Contents
eToro is an excellent broker for those who are in Kenya and want to acquire IOTA
Why do we recommend it?
- It is possible to make investments in countless of different goods
- Leverage is allowed
- Very user-friendly and simple
- You are able to copy investment strategies
- Admits short-selling
Go to the official site in English: www.etoro.com/iota
You should absolutely consider eToro in case you are thinking about purchasing IOTA from Kenya.
eToro is known for making “social trading” fashionable. Social trading is an ingenious way of investing in which traders can emulate the moves of other investors who have been generating income over time.
If you are a novice user or do not have much investment experience, eToro is very helpful, because it puts your investment on automatic by replicating moves from those who have been doing it for years and making profits. Also, in case you are an investor, the platform pays for your knowledge.
It is also worth mentioning how accessible is this platform, excellent for beginners who are taking their first steps in the investment world.
How are CFDs and futures different?
What are the main differences between CFDs and Futures?
- Counterparties
- Futures: the counterparty is someone else, another investor.
- CFDs: you do not operate with another individual, the counterparty is the broker, in this case, eToro.
- Expiration date:
- Futures: they expire. Once the contract expires, it is closed even if you are in red.
- CFDs: there is no expiration date. It is possible to wait until you are in a good shape to exit.
- Options for trading:
- Futures: options are much more restricted
- CFDs: you have plenty of options to choose from, there is a wide diversity of CFDs
- Minimum deposit:
- Futures: you have to invest much more
- CFDs: very low
- Trading costs:
- Futures: costs are usually lower
- CFDs: higher (although not too much)
- Leverage:
- Futures: it isn't possible to trade with leverage
- CFDs: it is always possible to leverage
If you still don't know what “leverage” is, we'll put it short: it is, simply, the possibility to use a higher amount than you actually have. For example, you can enter with $ 100, but if you leverage x2, your initial investment will be $ 200.
About leverage, Take Profit and Stop Loss
Assuming that, for instance, you are sure that IOTA is going up, and that you have $ 1,000 for “going long”, you should know that you have the option of investing more and making more money.
You could go to your bank, request a credit, put an asset as a guarantee, wait for it to be accepted, wait for the money, send the money to eToro, confirm that it arrived, and then acquire IOTA… However, when you finish doing all that, probably IOTA would be already much higher (if your prediction got confirmed), and investing wouldn't be a good idea at that moment.
Thanks to leverage, you can get that amount with two clicks. It's just like borrowing money, but much easier and quicker, and with the benefit that you will be getting it directly from eToro which will let you invest much more than you have on the wallet. Before trading, you will find the leverage options as in the screenshot below:
With other assets, the leverage you can use is higher. The reason is that cryptocurrencies regularly represent medium-long term investments. However, leverage is used especially for day trading or short-selling. But let's see how leverage works:
- If you want to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 (remember that$ 1,000 was “borrowed” from eToro).
- Then, turns out that IOTA does rises, as you thought, and now the cost of your investment is $ 2,400 (20% higher), so you decide to sell back because you want to play it safe.
- The $ 1k of leverage will be deducted, and you will have $ 1,400 left; which means the net profit is $ 400, since the other $1,000 was yours initially.
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is pretty decent.
The trick is that the risk of losing out also increases. If everything goes according to plan and the price goes up, you will earn profits in little time; but if the opposite happens, you will also lose more really quickly.
For instance: if instead of increasing by 20%, the price falls by 10%, you won't lose $ 10, but twice (the leverage) that figure, that would be $ 20. For that reason, the terms “Take Profit” and “Stop Loss” are so important when operating with leverage.
Take Profit is the automatic order to sell once the asset is above the entry price: you purchase IOTA at $ 100 and you ask eToro to automatically close your position as soon as the price reaches $ 120. It is very helpful to avoid being blinded by greed: a 20% profit is usually pretty good, but once you see it goes up, you might want to gain a bit more and decide to wait, but this could be a mistake. 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). You always need to mark a Stop Loss lower than that suggested by eToro.
Exchange-Traded Funds
Exchange-Traded Funds or ETFs are a kind of passively managed fund, similar to index funds. We can say that ETFs are somewhere between stocks and funds: they are publicly traded and therefore can be commercialized at any moment at market price. However, their advantage is that they offer more alternatives compared to stocks, and have lower fees.
About ETFs
Exchange-Traded Funds or ETFs are 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.
