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eToro, recommended broker for those who are in Australia and want to buy Bitcoin
Why do we recommend it?
- It is possible to invest in plenty of different goods
- Leverage is allowed
- It's uncomplicated and accessible
- It takes techniques and moves from successful traders so you can emulate them
- Allows you to go short
Main site: www.etoro.com/bitcoin
You should certainly consider eToro in case you are interested in acquiring Bitcoin from Australia.
“Social trading”, a relatively new investment method that consists in replicating techniques and moves from other experienced investors, has become trendy thanks to eToro.
eToro is very helpful if you are still a beginner in trading, since it puts your investment on autopilot by imitating moves from other experienced people with a long profit history. Oppositely, if you are an expert in the field and decide to share your abilities with others, eToro pays you for it.
Besides, the interface of the platform is so uncomplicated, great for users who want to start in the Bitcoin universe, without getting crazy with tons of diagrams and numbers.
In case you are not familiar with the term “leverage”, we'll put it short: it is, simply, the ability 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.
Everything you should know about leverage
Suppose now that you are sure that Bitcoin is going to appreciate, and you are thinking about “going long”.
You are absolutely certain that Bitcoin will rise, but you only have $ 1,000 to invest. Isn't it a shame to miss out on the possibility of earning more money?
There's the possibility of requesting a credit, but you must know that all the process takes time, and when you receive the money, Bitcoin might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Leverage is exactly like a loan, but it is only a few clicks away! You will be able to invest (and earn) much more money than what you have on the platform's wallet. Before trading, you will how much leverage to use as in the screenshot:
Trading with other assets allows you to use higher leverage. This is because leverage is most common in short-term operations, and cryptocurrencies tend to be a medium or long-term investment. 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 are a “loan” from eToro).
- Then, turns out that Bitcoin does increases, as you thought, and now the price of your investment is $ 2,400 (20% higher), so you decide to sell back.
- Once the $1,000 from leverage is returned, you will have $ 1,400 left; which means the net profit is $ 400, since the other $1,000 was yours from the beginning.
With $ 1000 you get a profit of $ 400, no less than a profit of 40%. That's not bad at all, right?
But not everything is wonderful. If everything goes ok and the asset increases, you will make money. Nevertheless, if the asset decreases, you will also lose more money in the blink of an eye.
Supposing 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 crucial to know about Take Profit and Stop Loss.
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 Bitcoin at $ 100 and request that your position is closed automatically when it reaches $ 120. It is very helpful to avoid being blinded by greed: we would all accept a 20% profit when making the investment, but when you reach that 20% it is easy to ask yourself “what if this keeps increasing and I can earn even more?”. It's like you got assured in advance that you will act prudently.
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. You always need to set a Stop Loss lower than that suggested by eToro.
About 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 the rates are much lower than those of an actively managed fund.
Currency market
Foreign exchange trading or Forex consists, as the name says, in the exchange of currencies. It is the conversion between a pair of currencies, and the aim is, evidently, to obtain a benefit out of this.
In case you want to trade euros and dollars, you acquire euros and pay with dollars, anticipating that the first currency (the euro) will revalue compared to the second (the dollar), to make a profit by selling it. Suppose you entered when a euro is worth 1.10 USD and you close when it is worth 1.15: consequently, that margin will be yours once you sell back.
You may be thinking by now that this form of trading requires high investments, and that is correct, since variations are usually minimal, and if you use a lot of leverage to counter that, you will take a considerable risk. In case you are new to the world of trading, it is not a good idea to begin with the currency market, because it is very risky and intricate.
eToro allows trading with the most usual currency pairs. However, consider that in this market sales are always made through contract for differences, thus you won't own the underlying asset.
Equities
Stocks are the most common securities. Some publicly traded companies decide to split into fractions and have several shareholders. By investing money in them, you can own a fraction of a company and obtain dividends.
We can group stocks into two main types: those that pay dividends and those that do not. Those that pay, at the end of the fiscal year, distribute their earnings among the stockholders; the latter, on the contrary, do not. However, that doesn't mean that the latter have less to offer. If a company does not pay every year but has a lot of potential, you should not give it up just because it does not pay you every year, since the capital gain you will get from the sale of the shares can be much greater than what you would earn through dividends.
