Contents
eToro, an advisable broker for those in Bangladesh who want to acquire Dash
Advantages:
- It's uncomplicated and accessible
- It uses other successful investment strategies so you can emulate them
- Allows short-selling
- You can trade leveraged
- Lets you invest in tons of other products
Homepage: www.etoro.com/dash
If you are interested in buying Dash from Bangladesh, eToro may be the best option.
“Social trading”, an innovative way of investing by replicating techniques and moves from other experienced investors, has become trendy because of eToro.
eToro is very useful if you are still a novice user in trading. You can rest assured that you will be making a smart investment since the site duplicates those from subjects with a great deal of expertise. And for those skilled investors willing to share their techniques with the community, eToro pays for it.
Another advantage is how easy the interface is, which turns out perfect for new users that are just learning all about the trading world.
What are ETFs?
Exchange-Traded Funds or ETFs are similar to index funds. They can be described as a merge between stocks and mutual funds, including the best features of both. They are publicly traded and therefore can be bought and sold at any time at market price. However, their main benefit is that they are more diversified compared to stocks, and the rates are much lower than those of an actively managed fund.
Foreign exchange
Forex or currency trading is the exchange between a pair of currencies.
For example, in case you decide to trade the EUR/USD pair, you speculate how many dollars it will take to buy a euro, thinking that the euro will increase compared to the dollar. Then, if you purchased each euro at 1.15 USD and you sell them back when they cost 1.20 USD, that margin will be yours.
As you may have already inferred, trading with currencies usually implies large resources, because prices never increase that much, or using much leverage, which is always a risk. Our advice 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 the most common currency pairs on eToro. However, remember that this market works through CFDs, thus the underlying asset won't be yours.
About Index Funds
This is the best option for people who can invest in the long term, especially for beginners, because it is less expensive, diversified, and the risk is lower.
Unlike a lot of people think, beating the benchmark is far from being a piece of cake and very few fund managers achieve that, apart from some famous cases, like Warren Buffett's.
In practice, if a fund manager achieves to beat the market, it is only for a short time or on a specific occasion. Or perhaps they would charge very high rates and indexing would be a better decision (with minimal commissions).
Index funds offer these two advantages: although in the long term, they usually beat active managers, and the rates are lower than you imagine.
By the way, do you know what leverage is? Just in case, we'll define it shortly:
trading allows you to invest more money than what you really have. Let's say that you have $ 100 and you choose to leverage x2, you will be actually investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Let's say now that you know that the price of Dash is about to raise its price, therefore you want to “go long”.
You are completely sure that Dash will rise, but you can only invest $ 1,000. Despite that, why miss the opportunity to make more money?
Possibly, you could ask a financial company for a loan, wait for it to be accepted, wait for the money, send the money to eToro, confirm that it arrived, and then buy Dash… Nevertheless, once you've managed doing all that, probably Dash would be already much higher (if your prediction got confirmed), and it wouldn't be a good idea to invest.
Leverage is like a loan, but it is only a few clicks away! eToro allows you to invest (and earn) much more than what you have on the platform. You will simply see the different options as in the image below:
Trading with other assets allows you to 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. Let's talk a bit more about how leverage works.
If for your investment of $ 1,000, you use leverage x2, your investment is 2 * $ 1,000, that is to say, $ 2,000. eToro would be “loaning” you the extra $ 1,000.
A week later Dash goes up and now the value of your investment is 20% higher, which means, you have $ 2,400 in Dash. But you don't want to be too greedy, so you decide, wisely, to sell back.
Obviously, the 1k $ from leverage will be deducted, and you'll have $ 1,400 left, of which $ 1000 was yours initially, so the net profit is $ 400.
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is pretty decent.
The trick is that the risk of losing out also increases. If everything goes according to plan and the price goes up, you will earn profits in little time; but if the opposite occurs, you will also lose more really fast.
Supposing that the asset didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but double, $ 40. Because of that, the concepts of Take Profit and Stop Loss are so important when using leverage.
Take Profit is the automatic sell order that is above the entry price: you purchase Dash at $ 100 and you ask eToro to automatically close your position as soon as the price goes up to $ 120. It is very helpful to avoid being blinded by enthusiasm: we would all take a 20% profit in the beginning, but when you reach that 20% it is easy to want some more and put yourself at risk of losing money. It's like you got assured in advance that you will act prudently.
Stop Loss is even more important, particularly if you use leverage, because a small loss with leverage can have a significant impact. Always remember to set a Stop Loss lower than that suggested by the platform.
Can you trust eToro?
eToro has been independently tested once and again to prove its integrity in displaying previous performance statistics. The results have always confirmed that eToro is rigorous with the data.
The main headquarters of eToro is in Cyprus, and therefore it is certified by the CySEC or Cyprus Securities Market Commission, which can cover up to € 20,000 from its client's debts. The platform complies, on the other hand, with all the strict requirements of the European Union.
eToro responds to the European Financial Instruments Market (MiFID), and to the Financial Conduct Authority (FCA) in the U.S. Apart from the above, it has a trajectory of fifteen years, with more than 20 million users around the world. So, you can be sure that your finances are safe.
