Contents
eToro is an outstanding brokerage for those who want to buy Tezos from Australia
Some of its advantages are:
- There are uncountable investment opportunities
- You can leverage
- It's uncomplicated and user-friendly
- Allows to imitate other investment tactics
- Allows you to go short
Main site: www.etoro.com/tezos
You should consider eToro if you are interested in acquiring Tezos from Australia.
“Social trading”, an innovative way of investing by replicating techniques and moves from other experienced investors, has become trendy thanks to eToro.
If you are still a rookie or do not have much experience in investments, eToro is great for you. You can rest assured that you are doing a smart investment move when replicating those from subjects with a long profit record. Oppositely, if you are an investor and decide to share your abilities with other traders, eToro rewards you with money.
Another advantage is how manageable the interface is, which turns out perfect for new users that are learning all about Tezos.
How do Contracts for Difference Function?
If you already have been on eToro, you probably noticed that the acronym CFD appears over and over. We will explain its meaning now, but you should know first that cryptocurrency operations on eToro are only CFDs when you go short or leverage above x2 (but the platform does not even allow this).
If you are considering day trading cryptocurrency or other advanced trading practices, next you will also find concepts like going short and leverage.
eToro allows you not only to bet when you are “in the black”, but with CFDs you can also bet “in red”. For example: you are sure that the Tezos will go down, so you clearly think “if it is going to depreciate or go down, I'll simply wait until it does”. However, if you really think that it's going down, why not making some profits out of that?
You can accomplish that by “going short”. Here's how it works:
- You ask for a loan of, let's say, 100 units of Tezos, which cost $ 5,000 at the moment (obviously, these figures are made up)
- Next, you sell them at their market price, $ 5,000
- The price is reduced, as you guessed, and the unit of Tezos goes from $ 50 to $ 30
- You get the 100 units again, but at their current price, $ 3,000
- You return the 100 units
- The rest is yours, so, you will have earned $ 2000
Take into account that it is much easier than it sounds: we can just say that by trading in Tezos you can also earn money if you foretell the downs.
Differences between futures and CFDs
Here are the major differences between Futures and CFDs, in case you want to know more:
- Counterparties
- Futures: the counterparty is someone else, another investor.
- CFDs: the counterparty is the broker (eToro). That means you do not “play” against or with another trader but the bank.
- Expiry date:
- Futures: there is an expiry date. When that date arrives, your position is closed even if you are in red.
- CFDs: there is no expiration date. It is possible to get back to a good position before exiting.
- Options for trading:
- Futures: there are limited options for investment
- CFDs: they include lots of different assets, commodities and currencies
- Minimum deposit amount or “trade size”:
- Futures: very high minimum investment
- CFDs: you can get in with a lower trade size
- Trading costs and charges:
- Futures: as you need to invest more, costs are lower
- CFDs: fees are higher
- Use of leverage:
- Futures: you can't leverage
- CFDs: totally available
Have you heard about “leverage”? Just in case, we'll put it simply:
the good thing about trading is that it lets you invest even more than you can have in a given time. Let's say that you enter with $ 100 and you choose to leverage x2, the amount of your investment will be $ 200.
Why using leverage and how to do it
Suppose now that you know that the price of Tezos is going to raise its price, thus you decide to take a long position.
You are completely certain that Tezos will rise, and you just have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
Possibly, you could ask a financial company for a credit, put an asset as collateral, wait for it to be accepted, wait for the money, send the money to eToro, confirm that it arrived, and then purchase Tezos… Nevertheless, when you finish doing all that, probably Tezos would be already much higher (if your prediction got confirmed), and it wouldn't be a good idea to invest then.
Leverage is exactly like a loan, but it is only a few clicks away! You will be able to invest (and earn) much higher amounts than what you actually have on the platform. As in the image below, you will see the different options you have:
When trading with other assets you can use higher leverage. The reason is that cryptocurrencies are a value that is invested in the medium-long term, and leverage is used especially for day trading or short-selling. But let's deepen a bit more on how all this works.
If you have the $ 1,000 and choose leverage x2, you will be investing $ 2,000. eToro would be “loaning” you the extra $ 1,000.
A couple of days later, as you thought, Tezos raises its price by 20% and your money has appreciated reaching $ 2,400. But you don't want to take too much risk, so it's time to sell.
You need to pay back the $ 1,000. You have $ 1,400 left, of which $ 1000 is the money you invested yourself, so the net profit is $ 400.
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is quite good.
It may sound too good to be true. The thing is, it can also play against you. If everything goes as planned, you will earn profits in little time; but if the opposite happens, you will also lose more really fast.
Supposing that the asset didn't increase by 20%, but it went down also by 20%, you won't lose $ 20 but double, $ 40. That is why the concepts of Take Profit and Stop Loss are crucial when using leverage.
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 Tezos at $ 100 and ask eToro to close your position automatically when it reaches $ 120. It is very helpful to avoid being blinded by enthusiasm: we would all accept a 20% profit in the beginning, 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 made sure now of not acting recklessly in the near future.
On the other hand, when using leverage you should always use Stop Loss, because a small decrease in the price of an asset can lead to a substantial loss. That is why it is essential to establish a Stop Loss lower than that suggested by the platform.
About ETFs
What do you know about Exchange-traded funds? They are similar to index funds and are known for combining the advantages of stocks and mutual funds, because they can be traded at any moment in the market, but have much more investment possibilities and the fees are significantly lower.
Commodity market
The main advantage of investing in commodities is that their price fluctuates less than that of other assets. Actually, their stability is what makes most people trade with raw materials when facing financial insecurities or market volatility. However, the cost of raw materials depends on supply and demand, so if faced with the fear of inflation, demand rises a lot, so will the price.
