to be accepted and receiving the money, send the money to eToro, confirm that it arrived, and then acquire Bitcoin Cash… However, once you've managed doing all that, probably Bitcoin Cash would be already much higher, and it wouldn't be a good idea to invest then.
With leverage, you can get that amount of money really easily. It's just like a loan, but much better: you will get it from eToro, which lets you invest a lot more than you have on the platform. Before trading, you will how much leverage to use as in the image:
When operating with other kinds of assets you can use higher leverage. Why? Because cryptocurrencies are a value that is invested in the medium-long term. However, leverage is used primarily for short-term operations or day trading. But let's see 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 gives you the remaining amount to reach that figure.
A week later turns out that Bitcoin Cash goes up by 20% and now your investment costs 2,400. So, a wise decision is to sell them back now.
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.
It may sound too good to be true. The trick is that the risk of losing out also increases. If everything goes as planned, you will make more money in less time; but if the value of the asset decreases, you will also lose more in less time.
For instance: if the price falls by 10%, you won't lose $ 10, but $ 20. For that reason, when operating with leverage it is very important to know about Take Profit and Stop Loss.
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 Bitcoin Cash 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 keep waiting in case it keeps rising, 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 have a big impact on your wallet. Take into account that eToro will recommend a limit for Stop Loss, but it is better to set it lower than the platform suggests.
How to deposit funds on eToro
Within the payment methods that you will find on eToro are: bank transfer, PayPal, credit card, Neteller, and Skrill. There is not much to explain here: making a deposit with eToro is a very easy process. You just need to go to “Deposit funds”, type the amount and choose your payment method.
Of course, keep in mind that for security policies, you need to be the holder of the account or the credit card.
The minimum you can deposit is $ 200 and there is a maximum limit of how much you can deposit if you are not verified. Therefore, if you want to trade with larger sums, contact Support beforehand to verify your account.
eToro allows deposits or transfers in any currency, but charges a fee for making the conversion to USD. That is why we suggest, if possible, using USD directly.
How are CFDs and futures different?
How are Futures and CFDs different?
- Counterparty
- Futures: the exchange is made with another trader.
- CFDs: the operations are not made with another individual, the counterparty is the brokerage.
- Date of expiry:
- Futures: there is a date of expiry. When that moment arrives, the contract is ended even if you are in red.
- CFDs: on the contrary, there is no expiration date. This means that you can wait for your position to rise before closing.
- Options for trading:
- Futures: there are limited options for investment
- CFDs: you have plenty of options to choose from, there is a wide diversity of CFDs
- Minimum investment amount:
- Futures: you need to start with a higher amount
- CFDs: very low
- Cost of trading and rates:
- Futures: as you need to pay more in the first place, rates are lower
- CFDs: fees are higher
- Use of leverage:
- Futures: absent leverage
- CFDs: existing and accessible
About Contracts for Difference
If you already have been on eToro, you must have noticed that the acronym CFD appears all the time. Before we explain this further, you should know that CFDs on eToro are only possible if you are short-selling or use leverage higher than x2 (nevertheless, this is not even available on eToro).
In case you are considering day trading cryptocurrency or other practices, you will also find concepts such as leverage and “going short”.
With CFDs you can bet on the platform even if you are “in red” or don't have a positive balance. Let's say that you are sure that the Bitcoin Cash will go down, so you obviously think “if it is going to depreciate or go down in price, I'll just wait and go when it has gone down”. Nevertheless, if you really consider that it's going down, why not making some profits out of that?
You can accomplish that by “going short”. More or less, it works like this:
- You ask someone to lend you, for instance, 100 units of Bitcoin Cash, which cost $ 5,000 at the moment (obviously, these figures are made up)
- You make $ 5,000 by selling the 100 units
- As you thought, it depreciates, and the unit of Bitcoin Cash goes from $ 50 to $ 30
- You buy the 100 units again, but their total current value is now $ 3,000
- You return the 100 units
- You will have made $ 2000, since you keep the difference
It is far more simple than it may seem. Just remember that by trading in Bitcoin Cash on eToro, you can make money when you anticipate the price will fall.
How does eToro work?
We mentioned previously that eToro is very friendly and intuitive. Anyone can start investing without having to read endless explanations.
If you are familiar with any of the most popular social networks today, like Instagram or Facebook, you can perfectly use eToro's interface.
We will explain the registration process and the different sections that you will see.
You will have to fill in some requested data when registering.
Also, you will see that they ask you some questions about your experience at investing.
However, it is not like you are answering a test. It is only a way of finding out how much knowledge you have and what type of assets they can recommend. For example, if it is your first experience in the investment world, they will not recommend that you invest in futures.
Next, we will explain the fundamental sections of the page.
With the “Set Price Alerts” tool, you'll be able to program an alarm when a security is at a certain price. Just click the tab and you will be able to set it. This is perfect in case you want to purchase an asset and you are waiting for it to decrease.
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
- Shares
- Commodities
- Forex trading
- Index funds
In “People”, you will find the public profiles of eToro users and their past performance. This is where you can duplicate the movements of your preferred traders.
You can search for those users that you find more interesting: by average profits, types of assets or risk level, for instance. You just have to type the amount you want to invest and eToro itself will be in charge of replicating the movements made by the selected investor, in proportion. This means that if you have $ 1000 and the trader puts 10% of his or her balance in an asset, the platform will invest also 10% of your funds (in this case $ 100) in that same asset.
In this part you will also see the three most popular types of CopyPortfolios, which are Top Trader, Market, and Partner.
Sometimes you might prefer copying to CopyPortfolios than to particular users, because you avoid putting all your eggs in one basket. There are all kinds of portfolios that you can identify easily and are classified by sectors. So, in case you think a specific industry, such as e-commerce or drones, will prosper in the future, you should probably look for that specific portfolio.
Virtual portfolio: How does it work?
In case you do not have much experience as an investor, you can start by practicing with a “demo” option. Setting a virtual account and operating with fictional money is very simple.
A virtual portfolio can be a good way of practicing before starting to trade with real funds. When you open your demo account, you will begin with a virtual balance of $ 100.000, to operate with a variety of financial instruments available on eToro, besides Bitcoin Cash.
If your performance is not that good and you lose your funds, there is always a possibility to replenish your virtual balance. Probably on the second try you will improve a lot.
Keep in mind that trading is mostly about being cold-minded, and perhaps using a demo portfolio can prevent you from controlling your impulses. It will never be the same as risking your own money.
And of course, 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. On the other hand, it can be very useful if you want to practice short and medium-term trading.