Contents
eToro is an excellent broker for those who are in Nigeria and want to purchase Ripple
Why do we recommend it?
- There are tons of investment possibilities
- Leverage is allowed
- It's really simple and manageable
- Allows to copy investment tactics
- Accepts “shorting” or short-selling
Official homepage: www.etoro.com/ripple
In case you are considering it, eToro is the best way to obtain Ripple from Nigeria.
eToro is popular for making “social trading” a trend. Social trading is an ingenious form of investing in which traders can emulate the moves of other investors who have been making earnings over time.
If you are still a rookie or haven't gained much investment experience, eToro is great for you. You can rest assured that you are doing a smart investment move when replicating those from subjects with a great deal of expertise. Also, in case you are an investor, the platform pays for your knowledge.
Besides, the interface of this site is amazingly manageable, great for users who want to begin in the Ripple world, without ending up overwhelmed with tons of numbers and information.
eToro Interface
We said before that eToro is very easy to manage. Anyone can start using it without previous knowledge or long explanations.
You won't have any problems with the interface if you are familiar with any other social network, like Facebook or Instagram.
Let's talk about the registration process and the different sections of eToro that you should know.
You will have to provide some personal information when registering.
Also, you will have to answer some questions about your experience as an investor.
But don't feel like you are taking an exam. The only intention is to know more about you and determine which financial instruments they should recommend according to your knowledge and experience.
As soon as you are registered and have completed your profile, the annoying “incomplete profile” bar will disappear.
Next, we will talk about the fundamental sections of the interface.
“Set Price Alerts” allows you to set alarms on the price of certain securities. This is very useful when you want to buy an asset that is falling, but perhaps you think that it has not finished falling yet.
“News Feed” is for social purposes. This is the section where users can share opinions and information.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we discussed in this guide, the six types of instruments on eToro are:
- Cryptocurrencies
- ETFs
- Stocks
- Commodities
- Forex trading
- Index funds
In the tab “People”, you can find the profiles of eToro users and their performances. This is where the term “social trading” makes sense since you can replicate with just one click the strategies of the investors that you prefer.
You can search for those users that you find more interesting: by risk level, types of instruments, average earnings… You just have to type the amount you want to invest and eToro will replicate the movements of the investor you selected, 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 money in that asset.
Also, here you will see CopyPortfolios classified into: Top Trader, Market, and Partner.
The benefit 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 sector will prosper in the future? Then you will surely find a CopyPortfolio about it.
Is eToro reliable for purchasing Ripple?
eToro has been independently tested once and again to certify its reliability in the treatment of data from previous users. Every time, it has been confirmed that eToro is rigorous with the information.
The main office of eToro is located in Cyprus, and the platform is certified by the Cyprus Securities Market Commission (or CySEC), which covers debts up to € 20,000 from its clients, including those from Nigeria. Furthermore, eToro follows all the strict regulations of the European Union.
In Europe, it is backed by the European Financial Instruments Market or MiFID, and in the USA it responds to the Financial Conduct Authority (FCA). In addition to all these regulations, you should know that eToro has worked for fifteen years and that it has more than 20 million users around the world, so we can rest assured that our funds are safe.
It is also important to mention the great customer service. They have a phone number for assistance, a ticket system to track any claim, and a live chat.
In case you still don't know what “leverage” is, we'll describe it briefly. When trading, it's the capacity of increasing your investment without putting extra money. For example, if you start with $ 100 and you use x2 leverage, you will be investing $ 200.
Why using leverage and how to do it
Suppose now that you know that the price of Ripple is about to raise its price, thus you choose to take a long position.
You are certain that Ripple will rise, but you can only invest $ 1,000. Despite that, why miss the opportunity to make more money?
Possibly, you could ask your bank for a loan, wait for it to be accepted and receiving the money, send the money to eToro, confirm that it arrived, and then obtain Ripple… Nevertheless, when you finish doing all that, probably Ripple would be already at a much higher price, and investing wouldn't be a good idea at that moment.
Using leverage, you can get that amount of money with two clicks. It's exactly like borrowing money, but much better: from eToro itself. You can get financing to invest much more money than you actually have on the eToro Wallet. It is really simple, before investing you will see the different options as in the image below:
When trading in different markets you can use more leverage. This is because cryptocurrencies are a value that is invested in the medium-long term. However, leverage is used mainly for short-term operations or day trading. But let's deepen a bit more on how all this works:
- If you want to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 (remember that$ 1,000 was borrowed from eToro).
