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eToro is an excellent broker for those who are in Nigeria and want to acquire Ethereum
Some of its advantages are:
- It uses strategies from experienced traders so you can emulate them
- Allows you to short sell
- It is uncomplicated and manageable
- eToro offers leverage
- There are tons of products you can invest in
Main site: www.etoro.com/ethereum
You should certainly consider eToro in case you are thinking about purchasing Ethereum from Nigeria.
“Social trading”, a relatively new investment method that consists in replicating techniques and moves from other experienced investors, has become trendy thanks to eToro.
If you are still a rookie or do not have much experience in investments, eToro is great for you, since it puts your investment on autopilot by repeating strategies from experienced traders with a long profit history. On the contrary, if you are an investor and want to share your methods with the community, eToro rewards you with money.
It is also very convenient how accessible is the platform, excellent for new traders who are taking their first steps in the investment world.
Can you rely on eToro?
Many independent tests have been applied to eToro to prove its integrity in reporting previous performance statistics. And it has been confirmed every time that eToro is rigorous with the data.
In the legal aspect, eToro follows all the demanding policies requested by the European Union. Specifically, its head office is in Cyprus, where it is validated by the CySEC or Cyprus Securities Market Commission, which protects up to € 20,000 of the debts that its clients may have with creditors, including those from Nigeria.
In Europe, it is backed by the European Financial Instruments Market (MiFID), and in the USA it responds to the Financial Conduct Authority (FCA). In addition to 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 funds are in good hands.
Their excellent customer service is also worth mentioning. You can use the ticketing system, an online chat, and they also have a phone number available for assistance.
Payment methods on eToro
Among the payment options that you will find on eToro are: credit card, PayPal, bank transfer, Neteller, and Skrill. There is not much to say here: making a deposit with eToro is really simple. Just go to “Deposit funds”, choose an amount and the payment method you prefer.
(Consider that you must be the account or credit card owner, for security policies).
The minimum amount required is $ 200, and there is a maximum limit for unverified accounts. Thus, if your intention is to deposit higher amounts, you should contact Support to verify your account.
The platform accepts deposits or transfers in any currency, but charges a commission for making the conversion to USD. That is why we suggest, if possible, depositing in USD from the beginning.
Futures Vs CFD
What are the main differences between CFDs and Futures?
- Counterparty
- Futures: operations are made with someone else, another trader.
- CFDs: the counterparty is the broker (eToro).
- Expiration date:
- Futures: they expire on a given date. Once the contract expires, it is closed even if you are in red.
- CFDs: they do not have an expiry date. It is possible to wait until you rise up and then exit.
- Variety:
- Futures: options are much more restricted
- CFDs: you have plenty of options to choose from, there are CFDs of practically anything
- Minimum deposit amount or “trade size”:
- Futures: minimum investment is higher
- CFDs: you can start with a small amount
- Trading costs:
- Futures: costs are usually lower
- CFDs: higher (although they are not excessively high either)
- Leverage:
- Futures: you can't leverage
- CFDs: completely available
About ETFs
What do you know about Exchange-traded funds or ETFs? They are similar to index funds and are known for combining the benefits of stocks and mutual funds: they can be traded at any moment in the market, but include a much wider diversity of assets and the rates are significantly lower.
Foreign exchange
What is known as Forex trading consists in the trading of currencies. It's the conversion of one currency to another to make a profit through the operation.
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 the euro will rise compared to the dollar. Therefore, if you purchased each euro at 1.15 USD and you sell them back when their price is 1.20 USD, you'll be keeping that margin.
You may be thinking by now that trading with currencies requires high investments, and you are not wrong, since increases in prices are never that dramatic, and if you use a lot of leverage to counter that, you will take a considerable risk. If you are just starting to trade, it is not a good idea to begin with the currency market, because it is very risky and complex.
Most currencies are available on eToro but take into account that in Forex sales are made through CFDs, which means you will not be the owner of the real asset.
Equities
Stocks or equities are the most popular financial assets. Some companies divide their capital into fractions: you can be one of those shareowners, but first, you should know where and how to make your investment.
We can group 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 earnings among the stockholders; the latter, on the contrary, 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, you should not discard that alternative, since selling the shares in the future could pay much more.
In the case of eToro, if you choose a company that distributes dividends, these will be deposited into your account, and you can collect them in cash or reinvest them. We recommend, if you don't have financial urgencies, that you benefit from compound interest and reinvest it in the company itself.
Consider that on eToro you can “dope” your trades with leverage, 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: you can end up not gaining at all, because you will not receive interest and also you will have to pay fees while your operation is open.
About ETFs
Have you heard about Exchange-traded funds or ETFs? They are similar to index funds and are known for merging the advantages of stocks and mutual funds: they can be traded at any moment in the market, but have much more investment possibilities and the fees are significantly lower.
About Index Funds
This is the best option for people who can invest in the long term, mostly for those who are starting to trade, because it is less expensive, diversified, and safer.
