Contents
eToro is an outstanding broker for those in Ireland who want to purchase Bitcoin
Why do we recommend it?
- Very user-friendly and simple
- It offers other successful investment strategies so you can emulate them
- Allows you to go short
- Leverage is allowed
- Allows you to invest in tons of other goods
Homepage: www.etoro.com/bitcoin
You should consider eToro if you are interested in investing in Bitcoin from Ireland.
This platform is known for making “social trading” a trend, a revolutionary form of investing in which users can replicate the movements of other traders who have been generating income for a long time.
eToro has solutions for you, especially if you are still a beginner in trading, because it automatizes your investment by imitating moves from those who have been doing it for years and making profits. Additionally, in case you are an investor, the platform pays for your knowledge.
Besides, the platform is so uncomplicated, great for a user who wants to begin in the Bitcoin world, without stressing over lots of diagrams and figures.
What are ETFs?
Exchange-Traded Funds or ETFs are a kind of passively managed fund, similar to index funds. They can be described as a merge between stocks and mutual funds. They can be traded like regular stocks, but include a wide diversity of assets and have lower fees.
Shares
The most popular financial instruments are stocks: these are fractions in which an enterprise can be shared, and thanks to capitalism you can obtain a profit with the performance of third-party companies just by investing money in them. But, obviously, you have to know where to put it.
There are, basically two types of shares: those of companies that distribute their earnings among the shareholders and those that don't pay regularly. However, that doesn't mean that the latter have less to offer. If a company does not pay every year but has a lot of potential, you should not give it up just because it does not pay you every year, since selling the shares eventually could pay a lot more.
If you invest in equities that pay out dividends, you will receive them into your account on eToro. Therefore, you can collect that money or you can choose to reinvest it. Nevertheless, compound interest can do magic, so our suggestion is that you reinvest in the company if you don't need the money immediately.
If you invest in stocks on eToro, you can use leverage to “dope” your trades. However, it is not advisable, since it would be a CFD and you would not receive dividends. Also, as equities tend to be long-term investments, you will have to pay fees during the time your operation is open.
In case you still don't know what “leverage” is, we'll put it short: it is, simply, the ability to use a higher amount than you actually have. For example, if you start with $ 100 and you leverage x2, your initial investment will be $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Suppose now that you know that the price of Bitcoin is going to raise its price, thus you want to take a long position.
You are certain that Bitcoin will go up, but you only have $ 1,000 available. Despite that, why miss the opportunity to make more money?
There's the possibility of asking for a credit at your bank or other financial company, but it is a process that takes time, and when you receive the money, Bitcoin might be already so expensive (if your guess was right) that trading wouldn't be convenient anymore.
With leverage, you can obtain that amount of money really easily. It's just like a loan, but much better: from eToro itself. You will be able to operate with much more money than you actually have on the eToro Wallet. It is really simple, before investing you will see the different options as in the screenshot:
When operating in different markets you can use even more leverage. This is because leverage is most common in short-term operations or day trading, and cryptocurrencies tend to be a medium or long-term investment. But let's see how leverage works:
- If you want to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 ($ 1,000 was borrowed from eToro).
- A few days later, Bitcoin does rises, as you assumed, and now the price of your investment is $ 2,400 (20% more), so you decide to sell back.
- The $ 1k of leverage will be deducted, and you will have $ 1,400 left; which means you've earned $ 400, since the other $1,000 was yours initially.
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is pretty decent.
But watch out: if all goes as you planned and the price goes up, you will make money. On the contrary, if the asset decreases, you will also lose more money in the blink of an eye.
For example: if instead of increasing by 20%, the price falls by 10%, you do not lose $ 10, but twice (the leverage) that figure, that would be $ 20. Because of that, the concepts of Take Profit and Stop Loss are so important 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 Bitcoin at $ 100, you can ask 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.
On the other hand, when trading with leverage you should always use Stop Loss, because a small fall in the price of an asset can lead to a substantial loss. Consider that eToro will recommend a limit for Stop Loss, but it is better to place it lower than that.
How to deposit funds into your eToro account
Within the payment methods that eToro accepts you will find: credit card, PayPal, bank transfer, Neteller, and Skrill. Making a deposit on eToro is so simple: go to “Deposit funds”, type the amount and choose your preferred method.
(Consider that you should be the account or credit card owner, for security reasons).
