Contents
Why we reccomend eToro for investing in Gram in Australia?
Why do we recommend it?
- It is possible to make investments in tons of other goods
- You can trade leveraged
- It is uncomplicated and accessible
- You can copy investment strategies
- Allows you to go short
Homepage: www.etoro.com/gram
In case you are interested in investing in Gram from Australia, eToro is probably the best option.
eToro is well-known for making “social trading” fashionable, an innovative way of investing in which investors can imitate the techniques of other traders who have been generating profits for years.
If you are a novice user or haven't gained much investment experience, eToro is very useful. You can rest assured that you will be making a smart investment since the site replicates those from subjects with a long profit record. Additionally, in case you do have experience in investment, eToro pays you for sharing it with others.
Another thing to mention is how easy the interface is, which turns out perfect for new users that are just learning all about Gram.
What are Contracts for Difference?
You probably have seen the acronym CFD now and then if you already registered on eToro. We will come back to it, but first, you should know that CFDs on eToro are only possible when you go short.
We will also refer to terms like leverage and “going short”, in case you are considering day trading cryptocurrency or other more advanced operations.
With CFDs you can operate on eToro even if you are not “in the black” or having a negative balance. For example: you believe that the Gram will go down, so the logical thing is to think “if it is going to depreciate or go down in price, I simply refrain from getting in and I'll go in when it has gone down”. However, if it actually falls, you can earn some money out of that.
You can accomplish that by “going short”. Basically, this is how it works:
- You obtain from a loan 100 units of Gram, valued at a total of $ 5,000 (these numbers are entirely made up)
- Next, you make $ 5,000 by selling them at their price in the market
- The price falls, as you thought, and the unit of Gram goes from $ 50 to $ 30
- You buy all 100 units one more time, but now their value is $ 3,000
- Then you return the 100 units to the loaner
- The rest is yours, so, you will have earned $ 2000
It all sounds more tricky than it really is. Just take into account that by trading in Gram on eToro, with CFDs you can make money when you anticipate downs.
Futures Vs CFD
What are the differences between Futures and CFDs?
- Counterparty
- Futures: operations are made with someone else, another investor.
- CFDs: the counterparty is the brokerage, in this case, eToro.
- Expiration:
- Futures: there is an expiry date. As soon as that date arrives, the contract is closed even if you are in red.
- CFDs: they don't expire. This means that you can wait until you get in a good position before closing.
- Trading options:
- Futures: options are much more restricted
- CFDs: a lot of variety, there is a huge diversity of CFDs
- Minimum deposit:
- Futures: very high minimum investment
- CFDs: it is possible to enter with a low amount
- Trading costs:
- Futures: as you need to invest more, costs are lower
- CFDs: higher (although not excessively)
- Possibility of using leverage:
- Futures: there is no leverage leverage
- CFDs: totally available
What is an ETF?
Exchange-Traded Funds or ETFs are a type of passively managed fund, 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.
About ETFs
Exchange-Traded Funds or ETFs 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 have lower fees.
Index Funds
Index funds are most adequate for those interested in long-term trading, particularly for beginners. If you don't need an amount of money for the next five or ten years, index funds offer you security and diversity.
Unlike a lot of people think, benchmark returns are very difficult to beat and very few fund managers have done it, apart from some famous cases.
In practice, all that glitters is not gold: if a fund manager achieves to beat the market, it is only for a short period or on a specific occasion. Or perhaps they would charge very high rates and indexing would be a better decision (with minimal commissions).
The great advantage of index funds is that they perfectly solve both issues: their fees are minor and in the long term they almost always beat active managers.
Currency market
Forex or currency trading allows obtaining profits by converting one currency for another.
If you decide to exchange the EUR/USD pair, for example, you speculate how many dollars it will take to buy a euro, with the expectation that after obtaining the first currency (the euro) it will revalue compared to the second (the dollar), to make a profit by selling it. Let's say you entered when the price of one euro is 1.10 USD and you exit when the price has gone up to 1.15: consequently, that margin will be yours once you sell back.
You may be thinking by now that operating with currencies requires investing considerable amounts, and you are not wrong, since fluctuations are usually minimal, and often you will need to use high leverage (which is an important risk). Our recommendation for those starting in the world of trading is to choose another market to begin with, since Forex is not the safest.
You can operate with almost every currency on eToro. Still, take into consideration that this market works with CFDs, therefore the underlying asset won't be yours.
Shares
The most common financial assets are stocks or shares: these are fractions in which an enterprise that chooses to go public is divided. You can own a proportion of a company and obtain a profit, but you must know where and how to invest your money.
We can group stocks into two main types: the ones that payout at the end of every fiscal year to the investors, and those that don't payout. The former ones are great, obviously, but investing in the latter can be a good idea too since the profit you can make by selling the shares can be even larger.
When trading on eToro, if you choose a company that distributes dividends, these will be reflected in your balance, and you can withdraw those funds or reinvest them. Our suggestion is, if you don't have financial urgencies, that you benefit from compound interest and reinvest it in the company itself.
