Contents
eToro, our favorite option for investing in Ethereum Classic from Ireland
Why do we recommend it?
- It is possible to invest in thousands of different goods
- Leverage is allowed
- User-friendly and straightforward
- Allows to imitate investment tactics
- You can go short
Official site: www.etoro.com/ethereum-classic
You should certainly consider eToro in case you are interested in acquiring Ethereum Classic from Ireland.
“Social trading”, an innovative way of investing by replicating techniques and moves from other experienced investors, has become trendy thanks to eToro.
eToro has solutions for you, especially if you are still a novice user in trading, because it puts your investment on autopilot by repeating strategies from those who have been doing it for years. Additionally, in case you are an investor, the platform pays for your knowledge.
Another thing to mention is how easy the interface is, which turns out perfect for new users that are learning all about the trading world.
ETFs
Exchange-Traded Funds or ETFs are a kind of passively managed fund, similar to index funds. They can be described as a combination of stocks and mutual funds. They are traded in the market like stocks, during the day. However, their advantage is that they are more diversified compared to stocks, and have lower fees.
ETFs
ETFs or Exchange-Traded Funds are similar to index funds. We can say that ETFs are halfway between stocks and 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.
About Index Funds
Index funds are most adequate for those who want to invest for the long term, particularly for beginners. If you don't need an amount of money for the next five or ten years, index funds offer you variety and lower risks.
Perhaps you have a different idea, but it is not easy at all to beat the market (yes, you have surely heard of investors who obtain huge profits).
But putting aside some unusual cases (like Warren Buffett's), not everything is as good as it sounds: when someone brags about having beaten the benchmark, they have probably done so for a short time, or will charge you so many commissions that it ends up being better for you to index (whit minimal commissions). Besides, take into account that if something happened in the past it doesn't mean necessarily that it will happen again.
With index funds, you don't have to worry about that: they usually beat active managers in the long term, and the fees are so much lower.
Commodity market
The major benefit of investing in raw materials is that their price varies less than that of other financial assets. In fact, their stability is what makes most people trade with commodities when facing economic adversities or fears of inflation. However, the prices of commodities are defined by their demand. Therefore, if a given economic situation causes higher demand, the prices will also be higher.
Remember that the only intended income from the investment in raw materials will be the hypothetical capital gain after selling them back: unlike stocks, these do not distribute dividends or pay interest.
Raw materials 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, for instance.
Foreign exchange
Forex or currency trading allows obtaining profits by converting one currency for another.
In case you decide to exchange EUR and USD, you purchase euros and pay with dollars, with the expectation that the first currency (the euro) will increase compared to the second (the dollar), to make a profit by selling it. Assume you entered when a euro is worth 1.10 USD and you leave when the price has gone up to 1.15: that margin is yours once you make the operation.
As you may have already inferred, this kind of trading requires investing a lot, because prices rarely increase that much, or using much leverage, which you know is a risk. If you are just starting in trading, it is not a good idea to begin with this market, because it's not the safest option.
Most currencies are available on eToro but consider that in this market sales are always made through contract for differences, therefore the underlying asset won't be yours.
Have you heard about “leverage”? Just in case, we'll define it simply:
trading lets you invest more money than what you really have. For instance, if you have $ 100 and you use x2 leverage, you will be actually investing $ 200.
Everything you need to know about leverage
Suppose now that you are sure that Ethereum Classic is going to rise, therefore you decide to take a long position.
You are completely certain that Ethereum Classic will rise, and you just have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
There's the possibility of requesting a credit at your bank or other financial company, but you must know that all the process takes time, and by the moment you finally get the money, Ethereum Classic might be already so expensive (if your guess was right) that investing wouldn't be convenient anymore.
Using leverage, you can obtain that amount of money really easily. It's just like borrowing money, but much easier and quicker, and with the benefit that you will be getting it directly from eToro. Before trading, you will be able to choose between the different options as in the screenshot:
Within other markets, you can use more leverage. The reason is that cryptocurrencies regularly represent medium-long term investments. However, leverage is used mainly for short-term operations or day trading. Let's talk a bit more about how leverage works.
You enter with $ 1,000 and pick leverage x2, then you would really invest $ 2,000 (the extra $ 1,000 to reach $ 2,000 are “borrowed” from eToro).
A few days pass and turns out that you were right: Ethereum Classic has risen by 20% and your money has appreciated reaching $ 2,400. But you don't want to take too much risk, so it's time to sell back.
You will have to give 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 watch out: if everything goes ok and the price rises, you will make profits. However, if the asset decreases, you will also lose more money really fast.
Let's imagine that the asset didn't increase by 20%, but it went down 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 bought Ethereum Classic at $ 100, you request eToro to close 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 going up, which could be a mistake since the price could go down again.
On the other hand, when trading with leverage you also have to use Stop Loss, because a small fall in the price of an asset can lead to a substantial loss. Take into account that eToro will recommend a limit for Stop Loss, but you should set it lower than that.
How to deposit funds into your eToro account
Among the payment methods that eToro accepts you will find: bank transfer, PayPal, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Neteller, and Skrill. There is not much to say here: making a deposit with eToro is very easy. Just go to “Deposit funds”, type the amount and choose your payment method.
Remember that for security reasons, you must be the holder of the account or the credit card.
