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eToro, our favorite broker for investing in Tron from Australia
Advantages:
- Allows to learn from other investment moves
- Admits short-selling
- It is very user-friendly
- eToro allows leverage
- Lets you invest in plenty of different products
Official main site: www.etoro.com/tron
You should certainly consider eToro in case you are thinking about buying Tron from Australia.
This broker is known for making “social trading” fashionable, a revolutionary form of investing in which investors can imitate the techniques of other traders who have been generating income for years.
If you are still a newbie or do not have much experience in investments, eToro is great for you. You can rest assured that you will be doing a smart investment move when replicating those from subjects with a long profit record. Also, in case you are an investor, the platform pays for your knowledge.
Another advantage is how easy the platform is, which turns out perfect for new users that are just learning all about the trading world.
Is eToro safe for purchasing Tron?
eToro has been independently tested once and again to verify its integrity in the handling of data from previous users. Every time, it has been confirmed that eToro is rigorous with the information.
In the legal aspect, eToro follows all the demanding regulations requested by the European Union, legislation in which it is found. Specifically, its main offices are in Cyprus, where it is certified by the Cyprus Securities Market Commission (known as CySEC), which protects up to € 20,000 of the debts from its clients, including those from Australia.
In Europe, it is backed 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 worldwide, and it has been operating for fifteen years. In short, we can be certain that our finances are safe.
Finally, their excellent customer service is also worth mentioning. They have a phone number for assistance, a ticket system, and a live chat.
How to deposit funds into your eToro account
When it comes to payment on eToro, there is not much to say, since it is really straightforward. You only need to select “Deposit funds”, put an amount, and choose your payment method. You can use PayPal (available for some countries), bank transfer, credit card, Skrill, or Neteller.
Of course, take into consideration that for security policies, you should be the owner of the account or the credit card.
You can start from $ 200, and if you are not verified you will have a maximum amount allowed. So, if you aim to operate with large amounts, you should contact Support to verify your account.
You can pay in any currency and eToro will automatically convert it to USD. Nevertheless, we suggest depositing directly in USD since the platform charges a fee.
How are CFDs and futures different?
What are the differences between Futures and CFDs?
- Which are the counterparties? In the case of Futures, the counterparty is another trader. In CDFs, it’s the brokerage, in this case eToro
- When do they expire? Futures have a determined expiration. CFDs don’t expire
- Markets available for trading Futures include fewer options to trade. With CFDs you can trade in several different markets.
- Minimum deposit Being higher figures, Futures require, proportionally, lower fees. Costs for CFDs are a bit higher.
- 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 multiplying your investment by borrowing money from the broker. That way, if you start with $ 100 and you leverage x2, your initial investment will be $ 200.
Everything you need to know about leverage
Let's say that you are confident that Tron will rise, and you want to “go long”, but you only have $ 1,000 available. However, it is possible to put more and earn higher profits.
Perhaps you could go to your bank, request a loan, wait for it to be accepted and receiving the money, and then obtain Tron… Nevertheless, once you've managed doing all that, probably Tron would be already at a much higher price (if your prediction got confirmed), and investing wouldn't be a good idea anymore.
Leverage is like a loan, but it is only a few clicks away! You will be able to operate with much more money than what you have on the platform's wallet. As in the image below, you will see the different options you have:
When trading with other kinds of assets you can use higher leverage. This is 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 with the previous example.
If for your investment of $ 1,000, you use leverage x2, your investment is 2 * $ 1,000, that is to say, $ 2,000. eToro puts the remaining amount to reach that figure.
A couple of days later, as you predicted, Tron increases by 20% and the value of your investment is now $ 2,400. Ok, don't be greedy, let's sell.
You will have to pay back the $ 1,000 of leverage and you will have made $ 400 (since the other $ 1,000 was your initial investment).
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is quite good.
Does it sound too wonderful? The trick is that the risk of losing out also increases. If everything goes as planned, you will earn profits in little time; but if the opposite happens, you will also lose more really fast.
For instance: if the price falls by 10%, you do not lose $ 10, but twice (the leverage) that figure, that would be $ 20. For that reason, the terms “Take Profit” and “Stop Loss” are fundamental 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 bought Tron at $ 100, you request eToro to close once it reaches $ 120. That way, you make sure you won't change your mind and decide to wait a bit longer in case it keeps rising, which could make you lose it all.
Also, if you use leverage you absolutely need to place a Stop Loss order (take into account that any small loss is greater with leverage). Take into account that eToro will recommend a limit for Stop Loss, but you should set it lower than that.