You may think differently, but beating the benchmark is far from being a piece of cake and very few fund managers achieve that, apart from some specific cases.
In practice, all that glitters is not gold: if a fund manager achieves to beat the market, it is only for a short time or on a specific occasion. Or perhaps they would charge very high rates and indexing would be a better decision anyway (with minimal commissions).
The good thing about index funds is that they solve those two issues: their fees are insignificant and they often beat active managers, but in the long term.
How do Contracts for Difference Function?
If you already have been on eToro, you probably noticed that the acronym CFD appears frequently. We will come back to it, but you should know first that cryptocurrency trading on eToro is only CFD when you short sell.
We will also explain terms like going short and leverage, in case you are thinking about day trading cryptocurrency or more advanced practices.
The advantage of eToro is that it allows you to bet both “in the black” and “in negative”. Let's say that you believe that the Ethereum will fall, so probably you think that it is better to refrain from getting in until it does. Nevertheless, if it actually falls, you can make some profits out of that.
You can do this through what is known known as “going short”. Its operation, roughly, consists in the following:
- You get from a loan 100 units of Ethereum, with a total price of $ 5,000 (these are completely made up numbers)
- You get $ 5,000 by offering them at their price in the market
- The price falls, as you guessed, and the unit of Ethereum now costs $ 30 instead of $ 50
- Again, you purchase the 100 units, but now their price is $ 3,000
- Now you pay back the 100 units
- The rest is yours, so, you will have made $ 2000
It all sounds more complicated than it really is. Just consider that by trading in Ethereum on eToro, you can make money when you anticipate the price will fall.
eToro Interface
We already said that one of the best features of eToro is that the platform is very friendly and easy to use. You don't need to read a lot or have previous knowledge to start investing.
If you are familiar with any of the most common social networks, you can perfectly use eToro's interface.
Let's talk about the sign-up process and the different sections of eToro.
You will have to provide some personal data (like full name or address, for instance) when registering.
To complete your profile, you will see that they ask you some questions about your experience at investing.
However, it's not like they're testing you or anything. It is only a way of finding out how much knowledge you have and what type of financial instruments they can suggest. For instance, if you have never invested before, they will not suggest that you invest in futures.
Let's get to know the different sections of the interface.
With the “Set Price Alerts” tool, you'll be able to program an alarm when a security is at a certain price. This is ideal in case 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 learn from each other by sharing their opinion and experiences.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we mentioned in this guide, the types of financial assets that eToro offers are:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Raw materials
- Currencies
- Index funds
The concept “social trading” makes sense within “People”: there, you can copy the movements of the investors you find most inspiring with just one click.
You can search and find users according to your interests. You can search by risk level, financial instruments, profits or country, among other filters. When you choose an investor and indicate the amount you want to invest, eToro will automatically replicate their movements, proportionally. For example, if you invest $ 1000 and the user puts 20% of their funds in an asset, eToro will put $ 200 of your funds in the same asset as well.
You will also find the CopyPortfolios divided into three main kinds: “Top Trader”, “Market” and “Partner”.
Sometimes you might prefer copying to CopyPortfolios than to individuals, because you avoid putting all your eggs in one basket, or in other words, risk is more diversified. The portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … You think that a certain industry will prosper anytime soon? Then look, because surely there is a CopyPortfolio about it.
Trading strategies
There are different methods or ways for crypto trading, like day trading or buying and holding, for naming just a few.
If you are new in the world of investment, our suggestion is a middle point: when you open your Ethereum position, place a dynamic stop loss 15-20% below the top price, and forget about the operation.
For instance, if you purchase a cryptocurrency at $ 15, then it increases to $ 25 and decreases back to $17, the stop-loss will close your position at $ 21 or $ 22. Hence, you will obtain a good profit.
It might sound way better to sell when the price is at its highest, but that is simply not possible. The mentioned method is much more realistic and it can give great results.
Later on, you will be able to apply more sophisticated strategies, such as using leverage or going short.
Virtual portfolio: How does it work?
In case you are beginning as an investor, the option to operate in “demo” mode may be useful. You only need to set a virtual account and your operations will be carried out with an imaginary balance.
A virtual account can help you to practice and gain experience before starting to operate with real funds. When you open your demo account, you will begin with a virtual balance of $ 100.000, to operate with a variety of financial instruments available on the platform (not just with Ethereum).
The first attempt is not usually that good. But you can ask eToro to deposit back the virtual $ 100k to your account.
Keep in mind that trading is mostly about being cautious, and perhaps a demo account can prevent you from controlling your impulses. It is not the same to trade with your own money than with fake funds, which you can lose without a problem.
Finally, the virtual mode is kind of absurd if you want to trade in the medium or long-term (with almost guaranteed returns only by replicating an index), since you would be wasting years. Demo accounts may be ideal for trying out before trading in the short or medium-term.