Contents
eToro is an outstanding broker for acquiring Ethereum from Egypt
Why do we recommend it?
- You are able to imitate other investment moves
- You can go short
- It's really simple and manageable
- Leverage is allowed
- Allows you to invest in plenty of other goods
Official homepage: www.etoro.com/ethereum
You should consider eToro in case you are thinking about purchasing Ethereum from Egypt.
“Social trading”, a relatively new investment method that consists in replicating techniques and moves from other experienced investors, has become popular thanks to eToro.
eToro has solutions for you, even if you are still a beginner in trading, because it automatizes your investment by repeating strategies from other experienced people with a long profit history. And for those skilled investors willing to share their techniques with the community, eToro pays for it.
Besides, the interface of the site is so uncomplicated, great for a user who wants to begin in the Ethereum world, without getting crazy with tons of graphs and numbers.
eToro Interface
We said previously that eToro is very friendly and intuitive. Anyone can start investing 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 see.
You will have to provide some personal data when registering.
During the sign-up process, you will also find some questions about your previous experience as an investor.
But don't feel like you are taking an exam. They only intend to find out about your previous experience and knowledge to know which financial instruments to recommend for you.
When you fill in all your information in your profile, you will stop seeing the “incomplete profile” message.
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. Just click the tab and you will be able to set it. This is perfect if you want to buy an asset and you are waiting for its price to fall.
In the “News Feed” tab is the most social part of eToro: where users are interacting all the time and sharing opinions, tips, and other valuable information.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we mentioned in this guide, the types of financial instruments that eToro offers are:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Commodities
- Forex
- Index funds
The term “social trading” makes sense in the section “People”: that is where you can replicate the trading strategies of the best investors with just one click. You'll be able to see all their profiles and performances.
Using the search box, you can find the users that you find more interesting: by risk level, types of financial instruments, average earnings… Just indicate the amount of your investment and eToro will replicate the movements made by the selected investor, in proportion. “In proportion” means that if you have $ 1000 and the trader puts 10% in an asset, eToro will invest also 10% of your money (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.
Sometimes you might prefer copying to CopyPortfolios than to particular users, because you avoid putting all your eggs in one basket. There are all kinds of portfolios that you can find easily and are divided by sectors. So, if you think a specific sector, such as fashion or healthcare, will have good incomes in the future, you should look for that specific portfolio.
eToro deposit methods
Within the payment methods that eToro accepts you will find: credit card, PayPal, bank transfer, Neteller, and Skrill. Depositing money on eToro is so simple: go to “Deposit funds”, set an amount and choose the payment method you prefer.
Consider that for security reasons, you need to be the owner of the credit card or the account.
The minimum you can deposit is $ 200 and there is a limited amount if you are not verified, so if you want to trade with larger sums, you should verify your account previously.
Also, remember that you can make the deposit in any currency because eToro will make the conversion to USD, but charges a commission for it, so it is better to make the transfer directly in USD.
About ETFs
ETFs or Exchange-Traded Funds are similar to index funds. We can say that ETFs are halfway between stocks and funds: they can be traded like regular stocks, but include a wide diversity of assets and the rates are much lower than those of an actively managed fund.
Currency market
Forex or currency trading is the exchange between a pair of currencies.
If you decide to exchange the EUR/USD pair, you speculate how many dollars it will take to buy a euro, with the expectation that after buying the first currency (the euro) it will revalue compared to the second (the dollar), to make a profit by selling it. Suppose you entered when the price of one euro is 1.10 USD and you exit when it is worth 1.15: that margin is yours once you make the operation.
You may be thinking that this form of trading requires investing considerable amounts, and you are not wrong, since variations are usually minimal, and often you will need to use a lot of leverage (which sometimes can be too much of a risk). If you are new to the world of trading, it is not a good idea to begin with the currency market, because it is very risky and intricate.
eToro allows exchanging the most common currency pairs but bear in mind that in Forex trading sales are made through contract for differences, thus you won't own the real asset.
Shares
Stocks or equities are the most popular securities. Some corporations divide their capital into fractions: you can be one of those shareholders, but first, you should know where and how to make your investment.
We can group stocks into two different kinds: 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 out dividends but has a lot of potential, it is also worth investing in it, since selling the shares eventually could pay a lot more.
