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eToro is an outstanding broker for those in Kenya who want to buy Stellar
Why do we recommend it?
- User-friendly and straightforward
- It uses other successful investment strategies so you can replicate them
- You can short sell
- You can trade leveraged
- It is possible to invest in plenty of other goods
Homepage: www.etoro.com/stellar
In case you are thinking about purchasing Stellar from Kenya, eToro is probably the best way to do it.
This broker is well-known for making “social trading” a trend, an ingenious way of investing in which traders can emulate the strategies of other investors who have been making profits for years.
If you are still a newbie or haven't gained much experience in investments, eToro is very useful. You can rest assured that you will be making a smart investment since the site emulates those from subjects with a great deal of expertise. Additionally, in case you do have experience in investment, eToro pays you for sharing it with others.
Another thing to mention is how manageable the interface is, which turns out perfect for new users that are learning all about the trading world.
Can you rely on eToro?
eToro is very careful with the data about past performances from users, and its reliability has been tested once and again by independent organizations.
The main headquarters of eToro is located in Cyprus, and the platform is approved by the Cyprus Securities Market Commission (or CySEC), which can cover up to € 20,000 from its client's debts, including those from Kenya. The platform complies, on the other hand, with all the strict requirements of the European Union.
It is also backed by the European Financial Instruments Market (MiFID), and in the USA it responds to the Financial Conduct Authority (FCA). Besides all these regulations, eToro has more than 20 million users around the world, and it has been operating for fifteen years. In short, we can be certain that our money is in safe hands.
No less important is their excellent customer service. You can use the online chat, and they also have a phone number available for assistance.
eToro deposit methods
Among the payment methods that you will find on eToro are: bank transfer, PayPal, credit card, Neteller, and Skrill. There is not much to say here: making a deposit with eToro is very easy. Just go to “Deposit funds”, type the amount and select a payment method from the previous ones.
Consider that for security policies, you need to be the owner of the account or the credit card.
The minimum amount allowed is $ 200, and there is a maximum limit for unverified accounts. So, if you intend to trade with large amounts, you should contact Support to verify your account.
eToro accepts transfers in any currency, but charges a commission for making the conversion to USD. That is why we recommend, if possible, using USD from the beginning.
Differences between futures and CFDs
How are Futures and CFDs different?
- Counterparty
- Futures: operations are made with someone else, another investor.
- CFDs: the operations are not made with another individual, the counterparty is the broker, in this case, eToro.
- Expiry:
- Futures: they have an expiry date. Once the contract expires, it is closed even if you are in red.
- CFDs: they do not have an expiry date. You can wait for your position to rise before closing.
- Variety:
- Futures: very little variety
- CFDs: a lot of variety, there are CFDs of practically anything
- Minimum deposit:
- Futures: you have to invest much more
- CFDs: you can get in with a small amount
- Trading costs:
- Futures: costs are usually lower
- CFDs: costs are higher
- Possibility of using leverage:
- Futures: it isn't possible to trade with leverage
- CFDs: completely available
What is an ETF?
What do you know about Exchange-traded funds or ETFs? They are passively managed funds, known for merging the benefits of stocks and mutual funds: they can be exchanged at any moment in the market, but have much more investment possibilities and considerably lower fees.
ETFs
ETFs or Exchange-Traded Funds are similar to index funds. We can say that ETFs are halfway between stocks and funds: they are publicly traded and therefore can be bought and sold at any time at market price. However, their advantage is that they offer more alternatives compared to stocks, and have lower fees.
Index Funds
In case you are interested in long-term investments, and you won't need to withdraw your money in at least five years, index funds can be the best choice. This kind of investment is also suitable for beginners since the risks are lower.
You may think differently, but benchmark returns are very difficult to beat and very few fund managers have done it, apart from some famous cases, like Warren Buffett's.
In practice, if a fund manager achieves to beat the benchmark, it is only for a short period or on a specific occasion. Or perhaps they would charge very high rates and indexing would be a better decision anyway.
Index funds offer solutions for that: although in the long term, they usually beat active managers, and the charges are minimal.
