Contents
Why we reccomend eToro for acquiring IOTA in Ireland?
Why do we recommend it?
- User-friendly and straightforward
- It takes strategies from skilled traders so you can replicate them
- Admits short-selling
- You can trade leveraged
- There are uncountable investment opportunities
Homepage: www.etoro.com/iota
In case you are considering it, eToro is probably the best option nowadays to buy IOTA from Ireland.
This broker is known 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 profits for a long time.
If you are a beginner or do not have much experience in investments, eToro is great for you. You can rest assured that you will be making a smart investment since the site replicates those from subjects with a great deal of expertise. And for those skilled investors willing to share their techniques with others, eToro rewards your knowledge with money.
Another advantage is how easy the platform is, which turns out perfect for new users that are just learning all about IOTA.
ETFs
ETFs or Exchange-Traded Funds are a type of passively managed fund, similar to index funds. They can be described as a combination of stocks and mutual funds. They can be traded like regular stocks, but include a wide diversity of assets and their fees are much lower than those of an actively managed fund.
Exchange-Traded Funds
What do you know about Exchange-traded funds? They are passively managed funds, known for combining the benefits of stocks and mutual funds: they can be traded at any moment in the market, but have much more investment possibilities and the rates are significantly lower.
Index Funds
If a long-term investment sounds like something you would do, and you won't need to take back 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.
Perhaps you have a different idea, but it is very hard to beat the market (yes, you have surely heard of managers who obtain huge profits).
But besides Warren Buffett and a couple more, not everything is as good as it sounds: if you hear of someone who has beaten the benchmark, 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.
With index funds, you don't have to worry about that: although in the long term, they usually beat active managers, and the charges are so much lower.
Forex trading
Currency trading or Forex consists, as the name says, in the trading of currencies. It is the conversion between a pair of currencies, and the aim is, evidently, to obtain a benefit out of this.
If you want to trade the EUR/USD pair, you acquire euros and pay with dollars, expecting that the euro will raise its price compared to the dollar. Then, if you bought each euro for 1.15 USD and you sell them back when they are worth 1.20 USD, that margin will be yours.
You may be thinking that operating with currencies requires high investments, and you're right, since increases in prices are never that dramatic, and often you will need to use high leverage (which is an important risk). In case you are just starting to trade, we don't recommend beginning with Forex, because it's not the safest alternative.
The most common currency pairs are available on eToro. Nevertheless, take into consideration that Forex trading functions through contract for differences, which means you will not be the owner of the underlying asset.
Shares
The most popular financial instruments are stocks: these are portions in which a corporation can be shared. You may get dividends with the performance of third-party companies just by putting your money in them. But, obviously, you have to know where to put it.
We can classify stocks into two main types: the ones that payout at the end of every fiscal year to the investors, and those that don't. The former ones are great, obviously, but investing in the latter can also be a good idea since sometimes you can make even more money by selling the shares later.
When trading on eToro, if you invest in shares that distribute dividends, these will be deposited into your account, and you can withdraw your money or reinvest it. Our suggestion is, if you don't have financial urgencies, that you take advantage of compound interest and reinvest it in the company.
Remember that when investing in shares on eToro you can use leverage to “dope” your trades, but in that case, you will not receive interest as it would be a CFD. For that reason, for long-term investments, it is better not to use leverage: you can end up not gaining at all, because you will not receive dividends and also you will have to pay commissions while your position is open.
Raw materials
Most people invest in raw materials because of their stability. While other assets tend to fluctuate more, commodity prices vary less and offer safety against inflation or market volatility. However, prices are subject to supply and demand, so if an economic situation provokes higher demand for a certain good, its cost will also increase.
Consider that the only intended income from the investment in raw materials will come from their further sale because these kinds of assets don't distribute dividends or pay interest.
Commodities are commonly categorized into hard raw materials, which include precious metals, industrial metals, and oil; and soft raw materials, which are basically agricultural products, like soy, cocoa, corn, or rice, for instance.
Are you familiar with the term “leverage”? Just in case, we'll put it simply:
the good thing about trading is that it allows you to invest even more than you can have in a given time. Let's say that you have $ 100 and you use x2 leverage, you will be actually investing $ 200.
What you should know about leverage
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.
Possibly, you could ask a financial company for a credit, put an asset as a guarantee, wait for it to be accepted and receiving the money, and then purchase IOTA… But by then it is likely that your prediction was confirmed a long time ago, and IOTA would be already so high that it is not worth investing.
With leverage, you can obtain that amount of money with two clicks. It's exactly like borrowing money, but much better: you will get it from eToro, which lets you invest much more than you have on the platform. As in the image below, you will see the different options you have:
With other assets, you can use more leverage. The reason: leverage is most common in short-term operations or day trading, and cryptocurrencies tend to be a medium or long-term investment. Let's talk a bit more about how leverage works.
You start with $ 1,000 and decide to use leverage x2, then you would really invest $ 2,000 (the extra $ 1,000 to reach $ 2,000 are “borrowed” from eToro).
A week later IOTA rises up and now the value of your investment is 20% higher, which means, you have $ 2,400 in IOTA. 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).
As you can see, with $ 1000 you get $ 400, in other words, 40% more. Not bad, right?
Does it sound too good? The thing is, it can also play against you. If everything goes as planned, you will make 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.
For example: if instead of increasing by 20%, the price falls by 10%, you won't lose $ 10, but twice that figure, which means $ 20, because of the leverage. Because of that, the terms “Take Profit” and “Stop Loss” are crucial when trading with 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 bought IOTA 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 rising, which could be a mistake since the price could go down again.