Index Funds
If a long-term investment sounds like a good idea to you, and you won't need to take back your money in five or ten years, index funds can be the best choice. This kind of investment is also great for beginners since the risks are much lower.
You may think differently, but beating the benchmark is far from being a piece of cake and very few fund managers achieve that, apart from some famous cases, like Warren Buffett's.
If someone brags about having beaten the index, they probably did it for a short time or on a specific occasion, or perhaps the rates are so high that indexing would be a better decision anyway (with minimal commissions).
The good thing about index funds is that they solve those two issues: their fees are minor and they beat active managers most of the time, although in the long term.
Stocks
Now let's talk about the most popular instruments: stocks. Stocks are portions of publicly traded enterprises. It is possible to obtain a profit through third-party companies just by investing money in them. But of course, you have to know where to put it.
We could say that there are two basic kinds of shares: the ones that divide their earnings regularly among the stockholders, and those that don't payout. The former ones are great, of course, but investing in the latter can be a good idea too since sometimes you can make even more money by selling the shares later.
When trading on eToro, if you invest in shares that give dividends, these will be deposited into your account, and you can withdraw those funds or invest them back. Our suggestion is, if you don't need the money immediately, that you don't renounce the magic of compound interest and reinvest it in the company itself.
Take into account that when investing in shares on eToro you can “dope” your trades with leverage, but in that case, you will not receive dividends as the trade is a CFD. That is why for long-term investments, it is better not to use leverage: not just because you lose dividends, but you will also have to pay commissions during the days that the operation is open, and these can end up with your gains.
Investment strategies
You can operate cryptocurrencies using several methods: from purchasing and waiting to day trading using volatility of the market in your favor.
My recommendation for those who are starting to invest is going for a middle point: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
Therefore, if for example you purchase a cryptocurrency at $ 10, it rises to $ 20, and after that it falls to $ 12, your stop loss will take you out of the trade at $ 16-17 and you will make a pretty good profit.
You may be wondering: why not selling when the cost is at its highest? But that would only work for a psychic or a fortune-teller. The mentioned method is more down-to-earth and can work out perfectly.
At some point, you can take your first steps with advanced investment strategies, such as short-selling or using leverage.
Can you rely on eToro?
eToro is very careful with the information about past performances from traders, and its reliability has been independently tested several times.
Legally, eToro complies with all the demanding regulations of the European Union, legislation in which it is found. Specifically, its head office is in Cyprus, and it is certified by the CySEC or Cyprus Securities Market Commission, which can cover up to € 20,000 of the debts from its clients, including those from Kenya.
eToro responds to the European Financial Instruments Market (MiFID) in Europe, and to the Financial Conduct Authority (FCA) in the United States of America. Apart from the above, it has a trajectory of fifteen years, with more than 20 million users all over the world. So, you can be sure that your money is 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.
eToro Interface
As we have referred among the positive aspects of eToro, the best thing about this online broker is its simplicity: anyone can trade without having to read endless guides.
You won't have any problems with the interface if you have used any of the most common social networks, like Facebook or Instagram.
Now we will walk you through the registration process and the different sections of the page that you should familiarize yourself with.
First of all, you will have to enter your personal data.
Additionally, you will have to answer some questions about your experience as an investor.
But don't feel intimidated, there is no right or wrong answer. The only intention is to know more about you and determine which financial instruments they should suggest according to your knowledge and experience.
Let's review the different tabs of the page.
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 purchase a security and you are waiting for it to decrease.
The section “News Feed” allows users to interact and share their experiences and knowledge.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. And we discussed previously in this guide the different financial instruments that are available on eToro:
- Cryptocurrencies
- Exchange-Traded Funds
- Shares
- Raw materials
- Forex
- Index funds
The term “social trading” makes sense within “People”: there, you can duplicate the movements of the best investors with just one click.
You can search for those investors that best suit your interests: by risk level, types of financial instruments, average earnings… Just indicate the amount of your investment and eToro will be in charge of replicating the movements of the investor you chose, in proportion. This means that if you have $ 1000 and the trader puts 10% in an asset, eToro will invest also 10% of your funds (in this case $ 100) in that same asset.
Finally, there are three main kinds of CopyPortfolios: Top Trader, Market, and Partner.
The advantage of copying to CopyPortfolios instead of individual traders is that this way you will diversify the risk. There are all kinds of portfolios that you can identify easily and are divided by sectors. Thus, if you think a specific sector, such as gaming or drones, has a good chance of prospering, you can find that specific portfolio and invest in it.