Contents
eToro, a reliable broker for acquiring Bitcoin from Egypt
Why do we recommend it?
- There are lots of possibilities for investments
- eToro offers leverage
- Really user-friendly and straightforward
- Allows to learn from other investment strategies
- Allows “shorting” or short-selling
Main site: www.etoro.com/bitcoin
eToro is probably the best option nowadays to obtain Bitcoin from Egypt.
“Social trading”, a relatively new investment method that consists in replicating techniques and strategies from other experienced investors, has become trendy thanks to eToro.
If you are a beginner or haven't gained much investment experience, eToro is very helpful, since it automatizes your investment by repeating strategies from those who have been doing it for years. And for those skilled investors willing to share their techniques, eToro rewards your knowledge with money.
Another advantage is how easy the interface is, which turns out perfect for new users that are just learning all about the trading world.
Can you rely on eToro?
eToro has been independently tested several times to verify 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.
Legally, eToro fulfills all the strict regulations of the European Union. Specifically, its head office is in Cyprus, where it is approved by the Cyprus Securities Market Commission or CySEC, which can cover up to € 20,000 of the debts that its clients may have with creditors (those from Egypt included).
In Europe, it is backed by the European Financial Instruments Market (MiFID), and in the USA it responds to the Financial Conduct Authority (FCA). Besides all these regulations, it should be mentioned that eToro has worked for fifteen years, with more than 20 million users, so we can rest assured that our money is in good hands.
It is also important to mention the great customer service. You can use the online chat, and they also have a phone number available for assistance.
Payment methods on eToro
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”, type an amount, and choose the payment option you prefer. You can pay with PayPal (available for some countries), bank transfer, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Skrill, or Neteller.
(Keep into consideration that you should be the account or credit card holder, for security policies).
The minimum you can deposit is $ 200 and there is a limit of how much you can deposit if you are not verified. Therefore, in case you want to trade with larger sums, you should verify your account first.
The platform accepts deposits or transfers in any currency, but charges a fee for making the conversion to USD. So it is better to use USD directly.
In case you haven't heard about “leverage”, we'll put it short. When trading, it's the capacity of enlarging your investment by borrowing money from the broker. For example, you can enter with $ 100, but if you leverage x2, your initial investment will be $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Let's say now that you know that the price of Bitcoin is going to raise its price, and you are thinking about “going long”.
You are positive that Bitcoin will go up, but you can only invest $ 1,000. Isn't it a shame to miss out on the opportunity to earn more money?
Perhaps you could go to your bank, request a credit, put an asset as collateral, wait for it to be accepted and receiving the money, and then acquire Bitcoin… But by that moment it is possible that your prediction was confirmed a long time ago, and Bitcoin would be already at such a high value that it is not worth investing.
Leverage is like a loan, but it is only a few clicks away! eToro allows you to operate with much higher amounts than what you actually have on the platform's wallet. Before trading, you will be able to choose between the different leverage options as in the screenshot below:
Within other markets, the ability to leverage is greater. The reason: leverage is most used for short-term operations or day trading, and cryptocurrencies tend to be a medium or long-term investment. Let's talk a bit more about how leverage works.
You enter with $ 1,000 and pick leverage x2, which means you would really invest $ 2,000 (the extra $ 1,000 to reach $ 2,000 are “borrowed” from eToro).
A week after that, turns out that Bitcoin rises up and now the value of your investment is 20% higher, which means, you have $ 2,400 in Bitcoin. But you don't want to be too greedy, so you decide, wisely, to sell again.
Obviously, the 1k $ from leverage will be deducted, and you'll have $ 1,400 left, of which $ 1000 is the money you invested yourself, so the net profit is $ 400.
With $ 1000 you get $ 400 more, no less than a profit of 40%. That's not bad at all.
But watch out: if everything goes ok and the price goes up, you will make profits. Nevertheless, if the price goes down, you will also lose more money really fast.
Supposing that the price didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but double, $ 40. That is why to operate with leverage it is very important to know about Take Profit and Stop Loss.
Take Profit is the automatic order to sell once the asset is above the entry price: you buy Bitcoin at $ 100 and you ask eToro to 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 when making the investment, but when you reach that 20% it is easy to want some more and risk losing it all. It's like you made sure now of not acting recklessly in the future.
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). Consider that eToro will recommend a limit for Stop Loss, but you should place it lower than that.
About ETFs
What do you know about Exchange-traded funds or ETFs? They are passively managed funds, known for combining the benefits of stocks and mutual funds, because they can be exchanged at any moment in the market, but have much more investment possibilities and the rates are significantly lower.
Equities
Stocks are the most popular securities. Some publicly traded companies decide to split into portions and have several shareholders. By investing money in them, you can own a portion of a company and obtain returns.
Basically, there are two types of stocks: those of companies that distribute their earnings among the shareholders and those that don't pay regularly. However, this is not to say that those of the second type have less to offer. If a company does not pay out dividends but has a lot of potential, it can still represent a good inversion, since selling the shares in the future could pay a lot more.
In the case of eToro, if you choose a company that pay out dividends, these will be deposited into your account, and you can withdraw those funds or invest them back. We suggest, if you don't need the money right away, that you benefit from compound interest and reinvest it in the company.