Remember that when investing in shares on eToro you can “dope” your trades with leverage, but in that case, you will not receive returns as it would be a contract for difference. For long-term investments, it is better not to use leverage: not only because you lose dividends, but also because you will have to pay fees as long as you keep the position open, and these can end up eating your gains.
Commodity market
Most investors trade with raw materials due to their stability. While other assets present higher fluctuation, raw materials prices vary less and offer security against inflation or market volatility. However, prices are subject to supply and demand in the market, so if the fear of possible inflation provokes higher demand for a certain good, the price will also increase.
Take into account that, unlike shares, raw materials don't pay dividends. Thus, by trading with these you will only have a further income by selling them back.
Raw materials are commonly classified into hard raw materials, which include precious metals as gold, silver, or copper, as well as industrial metals, and oil; and soft raw materials, which are agricultural goods, like soy, cocoa, corn, or rice, for instance.
Trading strategies
When trading cryptocurrencies, there are different possible methods or strategies, such as day trading or buying and holding, for naming just a few.
My recommendation for those who are starting to invest is something in the middle: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
For example, if you purchase a cryptocurrency when its price is $ 15, then it rises up to $ 25 and decreases back to $17, the stop-loss will allow your operation to be closed, perhaps at $ 21 or $ 22. Thus, you will get a satisfactory income.
You may be wondering: why not selling back when the cost is at its maximum? But unless you are a psychic, that is just not possible. The mentioned strategy can work perfectly and give good results.
Later on, you will be able to apply more complex techniques, like going short to profit from bear markets or using leverage.
How to deposit funds into your eToro account
When it comes to depositing funds on eToro, there is not much to say, since it is really straightforward. Just click “Deposit funds”, put an amount, and choose your payment method. You can pay with PayPal, bank transfer, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Skrill, or Neteller.
Remember that for security reasons, you must be the owner of the credit card or the account.
The lowest amount is $ 200, and there is a maximum allowed for unverified accounts, so if you plan to operate with larger sums, you should verify your account first.
Also, remember that you can make the transfer in any currency because eToro converts it to USD, but charges a commission for it, so it is better to make the transfer directly in USD.
Can you trust eToro?
eToro is very meticulous with the information about past performances from users, and its integrity has been tested once and again by independent organizations.
Legally, eToro fulfills all the demanding policies of the European Union, legislation in which it is found. Specifically, its head office is in Cyprus, and it is approved by the Cyprus Securities Market Commission (known as CySEC), which can cover up to € 20,000 of the debts that its clients may have with creditors, including those from Australia.
In Europe, it is 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 been active for fifteen years and that it has more than 20 million users, so we can rest assured that our money is in good hands.
No less important is their excellent customer service. You can use the online chat, and they also have a phone number available for assistance.
How does a virtual account work?
In case you are beginning as an investor, you can start by practicing with a “demo” option. Setting a virtual account and trading with fictional funds is very simple.
This is a great tool 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 Gram, but you can also create a diverse portfolio.
Don't worry, since if you lose all your virtual balance, you can contact support so they can add back the $ 100,000 to your demo account and you can try again.
Keep in mind that investing is mostly about being cold-minded, and perhaps using a demo account can prevent you from controlling your impulses. It is not the same to trade with your own money than with virtual funds, which you can lose without a problem.
As you may suppose, the demo mode is kind of pointless if you intend to invest in the medium or long-term, since you would be wasting years to see the outcome. Virtual accounts may be useful for trying out before investing in the short or medium-term.
How does eToro work?
As we have mentioned among the positive aspects of eToro, the best thing about this online broker is its extraordinary simplicity: anyone can invest without having to read endless explanations.
You won't have any issues with the interface if you are familiar with any of the most common social networks.
We will explain, roughly, the registration process and the different tabs that you will find on the platform.
You will have to provide some personal information when registering.
To complete your profile, you will see that they ask you some questions about your experience at investing.
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.
You will see a bar that says “incomplete profile” until you fill in all the information.
Let's get to know the different sections of the platform.
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 helpful in case you want to purchase a security that is falling but you believe it will decrease even more.
“News Feed” is for social purposes and interaction. This is the section where users can share opinions and learn from each other.
In “Discover” you will find the tabs: “Instruments”, “People” and “CopyPortfolios”. And we already discussed the kinds of assets that are available on eToro:
- Cryptocurrencies
- ETFs
- Stocks
- Raw materials
- Forex trading
- Index funds
The term “social trading” comes to life in the section “People”: there, you can replicate the movements of the best investors with just one click.
Using the search bar, you can find the investors that best suit your interests: by average profits, types of instruments or risk level, for instance. You just have to choose the amount of your investment and eToro will be in charge of replicating the movements made by the selected investor, in proportion. “In proportion” means that if you have $ 1000 and the trader puts 10% of his or her balance in an asset, eToro will invest also 10% of your money (that is, $ 100) in that same asset.
In this section 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 individuals is that this way the risk is more diversified. There are all kinds of portfolios that you can recognize easily and are classified by sectors. So, if you suspect a specific sector, such as fashion or healthcare, will have good incomes in the future, you can find that specific portfolio and do your investment.