Contents
eToro, our favorite option for acquiring Gram in Egypt
Why do we recommend it?
- There are uncountable possibilities for investments
- Leverage is allowed
- Very intuitive and simple
- Allows to replicate investment strategies
- Admits short-trading
Homepage: www.etoro.com/gram
eToro is the best way to obtain Gram from Egypt.
“Social trading”, a relatively new way of investing by replicating techniques and strategies from other experienced investors, has become popular thanks to eToro.
eToro is very useful if you don't have much experience in trading. You can rest assured that you will be 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.
Besides, the interface of the website is so uncomplicated, great for users who want to start in the Gram world, without ending up overwhelmed with tons of diagrams and numbers.
What are ETFs?
Exchange-Traded Funds or ETFs are similar to index funds. We can say that ETFs are somewhere between stocks and funds: they can be traded like regular stocks, but include a wide diversity of assets and have lower fees.
Stocks
Stocks are the most popular financial instruments. Some enterprises decide to split into fractions: you can be one of those shareholders, but first, you should know where and how to make your investment.
We could say that there are two main types of stocks: the ones that divide their earnings regularly among the shareholders, and those that don't payout. The former ones are great, of course, but investing in the latter can also be a good idea since sometimes you can make even more money by selling the shares.
In the case of eToro, if you choose a company that distributes dividends, these will be deposited into your account, and you can withdraw those funds 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.
Consider that when investing in shares on eToro you can “dope” your trades with leverage, but in that case, you will not receive interest as it would be a contract for difference. For long-term investments, it is not advisable to use leverage: not just because you lose dividends, but you will also have to pay fees during the days that the operation is open, and these can end up with your gains.
About Index Funds
In case you are interested in long-term investments, and you won't need to withdraw your money in at least five years, index funds can be the best choice. This type of investment is also great for beginners since the risks are much lower. Besides, the variety is wider.
Contrary to what it may seem, very few investors can beat their benchmark return (although you have probably heard of investors who achieve huge returns).
But except for Warren Buffett and a couple more, not everything is as good as it sounds: if you hear of someone who has beaten the index, they have probably done so for a short period, or the rates are so high that it ends up being better for you to index (whit minimal commissions). Besides, past performances do not ensure a future one.
The great advantage of index funds is that they perfectly solve those two issues: their rates are minor and in the long term they almost always beat active managers.
Commodity market
The main benefit of investing in commodities is that their price fluctuates less than that of other assets. Actually, their stability is what makes most people trade with commodities when facing possible inflation or market volatility. However, the cost of commodities is determined by supply and demand, so if faced with the fear of inflation, demand rises a lot, so will the price.
Keep in mind that the only intended profit from the investment in raw materials will be the hypothetical capital gain after selling them: unlike shares, these don't pay dividends.
Raw materials are commonly 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 sugar, cocoa, soybeans, among others.
If you still don't know what “leverage” is, we'll put it short. When trading, it's the capacity of increasing your investment without putting extra money. For example, if you start with $ 100 and you leverage x2, your initial investment will be $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Suppose now that you know that the price of Gram is going to raise its price, therefore you want to “go long”.
You are completely certain that Gram will go up, but you only have $ 1,000 available. Despite that, why miss the opportunity to make more money?
You could go to your bank, request a loan, wait for it to be accepted and receiving the money, and then acquire Gram… But by that moment it is possible that your prediction was confirmed a long time ago, and Gram would be already so high that it is not worth trading.
Using leverage, you can get that amount of money with two clicks. It's like borrowing money, but much better: you will get it from eToro, which allows you to invest much more than you have on the platform. Before trading, you will be able to choose between the different leverage options as in the screenshot below:
Within other markets, the leverage you can choose is higher. The reason: 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 explain how leverage works with the previous example:
- If you want to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 ($ 1,000 are a “loan” from eToro).
- A few days later, Gram does increases, as you assumed, and now the price of your investment is $ 2,400 (20% higher), so you decide to sell back.
- Once the $ 1k from leverage is deducted, you will have $ 1,400 left; which means you've earned $ 400, since the other $1,000 was yours from the beginning.
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is quite good.
But not everything is wonderful. If all goes as you planned and the asset increases, you will make money. However, if the price falls, you will also lose more money in the blink of an eye.
Let's imagine 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 to operate with leverage it is very important to take into account 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 Gram at $ 100, you program eToro to close your operation when 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 rising, which could be a mistake.
Stop Loss is even more important, mostly 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 you should set it lower than that.
Is eToro trustworthy for purchasing Gram?
eToro is very careful with the information about past performances from users, and its reliability has been tested several times times by independent organizations.
The main headquarters of eToro is in Cyprus, and therefore the broker is certified by the Cyprus Securities Market Commission (known as CySEC), which covers debts up to € 20,000 from its clients. Furthermore, eToro follows all the strict regulations of the European Union.
It is also backed by the European Financial Instruments Market (MiFID), and in the USA it is under the control of the Financial Conduct Authority (FCA). In addition to all these regulations, it should be mentioned that eToro has been active for fifteen years and that it has more than 20 million users around the world, so we can rest assured that our funds are safe.
It is also important to mention 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.
Futures Vs CFD
What are the differences between Futures and CFDs?
- Counterparty
- Futures: operations are made with someone else, another investor.
- CFDs: the counterparty is the broker (eToro). That means you do not “play” against or with another individual but the bank.