Stop Loss is even more important, especially if you use leverage, since a small loss with leverage can have a significant impact on your wallet. Consider that eToro will recommend a limit for Stop Loss, but it is better to set it lower than the platform suggests.
Can you rely on eToro?
eToro is very careful with the data about past performances from users, and its integrity has been tested many times by independent organizations.
The main office of eToro is located in Cyprus, and therefore the broker is approved by the CySEC or Cyprus Securities Market Commission, which can cover up to € 20,000 from its client's debts, including those from Ireland. On the other hand, eToro meets all the strict requirements of the European Union.
It is also backed by the European Financial Instruments Market or 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 more than 20 million users worldwide, and it has been operating for fifteen years. To sum up, we can be certain that our finances are safe.
No less important is their excellent customer service. You can use the ticketing system, an online chat, and they also have a phone number available for assistance.
How are CFDs and futures different?
How are Futures and CFDs different?
- Which are the counterparties? In the case of Futures, the counterparty is another trader. In CDFs, it’s the brokerage, in this case eToro
- When do they expire? Futures expire in a variable given date. CFDs don’t expire
- Markets available for trading Futures include fewer options to trade. With CFDs you can trade in several different markets.
- Minimum investment amount or “trade size” Costs for Futures are higher than costs for CFDs.
- Leverage With Futures, you can’t leverage; while with CFDs leverage is always available.
About Contracts for Difference
It is possible that you have found the acronym CFD now and then if you already accessed eToro. Before we come back to this, you should know that cryptocurrency trading on the platform is only CFD if you go short.
For your information, and in case you want to try at some point day trading cryptocurrency or other advanced trading practices, next we will also refer to terms like going short and leverage.
With CFDs you can bet on the platform even if you are not “in the black” or having a negative balance. For example: you have the conviction that the IOTA will go down, so the logical thing is to think “if it is going to depreciate or go down, I simply wait and I'll go in when it has gone down”. But if it really falls, it might mean extra money for you.
You can accomplish that by “going short”. Here's how it works:
- You ask someone to lend you, for instance, 100 units of IOTA, which total value at that moment is $ 5,000 (obviously, these numbers are made imaginary)
- You make $ 5,000 by selling the 100 units
- The price is reduced, as you calculated, and the unit of IOTA now costs $ 30 instead of $ 50
- Again, you purchase the 100 units, but at the current value, $ 3,000
- You return the 100 units
- The difference is yours, so, you will have made $ 2000
Take into account that it seems much more complex than it really is: we can just say that by trading in IOTA you can also make money if you anticipate the downs.
How does eToro work?
We said previously that eToro is very friendly and intuitive. Anyone can start using it without having to read endless explanations.
If you are familiar with any of the most popular social networks today, like Instagram or Linkedin, you can perfectly manage this platform.
Now we will detail the registration process and the different sections of the page that you should familiarize yourself with.
You will have to fill in some requested data when registering.
During the sign-up process, you will also have to answer some questions about your previous trading activities.
But don't feel like you are taking an exam. The objective is to know more about you and be clear about which financial instruments they should recommend according to your knowledge and experience.
Let's see what the different sections of the platform are.
“Set Price Alerts” allows you to set alarms on the price of certain securities. This is very helpful when you are after an asset that is falling, but it seems to you that it will decrease even more.
The section “News Feed” allows users to interact and learn from each other by sharing their opinion and experiences.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. And we discussed previously in this guide the kinds of assets that are available on eToro:
- Cryptocurrencies
- ETFs
- Stocks
- Commodities
- Currencies
- Index funds
In “People” are all the profiles and historical performances of other users, and you can replicate their movements with just one click. This is where the “social trading” concept is best applied.
You can search and find users according to your interests. You can apply filters like risk level, average profits, or financial market. When you choose an investor and indicate how much money you want to invest, eToro will automatically replicate their movements, in proportion. If you invest $ 1000 and the user puts 20% of their funds in an asset, the platform will put $ 200 of your funds in the same asset as well.
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 people is that this way the risk will be more diversified. Besides, the different portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … Do you suspect that a certain sector will prosper in the future? Then look, because surely there is a CopyPortfolio about it.
Investment strategies
When trading cryptocurrencies, there are different possible methods or strategies, such as day trading or buying and holding, for naming just a couple.
In case you are new in the world of trading, my recommendation is something in the middle: when you open your position, place a dynamic stop loss 15-20% below the maximum price, and let the rest happen on its own.
For instance, if you buy a cryptocurrency when it is worth $ 15, then it rises up to $ 25 and falls again to $17, the stop-loss will allow your operation to be closed, maybe at $ 21 or $ 22. Thus, you will obtain a fine profit.
It might sound more appealing to sell when the price is at its highest, right before corrections, but that is simply not possible. The mentioned method is much more down-to-earth and, well applied, it can work very well for you.
Later on, you will be able to apply more complex techniques, like using leverage or going short.
Virtual account
In case you are taking your first steps as an investor, the possibility to operate in “demo” mode may be useful. Setting a virtual account and operating with fictional funds is very easy.
This tool is perfect for those who want to put their talents to the test before playing for real funds. When you open your account, you will start with $ 100,000 of virtual funds to do your operations, not only with IOTA, but you can also create a diverse portfolio.
The first attempt is not usually that good. But don't worry, because you can ask support to replenish the virtual funds to your account, and the second time you should do better.
Take into account that trading is mainly about being cautious, and perhaps using a demo portfolio can make you a bit impulsive. It will never be the same as risking your own money.
As you may suppose, the virtual mode is kind of pointless if you want to trade in the medium or long-term (which almost assures you a profit only by replicating an index), since you would be wasting years to see the results. Demo accounts may be useful for trying out before trading in the short or medium-term.