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eToro is an excellent broker for those who are in India and want to buy Bitcoin Cash
Pros:
- It is uncomplicated and accessible
- It takes other successful investment strategies so you can replicate them
- Allows you to go short
- eToro offers leverage
- You can make investments in thousands of different products
Main site: www.etoro.com/bitcoin-cash
You should consider eToro if you are thinking about buying Bitcoin Cash from India.
“Social trading”, a relatively new form of investing by replicating techniques and moves from other experienced investors, has become trendy because of eToro.
If you are still a rookie or haven't gained much experience in investments, eToro is very helpful. 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 with others, eToro rewards your knowledge with money.
Another advantage is how manageable the platform is, which turns out perfect for new users that are learning all about Bitcoin Cash.
How do Contracts for Difference Work?
If you already registered on eToro, you must have seen how the initials CFD appear over and over. Before we explain what this is, we must say that CFDs on eToro are only possible when you are short-selling or select leverage higher than x2 (but this is not even available on the platform).
FYI, and if you are thinking about day trading cryptocurrency or other advanced trading operations, below you will also meet concepts 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 Cash will fall, so probably you think that the best thing to do is refrain from getting in until it does. But if it really goes down, it is possible to earn some money out of that.
You can do this through a practice known as “going short”. Its operation, roughly, works like this:
- Someone lends you, let's say, 100 units of Bitcoin Cash, valued at a total of $ 5,000 (these are completely imaginary numbers)
- You sell the 100 units at $ 5,000
- As you presumed, the price falls, and the unit of Bitcoin Cash now costs $ 30 instead of $ 50
- Again, you purchase the 100 units, but at the current value, $ 3,000
- You return the 100 units to the loaner
- The difference is yours, so, you will have earned $ 2000
Keep in mind that it seems much more complex than how eToro CFDs actually work: we can just say that by trading in Bitcoin Cash you can also make money if you predict it will fall.
Differences between futures and CFDs
How are Futures and CFDs different?
- 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. CFDs don’t have expiration date
- Markets available for trading The market for Futures is narrower. With CFDs you can trade in several different markets.
- Minimum deposit amount or “trade size” Costs for Futures are higher than costs for CFDs.
- Is it possible to leverage? With Futures, you can’t leverage; while with CFDs it is always possible.
If you still don't know what “leverage” is, we'll describe it briefly. When trading, it's the capacity of enlarging your investment by borrowing money from the broker. That way, if you start with $ 100 and you use x2 leverage, you will be investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Assuming that, for example, you are certain that Bitcoin Cash is going up, and that you have $ 1,000 for “going long”, you must know that you have the option of investing more and making more money.
You could go to your bank, ask for a credit, put an asset as a guarantee, wait for it to be accepted and receiving the money, and then purchase Bitcoin Cash… But maybe once you have made all that, your prediction could've been confirmed a long time ago, and Bitcoin Cash would be already at such a high value that it is not worth investing.
Using leverage, you can obtain that amount just by clicking your mouse. It's like borrowing money, 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. It is simple, before investing you will see the different options as in the screenshot:
With other assets, the ability to leverage is greater. Why? Because cryptocurrencies are usually medium-long term investments, and leverage is used mainly for short-term operations or day trading. Let's talk a bit more about how leverage works.
You start with $ 1,000 and decide to use leverage x2, then you would really invest $ 2,000, since eToro would put the other $ 1,000 (which is double the initial amount).
A week after that, turns out that Bitcoin Cash goes up and now the value of your investment is 20% higher, which means, you have $ 2,400 in Bitcoin Cash. But you don't want to be too reckless, so you decide, wisely, to sell back.
You need to pay back the $ 1,000. You have $ 1,400 left, of which $ 1000 is the money you put in yourself, so the net profit is $ 400.
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is pretty decent.
Does it sound too good? The trick is that the risk of losing out also increases. If everything goes according to plan and the price goes up, you will make more money in less time; but if the value of the asset decreases, you will also lose more in less time.
Supposing that the price didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but $ 40, because of the leverage. For that reason, the terms “Take Profit” and “Stop Loss” are fundamental when using leverage.
Take Profit is the automatic sell order that is above the entry price: you buy Bitcoin Cash at $ 100 and you ask eToro to close your operation as soon as the price goes up to $ 120. It is very helpful to avoid being blinded by enthusiasm: a 20% profit is usually pretty 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 reduce risks when trading.
Stop Loss is even more necessary, particularly if you use leverage, since a small loss with leverage can be fatal for your wallet. Take into account that eToro will recommend a limit for Stop Loss, but you should place it lower than that.
About ETFs
ETFs or Exchange-Traded Funds are a type of passively managed fund, similar to index funds. They can be described as a merge between stocks and mutual funds. They are publicly traded, that means they can be commercialized at any moment at market price. However, their advantage is that they are more diversified compared to stocks, and their commissions are much lower than those of an actively managed fund.
Currency market
Currency trading or Forex consists, as the name says, in the exchange of currencies. Put differently, is the conversion between a pair of currencies, and the aim is, evidently, to make a profit out of this.
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 obtaining the first currency (the euro) it will raise its price compared to the second (the dollar), to make a profit by selling it. Assume you entered when a euro is worth 1.10 USD and you leave when a euro is worth 1.15: that difference is yours once you sell again.
