Contents
eToro, an advisable online broker for those who want to buy Bitcoin from Nigeria
Why do we recommend it?
- It is uncomplicated and manageable
- You can imitate investment strategies
- Allows you to short sell
- eToro allows leverage
- There are tons of possibilities for investments
Official homepage: www.etoro.com/bitcoin
eToro is the best option to obtain Bitcoin from Nigeria.
This broker is known for making “social trading” a trend, a revolutionary way of investing in which users can replicate the techniques of other traders who have been generating profits over time.
If you are a novice user or haven't gained much experience in investments, eToro is very helpful. You can rest assured that you are making a smart investment since the site emulates those from subjects with a great deal of expertise. Also, in case you are an investor, the platform pays for your knowledge.
It is also very convenient how accessible is the platform, ideal for beginners who are taking their first steps with Bitcoin.
ETFs
Exchange-Traded Funds or ETFs are similar to index funds. They can be described as a merge between stocks and mutual funds, including the best features of both. They are publicly traded and therefore can be bought and sold at any moment at market price. However, their advantage is that they are more diversified compared to stocks, and have lower fees.
Exchange-Traded Funds
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 regularly at market price, but have much more investment possibilities and the rates are significantly lower.
BTW, do you know what leverage is? We'll put it simply:
the good thing about trading is that it allows you to invest more money than what you really have. For instance, if you enter with $ 100 and you put them with x2 leverage, the amount of your investment will be $ 200.
Leverage, Take Profit and Stop Loss
Assuming that, for instance, you are certain that Bitcoin is going up, and that you have $ 1,000 for “going long”, you must know that you can increase your investment and make more money.
You could consider requesting a loan, 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.
Leverage is exactly like a loan, but it is only a few clicks away! You will be able to operate with much higher amounts than what you actually have on the platform. You will simply see the different options as in the screenshot:
Trading with other assets allows you to use even more leverage. This is because leverage is most common in short-term operations, and cryptocurrencies tend to be a medium or long-term investment. But let's see how leverage works in the practice.
You start with $ 1,000 and decide to use leverage x2, which means you would really invest $ 2,000, since eToro would put the other $ 1,000 (which is double your initial amount).
A week later Bitcoin rises up by 20% and now your investment costs 2,400. 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 was yours initially, so you'll have earned $ 400.
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment. That is pretty good.
It may sound too good to be true. The thing is, it can also play against you. If everything goes as you planned, you will earn profits in little time; but in the opposite scenario, you will also lose more really fast.
Let's imagine that the price didn't increase by 20%, but it went down also by 20%, you won't lose $ 20 but double, $ 40. That is why the concepts of Take Profit and Stop Loss are so important when using leverage.
Take Profit is an automatic order of selling once the asset achieves a certain price: you buy Bitcoin at $ 100 and you ask eToro to close your operation as soon as the price goes up to $ 120. It is very useful 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. Consequently, you might lose money if you don't close on time. So, Take Profit helps you reduce risks when trading.
On the other hand, when operating with leverage you also have to use Stop Loss, because a small fall in the price of an asset can lead to a substantial loss. Take into account that eToro will recommend a limit for Stop Loss, but you should place it lower than the platform suggests.
Is eToro safe for purchasing Bitcoin?
eToro is very rigorous with the data about past performances from users, and its integrity has been independently tested several times.
The main office of eToro is in Cyprus, and therefore it is certified by the Cyprus Securities Market Commission (or CySEC), which covers debts up to € 20,000 from its clients. On the other hand, eToro meets all the strict regulations of the European Union.
eToro is backed by the European Financial Instruments Market (MiFID) in Europe, and by the Financial Conduct Authority or FCA in the U.S. Apart from the above, it has a trajectory of fifteen years, with more than 20 million users all over the world. So, yes, it is a safe broker.
No less important is their excellent customer service. You can reach them by phone or use their live chat.
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. Just click “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.
Remember that for security reasons, you must be the owner of the account or the credit card.
You can start with a $ 200 deposit, and if you are not verified you will have a maximum amount allowed. So, if you aim to trade with much more, you should contact Support to verify your account first.
eToro allows deposits in any currency, but charges a fee for making the conversion to USD. That is why we recommend, if it is in your hands, using USD directly.
How are CFDs and futures different?
Here are the main differences between CFDs and Futures, in case you want to know more:
- Counterparty
- Futures: the counterparty is someone else, another investor.
- CFDs: the counterparty is eToro, the brokerage. In other words: you don't “play” with someone else but with the bank.
- Expiration:
- Futures: they expire. When that date arrives, the contract is closed even if you are in losses.
- CFDs: there is no expiration date. It is possible to wait until you are in a good shape to close.
- Trading markets:
- Futures: options are much more limited
- CFDs: you have plenty of options, there is a wide diversity of CFDs
- Minimum investment:
- Futures: you need to enter with a higher amount
- CFDs: you can enter with a low amount
- Trading costs:
- Futures: costs are usually lower
- CFDs: higher (although they are not excessively high either)
- Leverage:
- Futures: you can't leverage
- CFDs: totally available
eToro Interface
As we have mentioned among the positive aspects of eToro, the best thing about this online broker is its simplicity: anyone can trade without having to read endless guides.
You won't have any issues with the interface if you have used any other social network, like Facebook or Twitter.
We will explain, roughly, the registration process and the different sections that you will find on eToro.
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 at investing.
But don't worry: it's not about passing an exam. It is only a way of finding out how much knowledge you have and what type of assets they can suggest. For example, if it is your first experience in the investment world, they will not suggest that you invest in futures.
Now we will explain the different sections of the site.
With the “Set Price Alerts” tool, you'll be able to program an alert when an asset is at a certain price. This is helpful in case you want to purchase a security that is falling but you believe it will decrease more to a certain point.
The section “News Feed” allows users to interact and learn from each other by sharing their opinion and experiences.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we discussed previously, the trading instruments that eToro offers are:
- Cryptocurrencies
- ETFs
- Stocks
- Commodities
- Currencies
- Index funds
In “People” are all the profiles and historical performances of other users, and you can replicate their movements with just one click. This is where the “social trading” term is best applied.
In this section, you will be able to search and find users according to your interests. When you choose an investor and indicate how much you want to invest, eToro will automatically replicate their movements, proportionally. If you invest $ 1000 and the user puts 20% of their funds in an asset, the platform will put $ 200 of your balance 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”.
Remember that in some cases, you might prefer copying to CopyPortfolios than to other traders, because you avoid putting all your eggs in one basket. The portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … You think that a certain industry is going to succeed in the future? Then look, because surely there is a CopyPortfolio about it.
Investment strategies
There are several cryptotrading trategies: for example, you can buy and hold, or you can day trade using volatility of the market in your favor.
If you are new in the world of trading, my suggestion is a middle point: when you open your Bitcoin position, place a stop-loss 15-20% under the maximum price, and let the rest happen on its own.
This means that if, for example, you buy a cryptocurrency at $ 10, it goes up to $ 20 and then falls to $ 12, your stop loss will close your position at $ 16-17 and you will have made a decent profit.
Perhaps you are wondering: why not selling back when the price is at its highest? But unless you are a psychic, that is just not possible. The mentioned strategy can work perfectly and is much more realistic.
Later on, you will be able to apply more sophisticated strategies, like short-selling or using leverage.