Contents
eToro, our reccomended option for purchasing Tezos in Bangladesh
Why do we recommend it?
- It is possible to make investments in thousands of different goods
- Leverage is allowed
- It's very easy to handle
- It offers other successful investment strategies so you can copy them
- You can short sell
Official site: www.etoro.com/tezos
In case you are considering it, eToro is probably the best way to obtain Tezos from Bangladesh.
eToro is popular for making “social trading” a trend. Social trading is an ingenious form of investing in which users can imitate the movements of other traders who have been generating income for years.
If you are still a newbie or do not have much investment experience, eToro is very helpful. You can rest assured that you are doing a smart investment move when replicating those from subjects with a long profit record. Additionally, in case you do have experience in investment, eToro pays you for sharing it with others.
Another advantage is how easy the interface is, which turns out perfect for new users that are learning all about Tezos.
Exchange-Traded Funds
Have you heard about Exchange-traded funds or ETFs? They are similar to index funds and are known for combining the advantages of stocks and mutual funds, because they can be exchanged at any moment in the market, but have much more investment possibilities and the fees are significantly lower.
ETFs
ETFs or Exchange-Traded Funds are a type of passively managed fund, similar to index funds. They can be described as a merge between stocks and mutual funds. They can be traded like regular stocks, but include a wide diversity of assets and the rates are much lower than those of an actively managed fund.
About Index Funds
Index funds are most adequate for those interested in long-term trading, especially for beginners. If you don't need to use the amount of money you'll invest in less than five or ten years, index funds offer you security and diversity.
Perhaps you have a different idea, but very few investors can beat the benchmark (yes, you have surely heard of managers who achieve huge profits).
But putting aside some unusual cases (like Warren Buffett's), all that glitters is not gold: when someone brags about having beaten the market, it was probably for a limited time, or their fees are really high. Also, if something happened in the past it doesn't necessarily represent a regular behavior.
The good thing about index funds is that they solve both issues: their commissions are minor and in the long term they almost always beat active managers.
Forex trading
What is known as Forex trading consists in the exchange of currencies. In other words, is the conversion between two currencies to make a profit through the operation.
In case you want to trade the EUR/USD pair, you purchase euros and pay with dollars, with the expectation that after obtaining the first currency (the euro) it will raise its price 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 exit when it is worth 1.15: that margin is yours once you sell again.
Perhaps you already inferred this, but trading with foreign exchange usually implies large resources, since variations are normally low, or using much leverage, which could be incautious, as you know. If you are just starting to trade, we don't recommend beginning with this market, because it's not the safest alternative.
Most currencies are available on eToro. However, keep in mind that in Forex trading sales are always made through CFDs, thus the underlying asset won't be yours.
Equities
The most common financial instruments are stocks: these are fractions in which an enterprise can be shared. You can own a proportion of a company and have returns, but first, you should know where and how to invest your money.
We can categorize stocks into two main types: the ones that divide their earnings regularly among 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.
When trading on eToro, if you invest in stocks that give dividends, you will receive them in your account, and you can collect them in cash or reinvest them. We recommend, if you don't have financial urgencies, that you don't renounce the magic of compound interest and reinvest it in the company itself.
If you trade with stocks on eToro, you will be able to use leverage. However, it is not advisable, since it would be a CFD and you would not get dividends. Besides, as shares tend to be long-term investments, you will have to pay commissions during the time your position is open.
Commodities (raw materials)
Most investors trade with raw materials because of their stability. While other assets tend to fluctuate more, raw materials prices vary less and offer security against inflation or market volatility. However, prices are subject to supply and demand in the market, so if an economic situation provokes greater demand for a certain good, the price will also increase.
Keep in mind that the only intended income from the investment in raw materials will come from their further sale because, unlike stocks, commodities do not pay dividends.
Commodities can be divided into two main types: hard raw materials and soft raw materials. The former include precious metals (such as gold, silver, copper, and platinum), industrial metals, and oil; while the latter are agricultural resources, such as cocoa, soybeans, rice, or sugar, among many others.
BTW, do you know what leverage is? We'll put it simply:
another advantage of trading is that it lets you invest higher figures than you can have in a given time. Let's say that you have $ 100 and you put them with x2 leverage, the amount of your investment will be $ 200.
Why using leverage and how to do it
Suppose now that you know that Tezos is going to rise, thus you decide “going long”.
You are absolutely sure that Tezos will go up, but you can only invest $ 1,000. Isn't it a shame to miss out on the opportunity to earn more money?
Possibly, you could ask a financial company for a credit, wait for it to be accepted, wait for the money, send the money to eToro, confirm that it arrived, and then purchase Tezos… Nevertheless, once you've managed doing all that, probably Tezos would be already at a much higher price, and investing wouldn't be a good idea anymore.