Their customer service functions perfectly. You can use the online chat, and they also have a phone number available for assistance.
eToro payment methods
Within the payment methods that you will find on eToro are: bank transfer, PayPal, credit card, Neteller, and Skrill. Making a deposit with eToro is so simple: go to “Deposit funds”, set an amount and select the payment method you prefer.
Remember that for security policies, you need to be the holder of the credit card or the account.
The lowest amount is $ 200, and there is a maximum allowed for unverified accounts. Therefore, if you want to trade with higher amounts, you should verify your account first.
The platform allows deposits or transfers in any currency, but charges a fee for making the conversion to USD. That is why we recommend, if possible, using USD from the beginning.
How are CFDs and futures different?
Here are the major differences between CFDs and Futures, in case you want to know more:
- Counterparties
- Futures: operations are made with someone else, another investor.
- CFDs: the counterparty is the broker, in this case, eToro. In other words: you don't “play” with someone else but with the bank.
- Date of expiration:
- Futures: there is a date of expiration. At that moment, your operation is ended even if you are in red.
- CFDs: they do not have an expiry date. It is possible to get back to a good position before exiting.
- Options for trading:
- Futures: options are much more restricted
- CFDs: you have plenty of options to choose from, there are CFDs of practically anything
- Minimum deposit:
- Futures: minimum investment is higher
- CFDs: you can get in with a small initial deposit
- Trading costs and charges:
- Futures: costs are usually lower
- CFDs: higher (although they are not excessively high either)
- Leverage:
- Futures: you can't leverage
- CFDs: it is always possible to leverage
What are Contracts for Difference?
You probably have found the initials CFD repeatedly if you already accessed eToro. Before we come back to this, we must say that cryptocurrency trading on eToro is only CFD when you are short-selling.
We will also refer to terms such as leverage and “going short”, in case you are thinking about day trading cryptocurrency or more advanced operations.
With CFDs you can operate on eToro even if you are not “in the black” or having a negative balance. In a hypothetical case: you are sure that the Dash will fall, so probably you think that it is better to refrain from getting in until it does. But if you are pretty sure that it is going down, why not take advantage of that?
You can accomplish that by “going short”. Here's how it works:
- They lend you, let's say, 100 units of Dash, which cost $ 5,000 (these numbers are completely made up)
- You sell the 100 units at $ 5,000
- As you supposed, it depreciates, and the unit of Dash goes from $ 50 to $ 30
- You buy all 100 units one more time, but now their value is $ 3,000
- You pay back the 100 units to whoever loaned them to you
- The rest is yours, so, you will have earned $ 2000
It is really simple. Just remember that by trading in Dash on eToro, you can make money when you anticipate downs.
How does eToro work?
We mentioned before that eToro is very friendly and intuitive. Anyone can start investing without previous knowledge or long explanations.
Everyone who has previously used Whatsapp, Pinterest or any of the most common social networks, knows enough to operate with the eToro interface.
We will explain the registration steps and the different sections that you will find on the platform.
First of all, you will have to fill in your personal data, like first name, last name or address.
They will also ask you about your previous trading activities.
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 recommend that you invest in futures.
You will see a bar that says “incomplete profile” until you fill in all the information.
Next, we will talk about the different sections of the interface.
“Set Price Alerts” allows you to put alarms on the price of certain assets. This is very useful when you want to purchase a security that is falling, but it seems to you that it will decrease even more.
“News Feed” is the more “social” section. There, users can interact and share their knowledge.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. As we discussed before, the six types of instruments on eToro are:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Commodities
- Currencies
- Index funds
In the tab “People” are all the profiles and historical performances of other investors, and you can replicate their strategies with just one click. This is where the “social trading” term is best applied.
You will be able to search and find users according to your interests. When you choose an investor and indicate the amount you want to invest, eToro will automatically replicate their movements, in proportion. If you have $ 1000 and the user puts 20% of their funds in an asset, the platform will invest $ 200 of your balance in the same asset as well.
Lastly, you will also find the CopyPortfolios divided into three main categories: “Top Trader”, “Market” and “Partner”.
The advantage of copying to CopyPortfolios instead of people is that this way the risk will be more diversified. The portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … Do you suspect that a certain industry will prosper anytime soon? Then you will surely find a CopyPortfolio about it.
Trading strategies
When trading cryptocurrencies, there are different possible methods or strategies, such as day trading or buying and holding, for naming just a couple.
If you don't have much experience in investment, our recommendation is something in between: placing a dynamic stop-loss (15-20% under the highest price) when you open your operation and wait for it to work its magic.
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 obtain a pretty good profit.
Perhaps you are wondering: why not selling back when the cost is at its highest? But unless you are a psychic, that is just not possible. The mentioned strategy can work perfectly and give good results.
And when you have more experience, you will be ready for more advanced trading techniques, like using leverage or going short.