Take into account that on eToro you can “dope” your trades with leverage, but in that case, you will not receive returns as the trade is a contract for difference. For long-term investments, it is better not to use leverage: not just because you lose dividends, but you will also have to pay fees as long as the operation is open, and these can end up eating your profit.
Exchange-Traded Funds
Have you heard about Exchange-traded funds or ETFs? They are similar to index funds and are known for combining the advantages of stocks and mutual funds: they can be traded regularly at market price, but offer much more variety and the rates are significantly lower.
Commodity market
Most investors trade with raw materials because of their stability. While other assets present higher fluctuation, commodity prices vary less and offer safety against inflation or market volatility. Nevertheless, prices do depend on supply and demand, so if an economic situation produces greater demand for a certain good, the price will also increase.
Consider that, unlike shares, raw materials don't pay dividends. Thus, the only prospective earnings would come from a sale of the asset.
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, and oil; while the latter are agricultural products as cocoa, soybeans, rice, or sugar.
Foreign exchange market
Forex or currency trading is the exchange between a pair of currencies.
For example, in case you want to trade euros and dollars, you speculate how many dollars it will take to buy a euro, with the expectation that after obtaining the first currency (the euro) it will revalue compared to the second (the dollar), to make a profit by selling it. Let's say you entered when a euro is worth 1.10 USD and you exit when a euro is worth 1.15: that margin is yours once you make the operation.
You may be thinking that this form of trading requires high investments, and that is correct, since variations are usually minimal, and if you use a lot of leverage to counter that, you will take a considerable risk. Our recommendation for those starting in the world of trading is to choose another market to begin with, since Forex is risky and complex.
eToro allows trading with the most popular currency pairs. Nevertheless, consider that Forex functions through contract for differences, thus the underlying asset won't be yours.
How do Contracts for Difference Function?
You probably have found the initials CFD more than once if you entered eToro before. We will come back to it, but first, you should know that CFDs on eToro are only possible if you short sell or leverage above x2 (although this is not even an option on eToro).
We will also explain terms like leverage and “going short”, in case you are interested in day trading cryptocurrency or more advanced operations.
The good thing about eToro is that it allows you to bet both “in the black” and “in red”. For example: you are sure that the Bitcoin will fall, so you obviously think “if it is going to depreciate, I'll just wait and go when it has gone down”. However, if it really falls, it might mean extra money for you.
You can do by “going short”. Its operation, roughly, consists in the following:
- You ask someone for a loan of, let's say, 100 units of Bitcoin, which cost $ 5,000 at the moment (these figures aren't real)
- You sell them at their current price, $ 5,000
- The price falls, as you thought, and the unit of Bitcoin goes from $ 50 to $ 30
- You get the 100 units again, but their current value is now $ 3,000
- Now you return the 100 units to whoever loaned them to you
- The $ 2000 difference is yours
It all sounds more complex than it really is. Just take into account that by trading in Bitcoin on eToro, with CFDs you can make a profit if you foretell downs in the price.
How does eToro work?
We mentioned before that one of the best things about eToro is how simple it is. It isn't necessary to read a lot or have previous knowledge to start investing.
You won't have any problems with the interface if you are familiar with any of the most common social networks, like Twitter or Facebook.
We will explain, roughly, the registration steps and the different sections that you will find.
You will have to fill in some requested data when registering.
They will also ask you about your previous experience as an investor.
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 financial instruments they can suggest. For instance, if it is your first experience in the investment world, they will not suggest that you invest in futures.
Let's see what the different sections of the page are.
With the “Set Price Alerts” tool, you'll be able to program an alert when a security is at a certain price. This is helpful if you want to purchase an asset and you are waiting for its price to fall.
“News Feed” is for social purposes. This is the section where users can share opinions and learn from each other.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. And we already mentioned the different financial instruments on eToro:
- Cryptocurrencies
- ETFs
- Shares
- Commodities
- Currencies
- Index funds
The term “social trading” comes to life in the section “People”: there, you can replicate the movements of the users you find most inspiring. You'll be able to see all their profiles and performances.
You can search for those investors that you find more interesting: by average earnings, types of assets or risk level, for instance. Just indicate the amount of your investment and eToro will replicate the movements made by the selected investor, in proportion. This means that if you put $ 1000 and the investor puts 10% of their capital in Amazon, eToro will invest $ 100 of your balance in that asset.
Finally, you will see in this section the popular CopyPortfolios. There are three types: Top Trader, Market, and Partner.
Sometimes it might be better to copy from CopyPortfolios than to particular traders, since you avoid putting all your eggs in one basket, or in other words, risk is more diversified. 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 succeed in the future? Then you will surely find a CopyPortfolio about it.
Demo account
If you do not have much experience as an investor, you can start by practicing with a “demo” option. You only need to set a virtual account and your operations will be carried out with an imaginary balance.
A virtual account can be a good way of gaining confidence before starting to trade with real money. When you open your demo account, you will begin with a virtual amount of $ 100.000, to operate with a variety of financial instruments available on the platform, besides Bitcoin.
The first attempt is not usually that good. But don't worry, since you can ask support to replenish the virtual funds to your portfolio.
Take into account that trading is mainly about being cold-minded, and perhaps a practice account can make you a bit impulsive. It will never be the same as risking your own money.
Evidently, if you are interested in trading in the long or medium-term, there is no point in using the virtual mode and having to wait for years. But it can be ideal if you want to practice short and medium-term investment.