Contents
eToro, a reliable online trading platform for those who are in Bangladesh and want to purchase Ethereum
Some of its benefits are:
- Allows to learn from other investment strategies
- Admits short-trading
- It's uncomplicated and user-friendly
- You can leverage
- There are lots of investment opportunities
Official homepage: www.etoro.com/ethereum
In case you are considering it, eToro is probably the best option today to obtain Ethereum from Bangladesh.
“Social trading”, an innovative way of investing by replicating techniques and strategies from other experienced investors, has become trendy thanks to eToro.
eToro is very useful if you are still a beginner in trading. You can rest assured that you will be doing a smart investment move when replicating those from subjects with a great deal of expertise. And for those skilled investors willing to share their techniques, eToro rewards your knowledge with money.
Another thing to mention is how easy the platform is, which turns out perfect for new users that are just learning all about Ethereum.
How to use eToro
As we have mentioned previously, one of the best things about eToro is its simplicity: anyone can use it without having to read endless explanations.
You won't have any problems with the interface if you have used any of the most common social networks.
We will explain the registration process and the different tabs that you will find on eToro.
When you open your account, you will have to fill in your personal data, like first name, last name or address.
During the sign-up process, you will also have to answer some questions about your previous trade experience.
However, it is not like you are answering a test. They are only measures to know how much knowledge you have and what type of assets they can suggest. For instance, 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.
Let's see what the different sections of the site are.
With the “Set Price Alerts” tool, you'll be able to program an alarm when a security is at a certain price. This is helpful if you want to purchase a security and you are waiting for its price to fall.
The section “News Feed” allows users to interact and share their experiences and knowledge.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we mentioned previously, the trading instruments that eToro offers are:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Commodities
- Currencies
- Index funds
The concept “social trading” makes sense within “People”: that is where you can replicate the trading strategies of the best investors.
In this section, you will be able to search and find users according to your interests. You can search by risk level, financial instruments, profits or country, among other filters. When you select an investor and indicate how much money 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, eToro will put $ 200 of your balance in the same asset as well.
You will also find the CopyPortfolios divided into three main kinds: “Top Trader”, “Market” and “Partner”.
The benefit of copying to CopyPortfolios instead of people is that this way the risk will be more diversified. There are all kinds of portfolios that you can recognize easily and are divided by sectors. Thus, in case you think a specific industry, like biotechnology or healthcare, has a good chance of prospering, you can look for that specific portfolio and do your investment.
Is eToro trustworthy for purchasing Ethereum?
eToro has been independently tested many times to verify 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 headquarters of eToro is located in Cyprus, and therefore the broker is approved by the CySEC or Cyprus Securities Market Commission, which can cover up to € 20,000 from its client's debts, including those from Bangladesh. 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) in Europe, and to the Financial Conduct Authority or FCA in the USA. Apart from the above, it has a trajectory of fifteen years, with more than 20 million users around the globe. So, you can be sure that your money is safe.
It is also worth mentioning the good functioning of its customer service. They have a phone number for assistance, a ticket system, and a live chat.
BTW, do you know what leverage is? Just in case, we'll put it simply:
trading lets you invest more money than you can have in a given time. Let's say that you enter with $ 100 and you use x2 leverage, you will be really investing $ 200.
Leverage, Take Profit and Stop Loss
Let's assume that you know that Ethereum is going to rise, and you decide “going long”.
You are positive that Ethereum will go up, and you have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
You could consider asking for a credit, but it is a process that takes time, and when you receive the money, Ethereum might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Using leverage, you can obtain that amount of money just by moving a finger. It's just like a loan, but much easier and quicker, and with the benefit that you will be getting it directly from eToro which will let you invest much more than you have on the wallet. Before trading, you will be able to choose between the different leverage options as in the image below:
Within other markets, you can use more leverage. The reason is that leverage is regularly for short-term operations or day trading, and cryptocurrencies tend to be a medium or long-term investment. But let's deepen a bit more on how all this works.
If you have the $ 1,000 and 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 couple of days later, as you thought, Ethereum 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 back.
First of all, the 1k $ of the leverage will be deducted. You have $ 1,400 left, of which $ 1000 is the money you invested yourself, so you'll have earned $ 400.
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment. That is pretty 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 occurs, you will also lose more really quickly.
Let's suppose that the asset didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but $ 40, because of the leverage. Therefore, when trading with leverage it is fundamental to know about Take Profit and Stop Loss.
Take Profit is an automatic order of selling once the asset achieves a certain price: you buy Ethereum at $ 100 and you ask eToro to close your position as soon as the price reaches $ 120. It is very helpful to avoid being blinded by enthusiasm: a 20% profit is usually very good, but once you see the price has risen, 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 to trade more safely.
Stop Loss is even more important, particularly if you use leverage, because a reduced loss with leverage can have a significant impact on your wallet. Take into account that eToro will recommend a limit for Stop Loss, but it is better to set it lower than that.
How to deposit funds into your eToro account
When it comes to depositing money on eToro, there is not much to say, since it is pretty simple. You just have to click “Deposit funds”, set an amount, and choose your payment method. You can use PayPal (available for some countries), bank transfer, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Skrill, or Neteller.
Remember that for security reasons, you need to be the owner of the account or the credit card.
The lowest amount is $ 200, and there is a maximum allowed for unverified accounts, so if you want to trade with higher amounts, you should verify your account first.
Additionally, remember that you can make the deposit in any currency because eToro will make the conversion automatically to USD, but charges a commission for it, so it is preferable to make the transfer directly in USD.
