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eToro, recommended broker for obtaining Litecoin from Australia
Some of its advantages are:
- It uses other successful investment strategies so you can emulate them
- Admits short-trading
- It's uncomplicated and user-friendly
- eToro allows leverage
- Allows you to invest in countless of other products
Go to the official site: www.etoro.com/litecoin
In case you are interested in investing in Litecoin from Australia, eToro is certainly the best way to do it.
eToro is famous for making “social trading” fashionable. Social trading is an ingenious way of investing in which traders can emulate the moves of other investors who have been generating income for years.
If you are a beginner or do not have much experience in investments, eToro is great for you, since it puts your investment on autopilot by repeating strategies from those who have been doing it for years and making profits. And for those skilled investors willing to share their techniques with others, eToro rewards your knowledge with money.
Another thing to mention is how intuitive the platform is, which turns out perfect for new users that are learning all about Litecoin.
eToro Interface
As we have mentioned previously, one of the best things about eToro is its simplicity: anyone can invest without having to read endless explanatory texts.
You won't have any problems with the interface if you are familiar with any other social network, like Linkedin or Instagram.
Now we will detail the registration process and the sections of the page that you should familiarize yourself with.
You will have to fill in some information requested when registering.
Also, you will have to answer some questions about your experience as an investor.
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 recommend. For example, if you have never invested before, they will not suggest that you invest in futures.
As soon as you are registered and have completed your profile, you will stop seeing the “incomplete profile” message.
Let's get to know the different sections of the site.
In the “Set Price Alerts” tab, you have, as its name indicates, the option to set alarms on the price of certain assets. You only need 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 which price is decreasing, but it seems to you that it has not finished falling yet.
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 discussed previously in this guide the kinds of assets on eToro:
- Cryptocurrencies
- ETFs
- Shares
- Commodities
- Forex trading
- Index funds
The concept “social trading” makes sense in the section “People”: that is where you can replicate the movements of any investor you choose. You'll be able to see all their profiles and performances.
You can search for those investors that you find more interesting: by average profits, types of assets or risk level, for instance. Just indicate the amount of your investment and eToro will be in charge of replicating the movements of the selected investor, in proportion. “In proportion” means that if you have $ 1000 and the investor puts 10% of his or her balance in an asset, the platform will invest also 10% of your money (that is, $ 100) in that same asset.
Also, here you will see CopyPortfolios classified into: Top Trader, Market, and Partner.
Sometimes you might prefer copying to CopyPortfolios than to individuals, because the former offer more diversity. There are all kinds of portfolios that you can recognize easily and are classified by sectors. Therefore, in case you suspect a specific sector, such as e-commerce or pharmacy, has good chances to succeed, you can find that specific portfolio and do your investment.
Is eToro safe for purchasing Litecoin?
eToro is very meticulous with the information about past performances from investors, and its reliability has been independently tested several times.
Legally, eToro fulfills all the strict regulations of the European Union. Its main offices are in Cyprus, where it is validated by the CySEC or Cyprus Securities Market Commission, which protects up to € 20,000 of the debts from its clients (those from Australia included).
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, eToro has worked for fifteen years and that it has more than 20 million users around the world, 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.
In case you still don't know what “leverage” is, we'll put it short. When trading, it's the capacity of enlarging your investment by borrowing money from the broker. For example, you can enter with $ 100, but if you use x2 leverage, you will be investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Let's say that you are sure that Litecoin will raise its price, and you want to “go long”, but you only have $ 1,000 available. However, it is possible to put more money and get higher profits.
Perhaps you could go to your bank, request a credit, put something as collateral, wait for it to be accepted, wait for the money, send the money to eToro, confirm that it arrived, and then buy Litecoin… However, once you've managed doing all that, probably Litecoin would be already at a much higher price (if your prediction got confirmed), and investing wouldn't be a good idea at that moment.
Leverage is like a credit, but it is only a few clicks away! You will be able to operate with much more than what you have on the platform. You will simply see the different options as in the screenshot:
When operating with other kinds of assets you can use even more leverage. Why? Because cryptocurrencies are usually medium-long term investments. However, leverage is used primarily for short-term operations or day trading. That said, I'm going to explain better how leverage works.
If you have the $ 1,000 and choose leverage x2, your investment is 2 * $ 1,000, that is to say, $ 2,000. eToro puts the remaining amount to reach that figure.
A week later Litecoin goes up by 20% and now your investment costs 2,400. 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).
In conclusion, by investing $ 1000 you can make a profit of 40% (in the case you earn $ 400). That is pretty decent.
But watch out: if everything goes ok and the price goes up, you will make profits. However, if the asset decreases, you will also lose more money than you invested.
