Contents
eToro is an excellent broker for those who are in Bangladesh and want to purchase Gram
Pros:
- You can replicate investment moves
- Allows you to short sell
- Really user-friendly and simple
- Leverage is allowed
- There are tons of possibilities for investments
Main site: www.etoro.com/gram
If you are considering investing in Gram from Bangladesh, eToro is probably the best option.
“Social trading”, an innovative investment method that consists in replicating techniques and strategies from other experienced investors, has become popular thanks to eToro.
If you are a beginner or haven't gained much investment experience, eToro is great for you, because it automatizes your investment by replicating moves from those who have been doing it for years and making profits. Oppositely, if you are an investor and want to share your methods with the community, eToro pays up for it.
Another advantage is how manageable the interface is, which turns out perfect for new users that are learning all about the trading world.
Differences between futures and CFDs
How are CFDs and Futures different?
- Counterparty
- Futures: operations are made with someone else, another investor.
- CFDs: the operations are not made with someone else, the counterparty is the broker.
- Expiry date:
- Futures: there is a date of expiration. As soon as that date arrives, your position is closed even if you are in red.
- CFDs: there is no expiration date. This means that you can wait until you get in a good position before exiting.
- Trading options:
- Futures: very little variety
- CFDs: they include lots of different assets, commodities and currencies
- Minimum deposit amount or “trade size”:
- Futures: minimum investment is higher
- CFDs: it is possible to start with a low amount
- Costs and rates:
- Futures: as you need to invest more, costs are lower
- CFDs: higher (although not too much)
- Use of leverage:
- Futures: there is no leverage leverage
- CFDs: existing and available
Are you familiar with the term “leverage”? We'll put it simply:
the good thing about trading is that it allows you to invest higher figures than what you really have. Let's say that you have $ 100 and you put them with x2 leverage, you will be actually investing $ 200.
Why using leverage and how to do it
Let's say that you are confident that Gram will raise its price, and you consider “going long. You have $ 1,000, but you actually can invest more and make 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 obtain Gram… But maybe once you have made all that, your prediction could've been confirmed a long time ago, and Gram would be already so high that it is not worth investing.
Leverage is just like a loan, but it is only a few clicks away! eToro allows you to invest (and earn) much more money than what you have on the platform. As in the image below, you will see the different options you have:
Trading with other assets allows you to use even more leverage. Why? Because cryptocurrencies regularly represent medium-long term investments. However, leverage is used primarily for short-term operations or day trading. But let's see how leverage works.
You enter 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 few days later, as you thought, Gram raises its price by 20% and the value of your investment is now $ 2,400. Ok, don't be greedy, it's time to sell.
You will have to pay back the $ 1,000 of leverage and you will have made $ 400 (since the other $ 1,000 was your initial investment).
In conclusion, by investing $ 1000 you can make a profit of 40% (in the case you earn $ 400). That is quite good.
But there's always a downside. If all goes as you intended and the asset increases, you will make money. Nevertheless, if the asset decreases, you will also lose more money than you invested.
Let's imagine that the price didn't increase by 20%, but it went down also by 20%, you won't lose $ 20 but $ 40, because of the leverage. That is why the terms “Take Profit” and “Stop Loss” are fundamental when using leverage.
Take Profit is a limit you can set when trading: you set the platform to sell your assets once they get to a point above the entry price. For instance, you can buy Gram at $ 100 and ask eToro to close your position automatically when it reaches $ 120. It is very helpful to avoid being blinded by greed: a 20% profit is usually very good, but once you see it goes up, you might think you can make higher profits, 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.
On the other hand, when operating with leverage you should always use Stop Loss, because a small fall in the price of an asset can have a big impact on your wallet. That is why it is vital to establish a Stop Loss lower than that suggested by eToro.
About ETFs
What do you know about Exchange-traded funds? They are passively managed funds, known for merging the benefits of stocks and mutual funds: they can be traded regularly at market price, but have much more variety and the rates are significantly lower.
Equities
Stocks are the most popular financial assets. Some publicly traded enterprises decide to split into portions: you can be one of those shareowners, but first, you have to know where and how to make your investment.
We could say that there are two main types of stocks: those that pay dividends and those that do not. Those that pay, at the end of the fiscal year, distribute their earnings among their shareholders; the latter, on the contrary, do not. However, this is not to say that those of the second type have less to offer. If a company does not pay every year but has a lot of potential, it can still represent a good inversion, since the capital gain you will get from the sale of the shares can be much greater than what you would earn through dividends.