Leverage is like a loan, but it is only a few clicks away! eToro allows you to operate with much more money than what you have on the platform. Before trading, you will be able to choose between the different leverage options as in the screenshot:
With other assets, you can use more leverage. The reason is that leverage is most common in short-term operations or day trading, and cryptocurrencies tend to be a medium or long-term investment. That said, I'm going to explain better how leverage works.
You begin with $ 1,000 and decide to use leverage x2, which means you would have $ 2,000 to invest (the extra $ 1,000 to reach $ 2,000 are “borrowed” from eToro).
A week after that, Tezos goes up by 20% and now your investment costs 2,400. But you don't want to be too reckless, 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).
As you can see, with $ 1000 you get $ 400, in other words, 40% more. That's not bad at all.
Still wondering where the catch is? The thing is, you can also lose money. If everything goes as you planned, you will earn more money in less time; however, if the value of the asset goes in the opposite direction, you will also lose more in less time.
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 concepts of Take Profit and Stop Loss are crucial when using 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 Tezos at $ 100, you can ask eToro to close once it reaches $ 120. That way, you make sure you won't change your mind and decide to wait a bit longer in case it keeps going up, which could be a mistake.
Stop Loss is even more necessary, particularly when trading with leverage, since a small loss could have a significant impact. Take into account that eToro will recommend a limit for Stop Loss, but it is better to place it lower than that.
Is eToro safe for purchasing Tezos?
eToro is very rigorous with the data about past performances from investors, and its integrity has been tested several times times by independent organizations.
The main office of eToro is located in Cyprus, and therefore the broker is approved by the Cyprus Securities Market Commission (or CySEC), which covers debts up to € 20,000 from its clients, including those from Bangladesh. The platform complies, on the other hand, with all the strict policies of the European Union.
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 around the world. So, yes, it is a safe broker.
No less important is their excellent customer service. They have a phone number for assistance, a ticket system, and a live chat.
Futures Vs CFD
What are the differences between CFDs and Futures?
- Counterparties
- Futures: operations are made with another investor.
- CFDs: the counterparty is the broker (eToro).
- Date of expiry:
- Futures: there is an expiration date. When that date arrives, your operation is closed even if you are in losses.
- CFDs: on the contrary, there is no expiration date. It is possible to wait until you are in a good shape to exit.
- Trading markets available:
- Futures: there are limited options for investment
- CFDs: they include lots of different assets, commodities and currencies
- Minimum investment amount or “trade size”:
- Futures: you have to invest much more
- CFDs: very low
- Trading costs:
- Futures: as you need to invest more, costs are lower
- CFDs: higher (although not excessively)
- Leverage:
- Futures: there is no leverage leverage
- CFDs: it is always possible to leverage
How to use eToro
We mentioned before that eToro is very friendly and intuitive. Anyone can start using it without previous experience or long explanations.
If you have used any of the most common social networks, you can perfectly use this platform.
Now we will detail the sign-up process and the sections of the eToro interface that you should know.
You will have to fill in some requested data when registering.
Additionally, you will see that they ask you some questions about your experience as an investor.
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 suggest. For instance, if you have never invested before, they will not suggest that you invest in futures.
Let's get to know the fundamental sections of the platform.
With the “Set Price Alerts” tool, you'll be able to program an alarm when an asset is at a certain price. This is ideal in case you want to buy an asset that is falling but you believe it will decrease more to a certain point.
The section “News Feed” allows users to interact and learn from each other by sharing their opinion and experiences.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we mentioned in this guide, the trading instruments available on are:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Raw materials
- Currencies
- Index funds
The concept “social trading” comes to life in the section “People”: that is where you can duplicate the strategies of the investors you find most inspiring. You'll be able to see all their profiles and performances.
You can search for those investors that you find more interesting: by average profits, types of assets or risk level, for instance. Just indicate the amount you want to invest and eToro itself will be in charge of replicating the movements made by the investor you selected, in proportion. “In proportion” 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 asset.
In this part you will also see the three main types of CopyPortfolios, which are Top Trader, Market, and Partner.
The advantage of using CopyPortfolios instead of copying individuals is that this way you will diversify the risk. The portfolios are identified so you can recognize them easily: one about gaming, another about large drone companies, another about pharmacy … Do you suspect that a certain sector is going to succeed anytime soon? Then look, because surely there is a CopyPortfolio about it.
Investment strategies
There are different methods or ways for crypto trading, such as buying and holding or day trading, for naming just a couple.
My recommendation for those who are beginning to invest is going for a middle point: when you open your position, set a dynamic stop loss 15-20% below the highest price, and let the rest happen on its own.
This means that if, for example, you buy a cryptocurrency at $ 10, it reaches $ 20, and after that it decreases to $ 12, your operation will be closed at $ 16-17 and you will make a pretty good profit.
I know it's tempting to look to sell when the cost is at its highest, right before corrections, but unless you're a fortuneteller, that is not possible. The mentioned method is much more realistic and, well applied, it can work very well.
Sooner or later, you will be prepared for using more advanced investment strategies, like using leverage or going short.