The minimum you can deposit is $ 200 and there is a maximum limit of how much you can deposit if you are not verified. Therefore, in case you plan to operate with higher amounts, you should verify your account previously.
eToro accepts deposits or transfers in any currency, but you will have to pay a fee for the conversion to USD. So it is better to use USD from the beginning.
Futures Vs CFD
How are CFDs and Futures different?
- Counterparties
- Futures: operations are made with another investor.
- CFDs: the counterparty is eToro, the brokerage. That means you don't “play” against or with another individual but the bank.
- Date of expiry:
- Futures: they expire on a given date. When that moment arrives, your operation is closed even if you are in red.
- CFDs: they don't expire. It is possible to wait until you rise up and then close.
- Variety:
- Futures: there are fewer options
- CFDs: a lot of variety, there is a wide diversity of CFDs
- Minimum deposit:
- Futures: you need to get in with a larger amount
- CFDs: you can start with a small deposit
- Trading costs:
- Futures: as you need to pay more in the first place, rates are lower
- CFDs: higher (although they are not excessively high either)
- Use of leverage:
- Futures: it isn't possible to trade with leverage
- CFDs: completely available
What are Contracts for Difference?
You probably have found the term CFD more than once if you entered eToro before. Before we explain what this is, you should know that CFDs on eToro are only possible if you go short.
In case you are interested in day trading cryptocurrency and other more advanced operations, you will also find terms such as leverage and “going short”.
Even if you aren't “in the black”, you can still operate on eToro with CFDs. Let's say that you have the certitude that the Bitcoin will fall, so perhaps you think that the best thing to do is refrain from getting in until it actually falls. However, if you really consider that it's going down, why not take advantage of that?
You can do that by “going short”. More or less, it works like this:
- You obtain from a loan 100 units of Bitcoin, with a total value of $ 5,000 (these numbers are imaginary)
- You make $ 5,000 by selling the 100 units
- 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 pay back the 100 units
- The rest is yours, so, you will have made $ 2000
Take into account that it seems much more complicated than how eToro CFDs actually work: we can just say that by trading in Bitcoin you can also make money if you predict the downs.
eToro Interface
We mentioned before that eToro is very easy to manage. Anyone can start using it without previous knowledge or long explanations.
Everyone who has used Instagram, Linkedin or any of the most common social networks, knows enough to use eToro.
We will explain, roughly, the registration steps and the different sections that you will see.
You will have to fill in some requested data when registering.
During the sign-up process, you will also find some questions about your previous investment activities.
However, it's not like they're testing you or anything. They only intend to know how much knowledge you have and what type of financial instruments they can suggest. For example, if you have never invested before, they will not suggest that you invest in futures.
You will see a bar that says “incomplete profile” until you complete all the requested information.
Let's review the different tabs of the page.
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 that is falling but you believe 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 discussed before, the six types of instruments on eToro are:
- Cryptocurrencies
- ETFs
- Shares
- Raw materials
- Forex
- Index funds
The concept “social trading” comes to life in the section “People”: that is where you can replicate the strategies of the users you find most inspiring.
Using the search bar, you can find the investors that best suit your interests: by risk level, types of financial assets, average earnings… You just have to choose the amount you want to invest and eToro will replicate the movements of the investor you selected, 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 money in the same company.
In this section you will also see the three most popular types of CopyPortfolios, which are Top Trader, Market, and Partner.
The benefit of copying to CopyPortfolios instead of individuals is that this way you will diversify the risk. There are all kinds of portfolios that you can recognize easily and are classified by sectors. Thus, if you suspect a specific sector, like biotechnology or healthcare, has a good chance of prospering, you should probably look for that specific portfolio.
Trading strategies
You can trade cryptocurrencies in many different ways: from buying and waiting to day trading (taking advantage of market volatility).
In case you don't have much experience trading, our recommendation is something in the middle: when you open your Bitcoin position, set a dynamic stop loss 15-20% under the highest price, and let the magic happen.
For example, if you purchase a cryptocurrency when its price is $ 15, it increases to $ 25 and decreases back to $17, the stop-loss will allow your operation to be closed, perhaps at $ 21 or $ 22. Thus, you will obtain a fine profit.
I know it's tempting to look to sell when the price is at its maximum, right before corrections, but that is simply not possible. The above strategy is much more down-to-earth and it can give great results.
Later on, you will be able to apply more complex strategies, such as using leverage or going short.