If you invest in shares that payout, you will receive the funds into your eToro account, and you can withdraw them or invest back. However, you can benefit a lot from compound interest, so we would suggest reinvesting.
If you trade with stocks on eToro, you will be able to use leverage. However, we don't recommend that, since it would be a CFD and you would not receive dividends. On top of that, as shares tend to be long-term investments, you will have to pay fees as long as your position is open.
About ETFs
What do you know about Exchange-traded funds or ETFs? They are passively managed funds, known for combining the advantages of stocks and mutual funds: they can be exchanged regularly at market price, but have much more investment possibilities and considerably lower rates.
Commodity market
Most people invest in raw materials due to their stability. While other assets tend to fluctuate more, commodity prices vary less and offer safety against inflation or market volatility. Nevertheless, prices are subject to supply and demand, so if the fear of possible inflation provokes greater demand for a certain good, its cost will also go up.
Consider that, unlike stocks, raw materials don't pay dividends. So, the only prospective earnings would come from a sale of the asset.
Commodities can be classified into two main categories: hard raw materials and soft raw materials. The former are precious metals (such as gold, silver, copper, and platinum), industrial metals, and oil; while the latter are agricultural resources as sugar, coffee, corn, soy, among many others.
eToro deposit methods
When it comes to depositing funds on eToro, there is not much to say, since it is really straightforward. You just have to click “Deposit funds”, put an amount, and choose the payment option you prefer. You can pay with PayPal, bank transfer, credit card, Skrill, or Neteller.
Consider that for security reasons, you must be the owner of the account or the credit card.
The minimum amount allowed is $ 200, and there is a maximum limit for unverified accounts. Thus, if your intention is to deposit larger sums, you will need to verify your account previously.
The platform accepts deposits in any currency, but charges a fee for making the conversion to USD. So it is better to use USD directly.
Can you rely on eToro?
eToro has been tested by independent organizations once and again to validate its integrity in reporting previous performance statistics. And it has been confirmed every time that eToro is very precise with the information.
The main office of eToro is located in Cyprus, and the platform is approved by the Cyprus Securities Market Commission (or CySEC), which covers debts up to € 20,000 from its clients. The platform complies, on the other hand, with all the strict policies of the European Union.
eToro responds to the European Financial Instruments Market (MiFID), and to the Financial Conduct Authority or FCA in the U.S. 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.
Finally, their excellent customer service is also worth mentioning. You can reach them by phone or use their live chat.
How does eToro work?
We mentioned previously that eToro is very easy to manage. Anyone can start investing without having to read endless explanations.
Everyone who has previously used Twitter, Linkedin or any of the most common social networks, has enough knowledge to operate with the eToro interface.
Let's talk about how to register and the different sections of eToro that you should know.
You will have to fill in some information requested when registering.
They will also ask you about your previous investment activities.
But don't worry: it is not an exam. It is only a way of finding out how much knowledge you have and what type of assets they can suggest. For example, if it is your first experience in the investment world, they will not recommend that you invest in futures.
As soon as you are registered and have completed your profile, the annoying “incomplete profile” bar will disappear.
Let's get to know the different sections of the interface.
With the “Set Price Alerts” tool, you'll be able to program an alarm when an asset is at a certain price. This is perfect if you want to purchase 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.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. As we mentioned previously, the six types of instruments on eToro are:
- Cryptocurrencies
- Exchange-Traded Funds
- Shares
- Commodities
- Forex
- Index funds
The term “social trading” makes sense within “People”: there, you can copy the movements of any investor you choose with just one click.
You can search for those investors that you find more interesting: by average profits, market or risk level, for example. Just indicate the amount of your investment and eToro itself will replicate the movements made by the investor you chose, in proportion. This means that if you have $ 1000 and the investor puts 10% in an asset, the platform will invest also 10% of your money (that is, $ 100) in that same asset.
Finally, you will see in this section the popular CopyPortfolios. There are three types: Top Trader, Market, and Partner.
The benefit of copying to CopyPortfolios instead of particular investors is that this way the risk will be more diversified. There are all kinds of portfolios that you can find easily and are classified by sectors. Thus, in case you think a specific sector, like biotechnology or drones, will have good incomes in the future, you should look for that specific portfolio.