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eToro, our favorite option for investing in Ethereum Classic in Australia
Why do we recommend it?
- It takes techniques and moves from successful investors so you can copy them
- Admits short-selling
- Very user-friendly and simple
- Leverage is allowed
- Lets you invest in countless of different products
Main site: www.etoro.com/ethereum-classic
In case you are considering it, eToro is probably the best way to purchase Ethereum Classic from Australia.
“Social trading”, a relatively new investment method that consists in replicating techniques and strategies from other experienced investors, has become popular thanks to eToro.
If you are still a rookie or do not have much investment experience, eToro is very helpful. You can rest assured that you are 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 pays for it.
Besides, the interface of the website is so uncomplicated, great for users who want to begin in the Ethereum Classic world, without ending up overwhelmed with tons of numbers and information.
About Contracts for Difference
You probably have seen the acronym CFD all the time if you entered eToro before. We will explain its meaning now, but you should know first that cryptocurrency trading on eToro is only CFD if you go short or leverage higher than x2 (and this is not even an option on eToro).
If you are interested in day trading cryptocurrency and other more advanced practices, we will also refer to concepts like leverage and “going short”.
With CFDs you can operate on the platform even if you are “in red” or don't have a positive balance. In a hypothetical case: you have the conviction that the Ethereum Classic will go down, so probably you consider that the best thing to do is wait until it does and then go in. Nevertheless, if you really think that it's going down, why not making some profits?
You can do that by “going short”. Here's how it works:
- You ask someone for a loan of, let's say, 100 units of Ethereum Classic, which cost $ 5,000 at the moment (obviously, these numbers aren't real)
- You make $ 5,000 by selling the 100 units
- The Ethereum Classic goes from $ 50 to $ 30 (as you calculated, it devaluates)
- Again, you buy the 100 units, but now their price is $ 3,000
- You return the 100 units
- The difference is yours, so, you will have made $ 2000
Consider that it seems much more complex than how eToro CFDs actually work: we can summarize this whole operation by saying that by trading in Ethereum Classic you can also earn money if you predict it will fall.
Exchange-Traded Funds
ETFs or Exchange-Traded Funds are similar to index funds. They can be described as a merge between stocks and mutual funds. They are traded in the market like stocks, during the day. However, their main benefit is that they offer more alternatives compared to stocks, and have lower fees.
About Index Funds
This is the best option for people who can invest in the long term, mostly for beginners, because it is less expensive, diversified, and the risk is lower.
Contrary to common perception, very few investors can beat the benchmark (although you have probably heard of investors who achieve huge profits).
But putting aside some unusual cases, not everything is as good as it sounds: when someone brags about having 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, if something happened in the past it doesn't mean necessarily that it will happen again.
Index funds offer these two great advantages: most of the time, they beat active managers in the long term, and the commissions are so much lower.
Foreign exchange
Forex or currency trading allows obtaining profits by converting one currency for another.
For instance, if you want to trade euros and dollars, you speculate how many dollars it will take to buy a euro, with the expectation that the euro will increase compared to the dollar. Therefore, if you purchased each euro at 1.15 USD and you sell them back when they cost 1.20 USD, you'll be earning that difference.
As you may have already inferred, operating with foreign exchange requires investing a lot, because prices never increase that much, or using much leverage, which you know is a risk. If you are just starting in trading, we don't recommend beginning with Forex, because it's not the safest alternative.
You can operate with almost all well-known currency pairs on eToro. Nevertheless, remember that Forex functions through CFDs, so the underlying asset won't be yours.
Investment strategies
There are different methods or ways for crypto trading, like day trading or buying and holding, for naming just a couple.
My suggestion for those who are starting to invest is going halfway between the two options: when you open your Ethereum Classic position, set a stop-loss 15-20% under the maximum price, and forget about the operation.
Therefore, if for example you purchase a cryptocurrency at $ 10, it reaches $ 20, and after that it decreases to $ 12, your operation will be closed at $ 16-17 and you will have earned a decent profit.
It may sound more appealing to sell when the cost is at its maximum, right before corrections, but unless you're clairvoyant, that will never be possible. The above method is much more down-to-earth and, well applied, it can work very well.
Later on, you will be able to apply more complex techniques, like using leverage or going short.
Payment methods on eToro
Among the payment options available on eToro are: credit card, PayPal, bank transfer, Neteller, and Skrill. Depositing money with eToro is so simple: go to “Deposit funds”, set an amount and choose the payment method you prefer.
Remember that for security reasons, you must be the holder of the credit card or the account.
The lowest amount you can deposit is $ 200, and there is a maximum allowed if you are not verified. Therefore, if you plan to operate with higher amounts, contact Support previously to verify your account.
You can make the payment in any currency and eToro will automatically convert it to USD. Nevertheless, it is advisable to use USD anyway since the platform charges a commission for the conversion.
Can you trust eToro?
eToro has been independently tested several times to verify its integrity in displaying previous performance statistics. The results have always confirmed that eToro is rigorous with the figures.
In the legal aspect, eToro complies with all the strict policies of the European Union. Specifically, its head office is in Cyprus, and it is approved by the CySEC or Cyprus Securities Market Commission, which protects up to € 20,000 of the debts from its clients (those from Australia included).
eToro is backed by the European Financial Instruments Market (MiFID) in Europe, and by the Financial Conduct Authority or FCA in the United States of America. Apart from the above, it has a trajectory of fifteen years, with more than 20 million users around the world. So, yes, it is a safe broker.
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 does eToro work?
We mentioned previously that eToro is very easy to manage. Anyone can start investing without previous knowledge or long explanations.
If you are familiar with any of the most common social networks, you can perfectly use this platform.
We will explain the registration process and the different sections that you will find.
You will have to fill in some information requested when registering.
Additionally, you will see that they ask you some questions about your experience at investing.
But you don't need to worry: it is not an exam. It is only a way of finding out how much knowledge you have and what type of financial instruments they can recommend. For example, if you have never invested before, they will not suggest that you invest in futures.
When you fill in all your information in your profile, the annoying “incomplete profile” bar will disappear.
Let's see what the different sections of the site are.
“Set Price Alerts” allows you to put alarms on the price of certain assets. You just have to click on the three points at the end of the line and you will be able to program a price alert. This is very helpful when you are after a security that is falling, but it seems to you that it has not finished falling yet.
“News Feed” is the more “social” section. There, users can interact and share their knowledge.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we mentioned previously, the six types of instruments on eToro are:
- Cryptocurrencies
- ETFs
- Stocks
- Raw materials
- Forex
- Index funds
The term “social trading” comes to life in the section “People”: there, you can copy the movements of any user you choose with just one click.
You will be able to find those traders that you find more interesting. You can search by risk level, trading market, profits or country, among other filters. When you select an investor and indicate how much money you want to invest, eToro will automatically replicate their movements, proportionally. If you have $ 1000 and the trader puts 20% of their funds in an asset, eToro will also invest 20% of your money in the same asset, in this case, $ 200.
You will also see the three main types of CopyPortfolios, which are classified into “Top Trader”, “Market” and “Partner”.
Sometimes it might be preferable to copy from CopyPortfolios than to other investors, because you avoid putting all your eggs in one basket. The portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … Do you suspect that a certain sector is going to have success in the future? Then you will surely find a CopyPortfolio about it.