Contents
eToro is an outstanding broker for those in Nigeria who want to obtain IOTA
Some of its benefits are:
- Allows to replicate investment tactics
- Allows “shorting” or short-selling
- Very user-friendly and simple
- You can trade leveraged
- Allows you to make investments in tons of other goods
Official website: www.etoro.com/iota
In case you are thinking about investing in IOTA from Nigeria, eToro may be the best option nowadays.
This platform is popular for making “social trading” fashionable, an innovative way of investing in which traders can emulate the moves of other investors who have been generating income for years.
eToro has solutions for you, especially if you don't have much experience in trading. You can rest assured that you will be making a smart investment since the site duplicates those from subjects with a long profit record. Oppositely, if you are an expert in the field willing to share your knowledge with the community, eToro pays up for it.
Besides, the platform is so uncomplicated, great for a user who wants to start in the IOTA universe, without getting crazy with tons of diagrams and figures.
Do you know the term “leverage”? Just in case, we'll put it simply:
trading allows you to invest higher figures than what you really have. Let's say that you have $ 100 and you put them with x2 leverage, you will be actually investing $ 200.
About leverage, Take Profit and Stop Loss
Let's say that you have complete certainty that IOTA will raise its price, and you want to “go long”, but you only have $ 1,000 available. However, you have the option of investing more and get higher profits.
You could consider requesting a loan, but it is a process that takes time, and when you receive the money, IOTA might be already so expensive that investing wouldn't be convenient anymore.
Thanks to leverage, you can obtain that amount just by moving a finger. It's like a loan, but much better: from eToro itself. You will be able to invest much more money than you actually have on the platform. It is very simple, before investing you will see the different options as in the screenshot:
When operating with other assets you can use even more leverage. This is because cryptocurrencies regularly represent medium-long term investments, and leverage is used primarily for short-term operations or day trading. But let's see how this works with the previous example.
You begin with $ 1,000 and pick leverage x2, which means you would really invest $ 2,000, since eToro would put the other $ 1,000 (which is double the initial amount).
A week later turns out that IOTA rises up and now the value of your investment is 20% higher, which means, you have $ 2,400 in IOTA. 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 the net profit is $ 400.
In conclusion, by investing $ 1000 you can make a profit of 40% (in the case you earn $ 400). That is pretty decent.
But not everything is wonderful. If all goes as you planned and the price rises, you will make money. Nevertheless, if the asset decreases, you will also lose more money than you invested.
For example: if instead of increasing by 20%, the price falls by 10%, you won't lose $ 10, but $ 20, because of the leverage. That is why to operate with leverage it is very important to take into account Take Profit and Stop Loss.
Take Profit is an automatic order of selling once the asset achieves a certain price: you purchase IOTA at $ 100 and you ask eToro to automatically close your position as soon as the price goes up to $ 120. It is very helpful to avoid being blinded by enthusiasm: we would all take a 20% profit in the beginning, but when you reach that 20% it is easy to ask yourself “what if this keeps increasing and I can earn even more?”. It's like you made sure now of not acting recklessly in the near future.
Stop Loss is even more necessary, particularly when trading with leverage, since a small loss could be fatal for your wallet. You always need to mark a Stop Loss lower than that suggested by the platform.
How are CFDs and futures different?
Here is a brief comparison between CFDs and Futures, in case you want to know more:
- Who is the counterparty? With Futures, the counterparty is another trader. In CDFs, it’s the broker (eToro)
- Date of expiration Futures expire in a variable given date. CFDs don’t have expiry date
- Variety of options for trading The market for Futures is narrower. With CFDs you can trade in several different markets.
- Minimum investment Costs for Futures are higher than costs for CFDs.
- Use of leverage With Futures, it isn’t possible; while with CFDs it is.
About Contracts for Difference
It is possible that you have found the acronym CFD more than once if you entered eToro before. Before we come back to this, you must know that CFDs on eToro are only possible if you short sell.
We will also refer to concepts like short-selling and leverage, in case you are considering day trading cryptocurrency or more advanced practices.