As you may have already inferred, trading with currencies usually implies a large capital, because prices rarely increase that much, or using much leverage, which is a bit like skating on thin ice. Our recommendation for those who are new in the world of trading is not to start with Forex, but with a safer and simpler market.
You can exchange with almost all well-known currency pairs on eToro. However, keep in mind that in this market sales are made through CFDs, therefore the underlying asset won't be yours.
Stocks
Stocks or equities are the most popular financial assets. Some publicly traded corporations decide to split into fractions and have many shareholders. By investing money in them, you can own a fraction of a company and obtain returns.
We can categorize stocks into two main types: 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 other hand, do not. Does that mean that you should only consider the former? No, of course not: if a company does not pay every year 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.
When trading on eToro, if you choose a company that pay out dividends, you will receive them in your account, and you can withdraw those funds or reinvest them. Our suggestion is, if you don't have financial urgencies, that you benefit from compound interest and reinvest it in the company.
Remember that on eToro you can use leverage to “dope” your trades, but in that case, you will not receive interest as it would be a CFD. That is why for long-term investments, it is not advisable to use leverage: not only because you lose dividends, but you will also have to pay commissions during the days that the operation is open, and these can end up eating your profit.
Commodities (raw materials)
Most investors trade with raw materials due to their stability. While other assets present higher fluctuation, commodity prices vary less and offer security 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.
Consider that, unlike stocks, raw materials don't pay dividends. So, the only potential further earnings would come from a sale of the asset.
Commodities are commonly classified into two kinds: first, we have hard raw materials, which are precious metals (gold, silver, copper, and platinum), industrial metals, and oil; in second place are soft raw materials, which are agricultural goods like sugar, cocoa, soybeans, among others.
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 their fees are much lower than those of an actively managed fund.
How to deposit funds on eToro
When it comes to payment on eToro, there isn't really much to say, since it is really straightforward. You just have to click “Deposit funds”, set an amount, and choose the payment option you prefer. You can use PayPal (available for some countries), bank transfer, credit card, Skrill, or Neteller.
(Keep in mind that you must be the account or credit card holder, for security policies).
The lowest amount you can deposit is $ 200, and there is a maximum authorized if you are not verified, so if you plan to operate with larger sums, you should verify your account previously.
The platform allows deposits in any currency, but you will have to pay a fee for the conversion to USD. That is why we suggest, if possible, depositing in USD directly.
Can you trust eToro?
Many tests from independent consultants have been applied to eToro to certify its reliability in the handling of data from previous users and past performances. Every time, results have shown that eToro is very meticulous with the information.
The main office of eToro is in Cyprus, and the platform is certified by the Cyprus Securities Market Commission (known as CySEC), which covers debts up to € 20,000 from its clients, including those from India. On the other hand, eToro meets all the strict requirements of the European Union.
It is also backed by the European Financial Instruments Market or MiFID, and in the USA it is under the control of the Financial Conduct Authority (FCA). Besides all these regulations, it should be mentioned that eToro has been active for fifteen years and that it has more than 20 million users around the world, so we can rest assured that our money is in good hands.
Finally, their excellent customer service is also worth mentioning. You can reach them by phone or use their live chat.
How does eToro work?
As we have mentioned previously, one of the best things about eToro is its simplicity: anyone can trade without having to read endless guides.
Everyone who has previously used social networks like Twitter or Linkedin, knows enough to operate with the eToro interface.
Now we are going to detail the sign-up process and the different sections of the eToro interface that you should know.
You will have to provide some personal information (like full name or address, for instance) when registering.
Additionally, you will see that they ask you some questions about your experience as an investor.
However, it is not like you are answering a test. It is only a way of finding out 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 recommend that you invest in futures.
Let's see what the different sections of the site are.
With the “Set Price Alerts” tool, you'll be able to program an alert when an asset is at a certain price. This is perfect if you want to buy a security that is falling but you believe it will decrease even more.
“News Feed” is the more “social” section. There, traders can interact and share their knowledge.
In “Discover” you will find: “Instruments”, “People” and “CopyPortfolios”. And we discussed previously in this guide the different financial instruments on eToro:
- Cryptocurrencies
- ETFs
- Shares
- Raw materials
- Forex
- Index funds
In the tab “People”, you will find the public profiles of eToro users and their performances. This is where “social trading” makes sense since you can duplicate the movements of the investors that you prefer.
You can search and find users according to your interests. You can apply filters like country, average profits, or financial instruments. When you choose an investor and indicate how much you want to invest, eToro will automatically replicate their movements, proportionally. For example, if you have $ 1000 and the trader puts 20% of their funds in an asset, eToro will put $ 200 of your funds in the same asset or company as well.
Lastly, you will also see the CopyPortfolios divided into three main categories: “Top Trader”, “Market” and “Partner”.
In some cases, it might be preferable to copy from CopyPortfolios than to particular traders, since you avoid putting all your eggs in one basket. There are all kinds of portfolios that you can identify easily and are classified by sectors. Therefore, in case you think a specific industry, such as e-commerce or oil, has a good chance of prospering, you should probably look for that specific portfolio.