Let's suppose that the price didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but $ 40, because of the leverage. Because of that, the terms “Take Profit” and “Stop Loss” are crucial when trading with leverage.
Take Profit is a trading limit you can set for your assets: you program your operation and ask the platform to sell them once they get to a point above the entry price. For instance, you can buy Litecoin at $ 100 and request that your position is closed automatically when it reaches $ 120. It is very helpful to avoid being blinded by enthusiasm: a 20% profit is usually pretty good, but once you see it goes up, you might think you can make higher profits, which is not always the case. As a result, you might lose money if you don't close on time. So, Take Profit helps you reduce risks when trading.
On the other hand, when using leverage you also have to use Stop Loss, because a small decrease in the price of an asset can have a big impact on your wallet. That is why it is essential to establish a Stop Loss lower than that suggested by eToro.
Payment methods on eToro
Among the payment options that eToro accepts you will find: credit card, PayPal, bank transfer, Neteller, and Skrill. Depositing money on eToro is so simple: go to “Deposit funds”, type the amount and choose a payment method from the previous ones.
Of course, take into consideration that for security reasons, you need to be the holder of the account or the credit card.
The minimum you can deposit is $ 200 and there is a limit of how much you can deposit if you are not verified, so if you plan to operate with larger sums, contact Support beforehand to verify your account.
You can make the deposit in any currency and eToro will automatically convert it to USD. However, we suggest depositing directly in USD since the platform charges a commission.
Differences between futures and CFDs
What are the differences between Futures and CFDs?
- Who is the counterparty? With Futures, the counterparty is another investor. In CDFs, it’s the broker (eToro)
- Date of expiration Futures have a determined expirationdate. CFDs don’t expire
- Markets available for trading The market for Futures is narrower. CFDs include a wide range of possibilities.
- Minimum investment amount or “trade size” Being higher numbers, Futures require, proportionally, lower fees. Costs for CFDs are a bit higher, although not too much.
- Leverage With Futures, it isn’t possible; while with CFDs it is.
About Contracts for Difference
You probably have seen the acronym CFD now and then if you entered eToro before. We will explain its meaning now, but you should know first that CFDs on eToro are only possible if you short sell or select leverage above x2 (but this is not even available on the platform).
We will also explain terms like leverage and “going short”, in case you are considering day trading cryptocurrency or other more advanced practices.
Even if you don't have a positive balance, you can still bet on eToro with CFDs. In a hypothetical case: you are sure that the Litecoin will go down, so perhaps you consider that it is better to wait until it does and then go in. But if it really falls, it might mean extra money for you.
You can accomplish that by “going short”. Here's how it works ,roughly:
- You ask someone to lend you, for instance, 100 units of Litecoin, which total price at that moment is $ 5,000 (these figures aren't real)
- You sell the 100 units and earn $ 5,000
- As you presumed, it devaluates, and the unit of Litecoin goes from $ 50 to $ 30
- You purchase the 100 units again, but at their current price, $ 3,000
- Then you pay back the 100 units to whoever loaned them to you
- The difference is yours, so, you will have earned $ 2000
Consider that it sounds much more tricky than how eToro CFDs actually work: we can just say that by trading in Litecoin you can also earn money if you foretell it will go down.
Investment strategies
There are lots of ways to trade cryptocurrencies: for example, you can buy and hold, or you can day trade using volatility of the market in your favor.
If you are just starting in the world of trading, my suggestion is a middle point: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
For example, if you purchase a cryptocurrency at $ 15, it increases to $ 25 and falls back to $17, the stop-loss will allow your operation to be closed, perhaps at $ 21 or $ 22. Therefore, you will obtain a fine profit.
I know it might sound more appealing to sell when the cost is at its peak, right before corrections, but that is simply not possible. The above method is much more down-to-earth and it can give great results.
Later on, you will be able to apply more sophisticated strategies, such as going short to profit from bear markets or using leverage.
How does a demo account work?
Are you beginning in trading? Using a demo account can be very helpful. You just need to set the virtual mode and you can start operating with fictional funds.
This can be a great way of gaining experience and confidence before trading with real money. You will have an amount of $ 100.000 (“fake” or virtual, of course) to begin with, and you can operate with a variety of financial instruments, not just with Litecoin.
If your performance is not that good and you lose your funds, there is always a possibility to replenish your virtual balance. The second time will always be better.
But remember that you need to be prudent for trading, and using a demo account can have an adverse effect. It is completely different to risk your real savings than to do operations with a fake balance that you don't mind losing. Also, investing virtual money can prevent you from learning to control your emotions, something you should be able to do when trading.
Finally, the virtual 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 to see the outcome. Virtual accounts may be helpful for practicing before investing in the short or medium-term.