With CFDs you can bet on eToro even if you are not “in the black” or having a negative balance. Let's say that you believe that the IOTA will go down, so perhaps it is obvious to think “if it is going to depreciate or go down in price, I simply refrain from getting in and I'll go in when it has gone down”. But if it really falls, it might mean extra money for you.
The operation known as “going short” will allow you to do that. It functions, more or less, like this:
- They lend you, let's say, 100 units of IOTA, valued at a total of $ 5,000 (these numbers are totally made up)
- You sell the 100 units and earn $ 5,000
- As you supposed, it devaluates, and the unit of IOTA now costs $ 30 instead of $ 50
- You purchase the 100 units again, but at $ 3,000
- You return the 100 units to the person that loaned them to you
- The rest is yours, so, you will have earned $ 2000
Consider that it is much easier than it sounds: we can summarize this whole operation by saying that by trading in IOTA you can also earn money if you anticipate it will go down.
eToro Interface
We mentioned before that eToro is very easy to manage. Anyone can start using it without having to read endless explanations.
You won't have any issues with the interface if you are familiar with any other social network.
Now we will detail the registration process and the sections of the page that you should know.
When you register, you will have to fill in your personal data, like first name, last name, address….
Also, you will have to answer some questions about your experience as an investor.
However, it's not like they're testing you or anything. They are only measures to know how much knowledge you have and what type of financial instruments they can recommend. For example, if you have never invested before, they will not recommend that you invest in futures.
Let's get to know the different sections of the page.
With the “Set Price Alerts” tool, you'll be able to program an alert when an asset is at a certain price. Just click the tab and you will be able to set it. This is helpful in case you want to purchase an asset and you are waiting for its price to fall.
“News Feed” is the more “social” section. There, traders can interact and share experiences.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. And we already mentioned the kinds of assets on eToro:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Raw materials
- Currencies
- Index funds
The term “social trading” makes sense in the section “People”: there, you can copy the movements of any investor you choose with just one click. You'll be able to see all their profiles and historical performances.
In this section, you will be able to search for those traders that you find more interesting. When you select an investor and indicate how much you want to invest, eToro will automatically replicate their movements, in proportion. If you invest $ 1000 and the user puts 20% of their funds in an asset, eToro will also invest 20% of your money in the same company or instrument, in this case, $ 200.
You will also see the three main types of CopyPortfolios, which are classified into “Top Trader”, “Market” and “Partner”.
The advantage of using CopyPortfolios instead of copying specific traders is that this way you will diversify the risk. The portfolios are identified so you can recognize them easily: one about gaming, another about large drone companies, another about pharmacy … You think that a certain industry will prosper in the future? Then you will surely find a CopyPortfolio about it.
Trading strategies
There are different methods or ways for crypto trading, such as day trading or buying and holding, for naming just a few.
If you are just starting in the world of investment, I suggest a middle point: when you open your IOTA position, place a dynamic stop loss 15-20% under the top price, and let the magic happen.
For example, if you purchase a cryptocurrency when its price is $ 15, it rises up to $ 25 and decreases back to $17, the stop-loss will allow your operation to be closed, maybe at $ 21 or $ 22. Thus, you will obtain a good profit.
I know it might sound more appealing to sell when the price is at its peak, but unless you're psychic, that will never be possible. The above method is much more down-to-earth and it can give great results.
Eventually, you will be prepared for applying advanced trading techniques, such as short-selling or using leverage.
How does a virtual portfolio work?
For those who still don't have much experience in investing, using a demo account can be very helpful. Just assure yourself that the virtual mode is set and you can start practicing with a “fictional” portfolio.
This tool is perfect for those who are new to this world and want to give it a few tries before trading with real funds. When you open your account, you will start with $ 100,000 of virtual balance to do all the operations that you can think of: not only with IOTA, you can also create a diverse portfolio.
If your first attempts don't go well and you lose your funds, you can always ask eToro support to replenish $ 100k of virtual balance. The second try will probably be better.
Take into account that you should always be prudent when investing, and perhaps using a demo portfolio can make you a bit impulsive. It is not the same to trade with your own money than with fake funds, which you can lose without any consequences.
Evidently, if you are interested in trading in the long or medium-term, it makes no sense that you try the demo mode and wait for years. On the other hand, it can be very useful if you want to practice short and medium-term trading.