ETFs
ETFs or Exchange-Traded Funds are a kind of passively managed fund, similar to index funds. They can be described as a merge between stocks and mutual funds, including the best features of both. They can be traded like regular stocks, but include a wide diversity of assets and have lower fees.
Equities
Stocks or shares are the most popular securities. Some publicly traded enterprises decide to split into portions: you can be one of those shareowners, but first, you have to know where and how to make your investment.
Basically, there are two kinds of stocks: those that pay dividends and those that do not. Those that pay, at the end of the fiscal year, distribute profits among the stockholders; the latter, on the contrary, do not. But this is not to say that the latter have less to offer. If a company does not pay every year but has a lot of potential, you should not discard that option, since selling the shares eventually could pay much more.
If you invest in equities that pay out dividends, you will receive them into your account on eToro. Then, you can collect that money or you can choose to reinvest it. However, compound interest is magic, so our suggestion is that you reinvest in the company.
Remember that when investing in shares on eToro you can use leverage to “dope” your trades, but in that case, you will not receive interest as the trade is a contract for difference. That is why for long-term investments, it is better not to use leverage: not only because you lose dividends, but also because you will have to pay fees during the days that you keep the position open, and these can end up eating your profit.
Raw materials
Most investors trade with raw materials because of their stability. While other assets tend to fluctuate more, commodity prices vary less and offer safety against inflation or market volatility. Nevertheless, prices do depend on supply and demand in the market, so if the fear of possible inflation provokes higher demand for a certain good, its cost will also rise.
Note that raw materials don't pay dividends. So, by trading with these you will only have a further income by selling them back.
There are two basic kinds of commodities: hard raw materials and soft raw materials. The former include precious metals (such as gold, silver, copper, and platinum), industrial metals (for instance, aluminum, iron, or zinc), and oil; and the latter are agricultural products as wheat, soybeans, vegetables, or even dairy.
About Index Funds
This is the best option for people who can invest in the long term, especially for beginners, because it is inexpensive, diversified, and the risk is lower.
Contrary to what it may seem, very few investors can beat the benchmark (yes, you have probably heard of investors who achieve huge returns).
But putting aside some remarkable cases (like Warren Buffett's), all that glitters is not gold: if you hear of someone who has beaten the benchmark, it was probably for a limited time, or their rates are really high. Besides, past performances do not ensure a future one.
Index funds offer solutions for that: although in the long term, they regularly beat active managers, and the rates are lower than you imagine.
Futures Vs CFD
Here are the major differences between CFDs and Futures, in case you want to know more:
- Which are the counterparties? In the case of Futures, the counterparty is another trader. In CDFs, it’s the brokerage, in this case eToro
- Expiry date Futures expire in a variable given date, while CFDs don’t have expiry date
- Markets available for trading Futures include fewer options to trade. CFDs include a wide range of possibilities.
- Minimum investment Being higher figures, Futures require, proportionally, lower costs. Costs for CFDs are a bit higher, although not excessively.
- Leverage With Futures, you can’t leverage; while with CFDs leverage is always available.
What are Contracts for Difference?
If you already registered on eToro, you must have noticed that the initials CFD appear repeatedly. Before we come back to it, you should know that CFDs on eToro are only possible when you go short.
If you are interested in day trading cryptocurrency and other advanced practices, below you will also meet concepts like going short and leverage.
With CFDs you can operate on eToro even if you are “in red” or don't have a positive balance. In a hypothetical case: you are sure that the Ethereum will fall, so probably you think that it is better to refrain from getting in until it does. Nevertheless, if it really goes down, it is possible to earn some money out of that.
You can accomplish that by “going short”. Basically, this is how it works:
- You ask for a loan of, let's say, 100 units of Ethereum, which cost $ 5,000 at the moment (these numbers aren't real)
- You sell them at their market price, $ 5,000
- The Ethereum devaluates from $ 50 to $ 30
- Again, you purchase the 100 units, but now their price is $ 3,000
- You give back the 100 units
- The rest is yours, so, you will have made $ 2000
Consider that it is much simpler than it sounds: we can summarize this whole operation by saying that by trading in Ethereum you can also earn money if you predict it will go down.
Investment strategies
There are different methods or ways for crypto trading, such as buying and holding or day trading, for naming just a couple.
My suggestion for those who are beginning to invest is going halfway between the two options: when you open your Ethereum position, place a dynamic stop loss 15-20% below the highest price, and forget about the operation.
For instance, if you buy a cryptocurrency when its price is $ 15, then it rises up to $ 25 and falls again to $17, the stop-loss will allow your operation to be closed, perhaps at $ 21 or $ 22. Thus, you will get a pretty good income.
Perhaps you are wondering: why not selling when the cost 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.
Eventually, you will be prepared for using more advanced trading strategies, like using leverage or going short.
How does a virtual portfolio work?
If you are taking your first steps as an investor, you can start by practicing with a “demo” option. You just have to make sure that the “Virtual” option is set in the upper left corner and you will be able to trade with “imaginary” funds.
This tool is great for those who want to put their talents to the test before playing for real money. When you create your account, you will start with $ 100,000 of virtual funds to do all the operations that you can think of: not just with Ethereum, you can also create a diverse portfolio.
The first attempt is not usually that good. But you can ask support to deposit back the virtual $ 100k to your account.
Take into account that investing is mostly about being cold-minded, nevertheless, using a virtual portfolio might have the opposite effect. It will never be the same as risking your own money.
Evidently, the demo mode is kind of pointless if you want to invest 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 helpful for practicing short or medium-term investments.