Take into account that commodities don't pay dividends. So, the only prospective earnings would come from a future sale of the asset.
Commodities are generally classified into two kinds: first, we have hard raw materials, which are precious metals (gold, silver, copper, and platinum), industrial metals, and oil; in second place are soft raw materials, which are agricultural goods such as sugar, cocoa, soybeans, among others.
About ETFs
What do you know about Exchange-traded funds? They are similar to index funds and are known for merging the benefits of stocks and mutual funds, because they can be traded regularly at market price, but have much more investment possibilities and considerably lower rates.
Index Funds
Index funds are the best alternative for those planning to invest for the long term, mostly for beginners. If you don't need an amount of money for the next five or ten years, index funds offer you variety and lower risks.
You may have a different idea, but very few fund managers can beat their benchmark return (yes, you have probably heard of managers who obtain huge returns).
But besides Warren Buffett and a couple more, all that glitters is not gold: when someone brags about having beaten the index, it was probably for a short time, or their rates are really high. In the end, indexing is better because commissions are minimal. Besides, if something happened in the past it doesn't mean necessarily that it will happen again.
Index funds offer solutions for that: although in the long term, they frequently beat active managers, and the rates are minimal.
Investment strategies
There are different methods or ways for crypto trading, like buying and holding or day trading, for naming just a couple.
In case you don't have much experience trading, my recommendation is a middle point: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
This means that if, for example, you buy a cryptocurrency at $ 10, it reaches $ 20 and then falls to $ 12, your stop loss will close your position at $ 16-17 and you will have made a considerable profit.
I know it's tempting to look to sell when the cost is at its peak, right before corrections, but that is simply not possible. The mentioned method is much more realistic and, well applied, it can work very well for you.
Later on, you will be able to apply more complex strategies, like going short or using leverage.
Payment methods on eToro
When it comes to depositing money on eToro, there is not much to say, since it is really straightforward. You only need to select “Deposit funds”, type an amount, and choose your payment method. You can pay with PayPal, bank transfer, credit card, Skrill, or Neteller.
Remember that for security reasons, you must be the holder of the credit card or the account.
The minimum amount required is $ 200, and there is a maximum limit for unverified accounts. So, if your intention is to deposit higher amounts, you should contact Support to verify your account first.
eToro allows transfers in any currency, but charges a fee for making the conversion to USD. That is why we suggest, if possible, depositing in USD from the beginning.
Is eToro safe for purchasing Tezos?
eToro has been tested by independent organizations once and again to prove its integrity in the handling of data from previous users and past performances. Every time, it has been confirmed that eToro is rigorous with the information.
The main office of eToro is in Cyprus, and the platform is approved by the Cyprus Securities Market Commission (known as CySEC), which covers debts up to € 20,000 from its clients. On the other hand, eToro meets all the strict regulations of the European Union.
It is also supported by the European Financial Instruments Market (MiFID), and in the USA it responds to the Financial Conduct Authority (FCA). In addition to all these regulations, eToro has more than 20 million users around the world, and it has been operating for the last fifteen years. To sum up, we can be confident that our finances are safe.
Finally, their customer service functions perfectly. You can reach them by phone or use their online chat.
Virtual portfolio
Are you beginning as an investor? Using a demo account can be very helpful. Just assure yourself that the virtual mode is set and you can start practicing with a “fictional” portfolio.
A virtual account can be a good way of gaining confidence before starting to trade with real funds. When you create your demo account, you will begin with a virtual balance of $ 100.000, to operate with a variety of assets available on the platform, besides Tezos.
If your performance is not that good and you go back to zero, there is always a possibility to replenish your virtual balance. You'll probably do better on the second try.
But remember that you need to be prudent for trading, and demo account trading can have an adverse effect. It is completely different to risk your real savings than to trade with a false balance that you don't mind losing.
Finally, the virtual mode is kind of absurd if you want to trade in the medium or long-term, since you would be wasting years. Demo accounts may be useful for trying out before trading in the short or medium-term.
How to use eToro
We mentioned previously that eToro is very friendly and intuitive. Anyone can start investing without having to read endless explanations.
Everyone who has used Instagram, Pinterest or any of the most common social networks, has enough skills to use eToro.
Now we are going to detail the registration process and the sections of the page that you should familiarize yourself with.
When you register, you will have to enter your personal data.
During the sign-up process, you will also find some questions about your previous trading activities.
But don't worry: it's not about passing an exam. They only intend to know how much knowledge you have and what type of financial instruments they can recommend. For instance, if you have never invested before, they will not recommend that you invest in futures.
Next, we will explain 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. This is helpful if you want to buy an asset that is falling but you believe it will decrease even more.
The section “News Feed” allows users to interact and learn from each other by sharing their opinion and experiences.
In “Discover” you will find: “Instruments”, “People” and “CopyPortfolios”. And we already discussed the different financial instruments that are available on eToro:
- Cryptocurrencies
- Exchange-Traded Funds
- Shares
- Raw materials
- Forex trading
- Index funds
In the tab “People”, you will find the profiles of eToro users and their historical performance. This is where you can replicate with just one click the strategies of your preferred investors.
Through the search engine, you can find the investors that best suit your interests: by average profits, market or risk level, for instance. You just have to type the amount you want to invest and eToro will be in charge of replicating the movements made by the selected investor, in proportion. This means that if you have $ 1000 and the investor puts 10% in an asset, eToro will invest also 10% of your funds (in this case $ 100) in that same asset.
Also, here you will see CopyPortfolios classified into three categories, Top Trader, Market, and Partner.
The advantage of using CopyPortfolios instead of copying individuals is that this way you will diversify the risk. The different portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … You think that a certain industry is going to have success in the future? Then you will surely find a CopyPortfolio about it.