Equities
Stocks are the most common financial assets. Some publicly traded corporations decide to split into portions and have many shareholders. By investing money in them, you can own a fraction of a company and obtain dividends.
Basically, there are two types of stocks: the ones that divide their earnings regularly among the stockholders, and those that don't payout. The former ones are great, obviously, but investing in the latter can also be a good idea since the profit you can make by selling the shares can be even larger.
When trading on eToro, if you choose a company that pay out dividends, these will be reflected in your balance, and you can withdraw your money or reinvest it. Our suggestion is, if you don't have financial urgencies, that you take advantage of compound interest and reinvest it in the company.
Remember that when investing in shares 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. That is why for long-term investments, it is not advisable to use leverage: you can end up not gaining at all, because you will not receive interest and, on top of that, you will have to pay fees while your position is open.
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. However, prices do depend on supply and demand in the market, so if an economic situation provokes higher demand for a certain good, its cost will also increase.
Note that the only intended income from the investment in raw materials will be the hypothetical capital gain after the sale since, unlike stocks, these don't give returns or pay interest.
Commodities can be divided into two main categories: hard raw materials and soft raw materials. The former include precious metals (such as gold, silver, copper, and platinum), industrial metals, and oil; and the latter are agricultural products, like sugar, coffee, corn, soy.
How do Contracts for Difference Function?
If you browsed eToro before, you must have noticed that the initials CFD appear all the time. We will explain exactly what this means, but you should know first that cryptocurrency operations on eToro are only CFDs when you short sell or choose leverage over x2 (but this is not even an option on eToro).
We will also refer to concepts like short-selling and leverage, in case you are interested in day trading cryptocurrency or other more advanced practices.
With CFDs you can bet on the platform even if you are not “in the black” or having a negative balance. In a hypothetical case: you believe that the Stellar will fall, so you obviously think “if it is going to depreciate, I'll just wait and go when it has gone down”. But if you are convinced that it is going down, why not take advantage of that and earn money?
The practice known as “going short” will allow you to do that. It functions, pretty much, like this:
- Someone lends you, let's say, 100 units of Stellar, with a total price of $ 5,000 (these numbers are entirely made up)
- You make $ 5,000 by selling the 100 units
- The price falls, as you calculated, and the unit of Stellar now costs $ 30 instead of $ 50
- You buy all 100 units once again, but now their price is $ 3,000
- You pay back the 100 units to whom made the loan in the first place
- The rest is yours, so, you will have earned $ 2000
It is far more simple than it may seem. Just consider that by trading in Stellar on eToro, you can earn money if you foretell downs in the price.
How does eToro work?
As we have referred among the positive aspects of eToro, the best thing about this online broker is its simplicity: anyone can trade without having to read endless explanations.
Everyone who has used Whatsapp, Facebook or any of the most common social networks, has enough knowledge to operate with the eToro interface.
We will explain, roughly, the registration steps and the different tabs that you will find.
You will have to fill in some information requested when registering.
To complete your registration, you will see that they ask you some questions about your experience as an investor.
But don't feel intimidated, there is no right or wrong answer. They only intend to find out how much you know and which financial instruments to recommend for you.
Next, we will explain the different sections of the interface.
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 helpful if you want to buy an asset that is falling but you believe it will decrease more to a certain point.
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
- Commodities
- Forex
- Index funds
In the tab “People”, you will find eToro users and their performances. This is where “social trading” makes sense since you can duplicate the movements of the traders that you prefer.
You can search for those investors that best suit your interests: by risk level, types of instruments, average earnings… You just have to choose the amount you want to invest and eToro will replicate the movements made by the investor you chose, in proportion. “In proportion” 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 the popular CopyPortfolios. There are three types: Top Trader, Market, and Partner.
The benefit of using CopyPortfolios instead of copying individuals is that this way the risk is more diversified. There are all kinds of portfolios that you can identify easily and are divided by sectors. Therefore, in case you suspect a specific industry, like biotechnology or oil, has good chances to succeed, you should probably look for that specific portfolio.