The minimum you can deposit is $ 200 and there is a maximum limit of how much you can deposit if you are not verified, so if you want to trade with higher amounts, you should verify your account previously.
You can pay in any currency you want and eToro will automatically convert it to USD. But we suggest depositing directly in USD since the platform charges a fee for the conversion.
What's the difference between CFDs and futures?
If you are interested, here are the main differences between CFDs and Futures:
- Counterparty
- Futures: the exchange is made with someone else, another investor.
- CFDs: the counterparty is eToro, the brokerage. In other words: you don't “play” against or with another trader but the bank.
- Date of expiry:
- Futures: there is an expiration date. Once the contract expires, it is closed even if you have losses.
- CFDs: there is no expiration date. This means that you can wait until you get in a good position before closing.
- Variety:
- Futures: options are much more restricted
- CFDs: a lot of variety, there are CFDs of practically anything
- Minimum deposit amount or “trade size”:
- Futures: you need a larger initial investment
- CFDs: it is possible to start trading with a low amount
- Trading costs and charges:
- Futures: as you have to invest more, costs are lower
- CFDs: higher (although not excessively)
- Possibility of using leverage:
- Futures: there is no leverage leverage
- CFDs: accessible leverage
About Contracts for Difference
It is possible that you have seen the term CFD now and then if you entered eToro before. We will explain exactly what this means, but you should know first that CFDs on eToro are only possible if you are short-selling.
We will also refer to concepts like leverage and “going short”, in case you are thinking about day trading cryptocurrency or other more advanced operations.
eToro allows you not only to bet if you are “in the black”, but through CFDs you can also bet “in negative”. Let's say that you have the conviction that the Ethereum Classic will fall, so you obviously think “if it is going to depreciate (go down in price), I'll just wait until it does”. But if it really falls, it might mean extra money for you.
You can accomplish that by “going short”. Basically, this is how it works:
- You ask for a loan of, let's say, 100 units of Ethereum Classic, which total value at that moment is $ 5,000 (these numbers aren't real)
- Then, you sell them at their price on the market, $ 5,000
- As you thought, it devaluates, and the unit of Ethereum Classic now costs $ 30 instead of $ 50
- Again, you purchase the 100 units, but at the current price, $ 3,000
- You give back the 100 units
- You will have made $ 2000, since you keep the difference
Consider that it is much simpler than it sounds: we can just say that by trading in Ethereum Classic you can also make money if you anticipate it will fall.
How to use eToro
We mentioned before that eToro is very friendly and intuitive. Anyone can start using it without having to read endless explanations.
Everyone who has used Twitter, Facebook or any of the most common social networks, knows enough to use eToro.
Let's talk about the registration process and the different sections of eToro.
You will have to fill in some information requested when registering.
Additionally, you will see that they ask you some questions about your experience as an investor.
But don't feel intimidated. The objective is to know more about you and determine which financial instruments they should recommend according to your knowledge and experience.
Let's get to know the different sections of the site.
With the “Set Price Alerts” tool, you'll be able to program an alert when a security 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 it to decrease.
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”. And we already mentioned the kinds of assets that are available on eToro:
- Cryptocurrencies
- ETFs
- Shares
- Commodities
- Currencies
- Index funds
In “People”, you will find the profiles of eToro users and their performances. This is where you can replicate with just one click the strategies of the investors that you prefer.
You can search for those investors that best suit your interests: by risk level, types of instruments, average earnings… Just indicate the amount you want to invest and eToro 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 money in the same asset.
In this section you will also find the three most popular types of CopyPortfolios, which are Top Trader, Market, and Partner.
Remember that in some cases, you might prefer copying to CopyPortfolios than to individuals, because the former offer more diversity. The portfolios are identified so you can recognize them easily: one about gaming, another about large drone companies, another about pharmacy … You think that a certain industry will prosper in the future? Then look, because surely there is a CopyPortfolio about it.
Trading strategies
You can operate cryptocurrencies using several methods: from purchasing and waiting to day trading (taking advantage of market volatility).
My suggestion for those who are beginning to trade is going for a middle point: when you open your Ethereum Classic position, set a dynamic stop loss 15-20% under the top 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 then decreases to $ 12, your stop loss will close your position at $ 16-17 and you will obtain a pretty good profit.
I know it's tempting to look to sell when the price is at its highest, right before corrections, but unless you're psychic, that's impossible. The mentioned strategy is much more down-to-earth and it can give great results.
At some point, you will be ready for more advanced trading techniques, such as short-selling or using leverage.
Virtual portfolio: How does it work?
If you are beginning as an investor, you can start by practicing with a “demo” option. You only need to set the “virtual” option and you will be able to trade with an imaginary balance.
A virtual portfolio can be a good way of practicing before starting to trade with real funds. When you open your demo account, you will begin with a virtual balance of $ 100.000, to trade with a variety of financial instruments available on the platform (not only with Ethereum Classic).
The first attempt is not usually that good. But don't worry, since you can ask support to deposit back the virtual funds to your account.
However, keep in mind that investing is mostly about being cautious, and demo account trading can have the opposite effect. It is not the same to risk your own money than to do operations with virtual funds which loss does not suppose any drama.
As you may suppose, the demo mode is kind of pointless if you intend to invest in the medium or long-term (which almost assures you a profit only by replicating an index), since you would be wasting years. Demo accounts may be useful for practicing short or medium-term operations.