Contents
eToro is an outstanding brokerage platform for those in Australia who want to buy Monero
Some of its advantages are:
- You can invest in plenty of different goods
- Leverage is allowed
- Really user-friendly and simple
- You can learn from other investment strategies
- You can go short
Official page: www.etoro.com/monero
If you are thinking about investing in Monero from Australia, eToro may be the best way to do it.
“Social trading”, a relatively new investment method that consists in replicating techniques and strategies from other experienced investors, has become trendy because of eToro.
eToro has solutions for you, especially if you don't have much experience in trading, since it automatizes your investment by replicating moves from those who have been doing it for years and making profits. Additionally, in case you do have experience in investment, the platform pays you for sharing it.
Another advantage is how intuitive the interface is, which turns out perfect for new users that are learning all about Monero.
Futures Vs CFD
Here is a brief comparison between CFDs and Futures, in case you want to know more:
- Who is the counterparty? In the case of Futures, the counterparty is another investor. In CDFs, it’s the brokerage, in this case eToro
- Expiration date Futures have a determined expiration, while CFDs don’t expire
- Variety of options for trading The market for Futures is narrower. CFDs include a wide range of possibilities.
- Minimum investment amount or “trade size” Costs for Futures are higher than costs for CFDs.
- Use of leverage With Futures, you can’t leverage; while with CFDs leverage is always available.
If you still don't know what “leverage” is, we'll put it short. When trading, it's the capacity of enlarging your investment without putting more money. For example, if you start with $ 100 and you leverage x2, your initial investment will be $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Suppose now that you are sure that Monero is going to rise, thus you decide to take a long position.
You are certain that Monero will rise, and you have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
You could consider requesting a loan, but it is a process that takes time, and by the moment you finally get the money, Monero might be already so expensive (if your guess was right) that trading wouldn't be convenient anymore.
Leverage is exactly like a loan, but it is only a few clicks away! eToro allows you to operate with much more than what you have on the platform's wallet. Before trading, you will how much leverage to use as in the screenshot:
When trading with other assets you can use higher leverage. Why? 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 decide to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 ($ 1,000 are a “loan” from eToro).
- Then, turns out that Monero does rises, as you thought, and now the price of your investment is $ 2,400 (20% higher), so you decide to sell back because you want to play it safe.
- Once the $ 1k from leverage is deducted, you will have $ 1,400 left; which means you've earned $ 400, since the other $1,000 was yours initially.
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is quite good.
But there's always a downside. If all goes as you planned and the asset increases, you will make money. Nevertheless, if the asset decreases, you will also lose more money than you invested.
For example: if the price falls by 10%, you do not lose $ 10, but twice (the leverage) that figure, that would be $ 20. Because of that, the concepts of Take Profit and Stop Loss are crucial when operating with 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 purchased Monero at $ 100, you can ask eToro to close your operation when it reaches $ 120. That way, you make sure you won't be blinded by greed and decide to keep waiting in case it keeps going up, which could make you lose it all.
Stop Loss is even more important, mostly when operating with leverage, since a small loss could be fatal for your wallet. You always need to set a Stop Loss lower than that suggested by the broker.
About ETFs
Exchange-Traded Funds or ETFs are a kind of passively managed fund, similar to index funds. We can say that ETFs are somewhere between stocks and funds: they are publicly traded and therefore can be bought and sold at any moment at market price. However, their main benefit is that they offer more alternatives compared to stocks, and the rates are much lower than those of an actively managed fund.
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 traded at any moment in the market, but offer much more diversity and considerably lower rates.
Index Funds
If a long-term investment sounds like something you would do, and you won't need to withdraw your money in five or ten years, index funds can be the best alternative. This type of investment is also great for beginners since it is more secure. Besides, they offer more variety.
Contrary to what it may seem, very few fund managers can beat the benchmark (yes, you have surely heard of managers who obtain huge returns).
But putting aside some unusual cases, all that glitters is not gold: when someone brags about having beaten the market, it was probably for a limited time, or their rates are really high. Also, take into account that past performances do not ensure a future one.