When trading on eToro, if you invest in stocks that distribute dividends, these will be reflected in your balance, and you can collect them in cash or reinvest them. Our suggestion is, if you don't have financial urgencies, that you don't renounce the magic of compound interest and reinvest it in the company.
If you invest in stocks on eToro, you can use leverage. But it is not advisable, since it would be a CFD and you would not get dividends. On top of that, as shares tend to be long-term investments, you will have to pay commissions as long as your operation is open.
About ETFs
Have you heard about Exchange-traded funds? They are passively managed funds, known for combining the advantages of stocks and mutual funds: they can be traded at any moment in the market, but offer much more diversity and the rates are significantly lower.
Commodity market
The major advantage of investing in raw materials is that their price fluctuates less than that of other assets. Actually, their security is what makes people often invest in raw materials, to take refuge from possible inflation or market volatility. Even so, the prices of commodities are defined by their demand. Therefore, if a generalized fear of inflation provokes higher demand, the prices will also rise.
Remember that the only intended income from the investment in raw materials will come from their further sale because, unlike shares, commodities do not give returns or pay interest.
Commodities are usually classified into hard raw materials, which include precious metals as gold, silver, or copper, as well as industrial metals, and oil; and soft raw materials, which are basically agricultural goods, like soy, cocoa, corn, or rice.
What's the difference between CFDs and futures?
What are the differences between Futures and CFDs?
- Counterparty
- Futures: operations are made with someone else, another trader.
- CFDs: the counterparty is the broker (eToro). That means you don't “play” with someone else but with the bank.
- Expiration date:
- Futures: they expire. Once the contract expires, it is closed even if you are in red.
- CFDs: on the contrary, they don't expire. It is possible to wait until you rise up and then close.
- Trading markets available:
- Futures: there are fewer options
- CFDs: you have plenty of options to choose from, there is a wide diversity of CFDs
- Minimum investment:
- Futures: minimum investment is higher
- CFDs: you can enter with a low amount
- Trading costs and charges:
- Futures: as you have to invest more, costs are lower
- CFDs: higher (although not excessively)
- Possibility of leverage:
- Futures: you can't leverage
- CFDs: it is always possible to leverage
About Contracts for Difference
If you already registered on eToro, you must have seen how the acronym CFD appears all the time. Before we come back to this, we must say that CFDs on eToro are only possible if you are short-selling or choose leverage higher than x2 (nevertheless, this is not even available on eToro).
For the record, and in case you want to try at some point day trading cryptocurrency or other trading practices, next you will also find information about concepts like leverage and “going short”.
The advantage of eToro is that it lets you bet both “in the black” and “in red”. Let's say that you have the certitude that the Ethereum will go down, so perhaps it is obvious to think “if it is going to depreciate (go down in price), I'll just wait until it does”. But if you really consider that it's going down, why not take advantage of that and making money?
You can do that by “going short”. Here's how it works ,roughly:
- You ask for a loan of, let's say, 100 units of Ethereum, which total price at the moment is $ 5,000 (obviously, these numbers are made up)
- Next, you make $ 5,000 by offering them at their price at that moment
- The Ethereum devaluates from $ 50 to $ 30
- You purchase all 100 units again, but now they are worth $ 3,000
- You give back the 100 units to whom made the loan in the first place
- You will have made $ 2000, since you keep the difference
Keep in mind that it seems much more complicated than how eToro CFDs actually work: we can summarize this whole operation by saying that by trading in Ethereum you can also earn money if you foretell the downs.
Investment strategies
There are many ways to trade cryptocurrencies: from purchasing and holding to day trading (taking advantage of price fluctuations).
If you are a beginner in the world of trading, our recommendation is something in between: when you open your Ethereum position, set a dynamic stop loss 15-20% under the highest price, and let the rest happen on its own.
For instance, if you purchase a cryptocurrency at $ 15, then it increases to $ 25 and falls back to $17, the stop-loss will close your position at $ 21 or $ 22. Thus, you will get a pretty good income.
You may be wondering: why not selling back when the price is at its maximum? But that would only work for a psychic or a fortune-teller. The mentioned method is more down-to-earth and can work out perfectly if it is well applied.
At some point, you can take your first steps with advanced investment techniques, such as going short or using leverage.