- Date of expiry:
- Futures: they expire. Once the contract expires, it is closed and can't be reopened.
- CFDs: on the contrary, they don't expire. You can wait for your position to rise before closing.
- Trading options:
- Futures: options are much more restricted
- CFDs: a lot of variety, there is a wide diversity of CFDs
- Minimum investment amount or “trade size”:
- Futures: you need a larger initial investment
- CFDs: you can start with a small deposit
- Trading costs and charges:
- Futures: as you have to pay more in the first place, rates are lower
- CFDs: fees are higher
- Use of leverage:
- Futures: it isn't possible to trade with leverage
- CFDs: it is always possible to leverage
What are Contracts for Difference?
If you browsed eToro before, you probably noticed that the acronym CFD appears frequently. We will come back to it, but you should know first that cryptocurrency trading on the platform is only CFD when you short sell or choose leverage higher than x2 (and the platform does not even allow this option).
We will also explain terms such as leverage and “going short”, in case you are interested in day trading cryptocurrency or other more advanced practices.
The good thing about eToro is that it allows you to bet both “in the black” and “in negative”. Let's say that you believe that the Gram will go down, so perhaps you think that the best thing to do is wait until it does and then go in. Nevertheless, if it really goes down, it is possible to earn some money out of that.
The operation known as “going short” will allow you to do that. It works, roughly, like this:
- They lend you, for example, 100 units of Gram, which cost $ 5,000 (these numbers are totally made up)
- You sell the 100 units and earn $ 5,000
- As you presumed, the price falls, and the unit of Gram now costs $ 30 instead of $ 50
- You get the 100 units again, but their current value is now $ 3,000
- You pay back the 100 units
- The difference is yours, so, you will have earned $ 2000
Consider that it is much easier than it sounds: we can summarize this whole operation by saying that by trading in Gram you can also earn money if you predict it will go down.
eToro Interface
As we have mentioned before, one of the best things about eToro is its extraordinary simplicity: anyone can use it without having to read endless explanatory texts.
You won't have any issues with the interface if you are familiar with any other social network, like Facebook or Twitter.
We will explain the registration process and the different sections that you will find.
First, you will have to enter all the information that eToro asks for: first and last name, address…
Before you end up with the sign-up process, you will also have to answer some questions about your previous trade experience.
But don't feel like you are taking an exam. They only intend to find out about your previous experience and knowledge to know which assets to recommend for you.
As soon as you are registered and have completed your profile, the annoying “incomplete profile” bar will disappear.
Now we will explain the fundamental sections of the interface.
With the “Set Price Alerts” tool, you'll be able to program an alert when an asset is at a certain price. Just click the tab and you will be able to set it. This is ideal if you want to buy an asset that is falling but you believe it will decrease even more.
“News Feed” is the more “social” section. There, traders can interact and share experiences.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. And we already mentioned the different financial instruments that are available on eToro:
- Cryptocurrencies
- Exchange-Traded Funds
- Shares
- Commodities
- Currencies
- Index funds
In “People” are all the profiles and historical performances of other users, and you can replicate their strategies with just one click. This is where the “social trading” term is best applied.
In this section, you will be able to search for those users that you find more interesting. When you choose an investor and indicate the amount you want to invest, eToro will automatically replicate their movements, in proportion. If you have $ 1000 and the user puts 20% of their funds in an asset, eToro will put $ 200 of your funds in the same asset as well.
You will also see the three main types of CopyPortfolios, which are classified into “Top Trader”, “Market” and “Partner”.
The benefit of copying to CopyPortfolios instead of people is that this way you will diversify the risk. There are all kinds of portfolios that you can find easily and are divided by sectors. Thus, if you think a specific sector, like gaming or pharmacy, has good chances to succeed, you can find that specific portfolio and do your investment.
Investment strategies
When trading cryptocurrencies, there are different possible methods or strategies, such as buying and holding or day trading, for naming just a few.
In case you don't have much experience trading, I recommend a middle point: when you open your Gram position, set a stop-loss order 15-20% under the highest price, and let the rest happen on its own.
Therefore, if for example you purchase a cryptocurrency at $ 10, it reaches $ 20, and after that it decreases to $ 12, your position will be closed at $ 16-17 and you will have made a considerable profit.
Perhaps you are wondering: why not selling when the cost is at its highest? But unless you are a psychic, that is just not possible. The mentioned strategy can work perfectly and give good results.
At some point, you can take your first steps with advanced trading strategies, like using leverage or going short.
How does a demo account work?
If you do not have much experience as an investor, you can start by practicing with a “demo” option. You only need to set the “virtual” option and your operations will be carried out 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 money. With your virtual account, you will begin with a $ 100,000 balance (which of course, is fake) to do your operations, not only with Gram, but you can also work with a diverse portfolio with all the different instrument that are available on eToro.
Don't worry, since if you lose all your virtual funds, you can contact support so they can add back the $ 100k to your demo account and you can make a second attempt.
Take into account that you should always be cold-minded when trading, and perhaps a practice account can make you a bit impulsive. It is not the same to trade with your own money than with fake funds, which you can lose without a problem.
Evidently, if you are going to invest in the medium or long-term, with profits almost assured only by replicating an index, it doesn't make sense that you invest in the virtual mode and wait for years. On the other hand, short or medium-term investments are perfect to try out with the virtual mode.