With index funds, you won't be concerned about that: most of the time, they beat active managers in the long term, and the commissions are lower than you imagine.
Trading strategies
There are many methods to operate cryptocurrencies: for example, you can buy and hold, or you can day trade (taking advantage of market volatility).
My recommendation for those who are beginning to invest is something in the middle: when you open your position, place a dynamic stop loss 15-20% below the maximum price, and let the magic happen.
For example, if you purchase a cryptocurrency when it is worth $ 15, it increases to $ 25 and decreases again to $17, the stop-loss will close your position at $ 21 or $ 22. Therefore, you will obtain a good profit.
Perhaps you are wondering: why not selling back when the price is at its maximum? But that would only work for a psychic or a fortune-teller. The mentioned strategy is completely realistic and can work out perfectly if it is well applied.
Later on, you will be able to apply more complex strategies, like going short or using leverage.
eToro deposit methods
Within the payment methods available on eToro are: bank transfer, PayPal, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Neteller, and Skrill. There is not much to explain here: making a deposit with eToro is a very easy process. You just need to click “Deposit funds”, type the amount and select a payment method from the previous ones.
Consider that for security policies, you must be the owner of the account or the credit card.
The lowest amount is $ 200, and there is a maximum authorized for unverified accounts, so if you plan to operate with higher amounts, you should verify your account previously.
You can pay in any currency and eToro will do the conversion to USD. Nevertheless, we suggest depositing directly in USD since the platform charges a commission.
Can you trust eToro?
eToro has been tested by independent organizations once and again to certify its reliability in the treatment of data from previous users. Every time, it has been confirmed that eToro is rigorous 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 can cover up to € 20,000 from its client's debts. On the other hand, eToro meets all the strict requirements of the European Union.
eToro responds to the European Financial Instruments Market or MiFID, and to the Financial Conduct Authority (FCA) in the USA. 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 finances are safe.
Their excellent customer service is also worth mentioning. You can use the online chat, and they also have a phone number available for assistance.
Virtual portfolio
For those who still don't have much experience in investing, using a demo account can be very helpful. You just need to set the virtual mode and you can start practicing with a “fictional” amount.
A virtual account can help you to practice and gain experience before starting to operate with real money. When you create your demo account, you will begin with a virtual balance of $ 100.000, to trade with a variety of assets available on the platform (not only with Monero).
The first attempt is not usually that good. But you can ask support to deposit back the virtual funds to your account, and the second time you should do better.
Take into account that you should always be cold-minded when trading, and using a virtual portfolio might have the opposite effect. It will never be the same as risking your own money.
As you may suppose, if you are interested in investing in the long or medium-term, it makes no sense that you try the virtual mode and waste years waiting to see the results. But it can be ideal if you want to practice short and medium-term investment.
How does eToro work?
As we have mentioned before, one of the best features of eToro is its extraordinary simplicity: anyone can invest without having to read endless explanations.
Everyone who has used social networks like Twitter or Linkedin, has enough skills to use eToro.
We will explain, roughly, the registration process and the different tabs that you will find on eToro.
First of all, you will have to fill in your personal data, like first name, last name, address….
They will also ask you about your previous experience as an investor.
But don't feel like you are taking an exam. The only intention is to know more about you and be clear about which financial instruments they should recommend according to your knowledge and experience.
Next, we will explain the fundamental sections of the platform.
With the “Set Price Alerts” tool, you'll be able to program an alarm when a security is at a certain price. Just click the tab and you will be able to set it. This is helpful if you want to buy an asset and you are waiting for its price to fall.
In “News Feed”, investors interact and share valuable information.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we mentioned in this guide, the different financial instruments available on are:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Commodities
- Forex
- Index funds
The concept “social trading” comes to life within “People”: there, you can replicate the trading strategies of any investor you choose. You'll be able to see all their profiles and performances.
You can search and find users according to your interests. When you select an investor and indicate the amount 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 invest $ 200 of your balance in the same asset as well.
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 particular users, since the former offer more diversity. The portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … You think that a certain sector will prosper in the future? Then you will surely find a CopyPortfolio about it.