About ETFs
Exchange-Traded Funds or ETFs are similar to index funds. We can say that ETFs are somewhere between stocks and funds: they can be traded like regular stocks, but include a wide diversity of assets and their commissions are much lower than those of an actively managed fund.
Shares
Let's discuss the most popular instruments: stocks or shares. Stocks are fractions in which an enterprise that chooses to go public is divided. You may get dividends through third-party companies just by putting your money in them. But, obviously, you have to know where to put it.
There are two kinds of stocks: those of companies that distribute their earnings among the shareholders and those that don't. Does that mean that you should only consider the former? No, of course not: if a company does not pay every year but has a lot of potential, it is also worth investing in it, since selling the shares in the future could pay much more.
When trading on eToro, if you choose a company that pay out dividends, these will be deposited into your account, and you can withdraw those funds or reinvest them. We recommend, if you don't need the money immediately, that you benefit from compound interest and reinvest it in the company itself.
Consider that when investing in shares on eToro you can use leverage to “dope” your trades, but in that case, you will not receive returns as it would be a CFD. For long-term investments, it is not advisable to use leverage: you can end up losing money, because you will not get dividends and, on top of that, you will have to pay fees while your position is open.
Exchange-Traded Funds
What do you know about Exchange-traded funds or ETFs? They are passively managed funds, known for merging the advantages of stocks and mutual funds, because they can be exchanged regularly at market price, but have much more investment possibilities and the rates are significantly lower.
Index Funds
Index funds are suitable 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 are a secure option.
You may have a different idea, but very few investors can beat their benchmark return (yes, you have probably heard of managers who achieve huge returns).
But putting aside some unusual cases, not everything is as good as it sounds: if you hear of someone who has beaten the benchmark, it was probably for a short time, or their rates are really high. In the end, indexing is better because commissions are minimal. Also, take into account that past performances do not ensure a future one.
With index funds, you don't have to worry about that: they usually beat active managers in the long term, and the charges are so much lower.
How does eToro work?
We mentioned previously that eToro is very friendly and intuitive. Anyone can start using it without having to read endless explanations.
If you are familiar with any of the most common social networks, you can perfectly manage this platform.
We will explain, roughly, the registration steps and the different sections that you will see on eToro.
First of all, you will have to enter your personal data, like first name, last name, address….
To complete your registration, you will have to answer some questions about your experience as an investor.
But you don't need to 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 suggest. For example, if it is your first experience in the investment world, they will not recommend that you invest in futures.
When you fill in all your information in your profile, the “incomplete profile” bar will disappear.
Let's see what the different sections of the page are.
In “Set Price Alerts”, you have, as its name indicates, the option to set alarms on the price of certain securities. This is very useful when you want to buy a security which price is decreasing, but perhaps you think that it will decrease even more.
The section “News Feed” allows users to interact and share their experiences and knowledge.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we mentioned before, the six types of instruments on eToro are:
- Cryptocurrencies
- ETFs
- Shares
- Commodities
- Forex trading
- Index funds
The concept “social trading” comes to life within “People”: there, you can replicate the strategies of any user you choose.
Using the search bar, you can find the users that best suit your interests: by average earnings, types of assets or risk level, for example. Just indicate the amount you want to invest and eToro itself will replicate 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, the platform will invest also 10% of your funds (in this case $ 100) in that same asset.
In this section you will also see the three most popular types of CopyPortfolios, which are Top Trader, Market, and Partner.
The advantage of copying to CopyPortfolios instead of people is that this way you will diversify the risk. The portfolios are identified so you can recognize them easily: one about gaming, another about large drone companies, another about pharmacy … Do you suspect that a certain industry is going to have success anytime soon? Then you will surely find a CopyPortfolio about it.
How does a demo account work?
If you do not have much experience as an investor, you can start by practicing with a “demo” option. Setting a virtual account and operating with fictional money is very easy.
This can be a great way of practicing before trading with real funds. You will have an amount of $ 100.000 (“fake” or virtual, of course) to begin with, and you will be able to trade with all the different assets available on eToro, not only with Tron.
The first attempt is not usually that good. But you can ask eToro to replenish the virtual $ 100k to your account, and the second try you should do better.
Keep in mind that you should always be cautious when investing, and perhaps a demo account can prevent you from controlling your impulses. It will never be the same as risking your own money.
Evidently, the demo mode is kind of pointless if you want to trade in the medium or long-term (with almost guaranteed returns only by replicating an index), since you would be wasting years to see the results. Virtual accounts may be useful for trying out short or medium-term operations.