In the case of eToro, if you choose a company that pay out dividends, you will receive them in your account, and you can collect them in cash or reinvest them. Our suggestion is, if you don't have financial urgencies, that you benefit from compound interest and reinvest it in the company itself.
If you invest in stocks on eToro, you can 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 fees.
Raw materials
The main attraction of trading with commodities is that their price fluctuates less than that of other financial products. Actually, their stability is what makes most investors trade with raw materials when facing market volatility or inflation. Nonetheless, the cost of raw materials depends on supply and demand, so if faced with the fear of inflation, demand rises a lot, so will the price.
Note that the only intended income from the investment in raw materials will come from their further sale because these kinds of assets don't pay dividends.
Commodities are usually classified into hard raw materials, which include precious metals, industrial metals, and oil; and soft raw materials, which are agricultural products, like soy, cocoa, corn, or rice.
About Index Funds
Are most adequate for those interested in long-term investments, particularly 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 are the safest option.
You may think differently, but benchmark returns are very difficult to beat and very few fund managers achieve that, apart from some famous cases, like Warren Buffett's.
In practice, if a fund manager achieves to beat the benchmark, it is only for a short time or on a specific occasion. Or perhaps they would charge very high fees and indexing would be a better decision anyway.
With index funds, you don't have to worry about that: although in the long term, they usually beat active managers, and the rates are minimal.
How to deposit funds on eToro
Within the payment options available on eToro are: bank transfer, PayPal, credit card, Neteller, and Skrill. There is not much to say here: making a deposit with eToro is a very easy process. Just go to “Deposit funds”, choose an amount and the payment method you prefer.
Evidently, for security reasons, you should be the account or credit card holder.
You can start with a $ 200 deposit, and if you are not verified you will have a maximum amount allowed. Thus, if your intention is to deposit higher amounts, you will need to verify your account previously.
You can make the deposit in any currency you want and eToro will automatically convert it to USD. But it is better to use USD anyway since the platform charges a commission for the conversion.
Virtual portfolio: How does it work?
For those who still don't have much experience in investing, a demo account can be useful. Just assure yourself that the virtual mode is set in the top left corner of the page and you can start operating with “fake” funds.
This tool is great for those who are new to this world and want to put their talents to the test before playing for real money. When you open your account, you will start with $ 100,000 of virtual funds to do your operations, not only with Gram, but you can also create a diverse portfolio.
The first attempt is not usually that good. But you can ask eToro to deposit back the virtual $ 100k to your account.
Take into account that trading is mostly about being cold-minded, and using a demo account might have the opposite effect. It is not the same to operate with your own money than with fake funds, which you can lose without a problem.
And of course, if you are interested in trading in the long or medium-term, it makes no sense that you try the virtual mode and waste years waiting to see the results. On the other hand, it can be very useful if you want to practice short and medium-term investment.
eToro Interface
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 investing.
You won't have any issues with the interface if you are familiar with any of the most common social networks, like Linkedin or Twitter.
We will explain, roughly, the registration steps and the different tabs that you will see.
First of all, you will have to enter your personal data.
They will also ask you about your previous trading activities.
But don't feel intimidated, there is no right or wrong answer. The objective is to know more about you and determine which financial instruments they should suggest according to your knowledge and experience.
You will see a bar that says “incomplete profile” until you complete all the requested information.
Now we will explain the different 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. Just click the tab and you will be able to set it. This is ideal in case you want to buy an asset and you are waiting for its price to fall.
In the “News Feed” tab is the most social part of eToro: where users are interacting all day and sharing opinions, tips, and other valuable information.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. And we discussed previously in this guide the different financial instruments that are available on eToro:
- Cryptocurrencies
- ETFs
- Shares
- Raw materials
- Forex
- Index funds
In the tab “People”, you can find the profiles of eToro users and their performances. This is where you can replicate the movements of your preferred investors.
You will be able to search and find users according to your interests. When you select an investor and indicate how much you want to invest, eToro will automatically replicate their movements, proportionally. If you have $ 1000 and the trader puts 20% of their funds in an asset, eToro will put $ 200 of your funds in the same asset or company as well.
Finally, you will also see the CopyPortfolios divided into three main kinds: “Top Trader”, “Market” and “Partner”.
Sometimes you might prefer copying to CopyPortfolios than to other investors, since the former offer more diversity. Besides, the different portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … You think that a certain industry is going to succeed anytime soon? Then you will surely find a CopyPortfolio about it.