- A few days later, Ripple does increases, as you thought, and now the cost of your investment is $ 2,400 (20% more), so you decide to sell back because you want to play it safe.
- The $ 1k of leverage will be deducted, and you will have $ 1,400 left; which means the net profit is $ 400, since the other $1,000 was yours from the beginning.
In conclusion, by investing $ 1000 you can make a profit of 40% (in the case you earn $ 400). That is quite good.
Still wondering where the catch is? The thing is, it can also play against you. If everything goes according to plan and the price goes up, you will earn more money in less time; however, if the value of the asset decreases, you will also lose more in less time.
Let's imagine that the asset 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, when using leverage it is crucial to know two other concepts: Take Profit and Stop Loss.
Take Profit is a limit you can set when trading: you set the platform to sell your assets once they get to a point above the entry price. For instance, you can buy Ripple at $ 100 and ask eToro to close your position automatically when it reaches $ 120. It is very helpful to avoid being blinded by greed: we would all accept a 20% profit when making the investment, but when you reach that 20% it is easy to want higher profits and put yourself at risk of losing money. It's like you made sure now of not acting recklessly in the near future.
On the other hand, when operating with leverage you should always use Stop Loss, because a small decrease in the price of an asset can lead to a substantial loss. Consider that eToro will recommend a limit for Stop Loss, but it is better to place it lower than that.
How to deposit funds on eToro
When it comes to payment on eToro, there isn't really much to say, since it is pretty simple. You only need to select “Deposit funds”, put an amount, and choose the payment option you prefer. You can use PayPal (available for some countries), bank transfer, credit card, Skrill, or Neteller.
Remember that for security policies, you must be the holder of the account or the credit card.
The minimum amount you can deposit is $ 200 and there is a limited amount if you are not verified, so if you want to trade with larger sums, you should verify your account previously.
Also, know that you can make the deposit in any currency since eToro will make the conversion automatically to USD, but charges a commission for it, so it is preferable to make the transfer directly in USD.
About ETFs
ETFs or Exchange-Traded Funds are a type of passively managed fund, similar to index funds. They can be described as a combination of stocks and mutual 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.
Equities
Let's discuss the most well-known instruments: stocks or shares. Stocks are fractions in which an enterprise can be shared. You can obtain a profit through third-party companies just by putting your money in them. But, obviously, you have to know where to put it.
There are two kinds of shares: the ones that divide their earnings regularly among the shareholders, 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.
If you invest in stocks that pay out dividends, you will receive them into your account on eToro. Therefore, you can collect that money or you can choose to reinvest it. However, compound interest is magic, so we would suggest reinvesting.
Remember that on eToro you can “dope” your trades with leverage, but in that case, you will not receive dividends as the trade would be a contract for difference. That is why for long-term investments, it is not advisable to use leverage: you can end up losing money, because you will not get dividends and also you will have to pay fees while your operation is open.
ETFs
ETFs or Exchange-Traded Funds are a kind of passively managed fund, 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 have lower fees.
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 inexpensive, diversified, and the risk is lower.
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 famous cases, like Warren Buffett's.
In practice, all that glitters is not gold: 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.
The good thing about index funds is that they solve those two issues: their commissions are minor and in the long term they almost always beat active managers.
How do Contracts for Difference Function?
If you have entered eToro before, you probably realized that the initials CFD appear over and over. We will explain exactly what this means, but you should know first that CFDs on eToro are only possible when you go short.
If you are thinking about day trading cryptocurrency and other more advanced practices, you will also find information about concepts like going short and leverage.
With CFDs you can bet on eToro even if you are not “in the black” or having a negative balance. In a hypothetical case: you believe that the Ripple will fall, so the logical thing is to think “if it is going to depreciate or go down in price, I'll just wait and bet when it has gone down”. But if it really goes down, it is possible to make some profits out of that.
You can do that by “going short”. More or less, this is how it works:
- Someone lends you, for example, 100 units of Ripple, with a total price of $ 5,000 (these numbers are fictional)
- You make $ 5,000 by selling the 100 units
- The Ripple goes from $ 50 to $ 30 (as you thought, the price decreases)
- You purchase all 100 units once again, but now they are worth $ 3,000
- You return the 100 units to whoever made the loan
- The difference is yours, so, you will have earned $ 2000
It is really simple. Just remember that by trading in Ripple on eToro, with CFDs you can make a profit when you anticipate the price will fall.
Investment strategies
There are several ways to operate cryptocurrencies: from buying and holding to day trading (and benefit from market volatility).
If you are just beginning in the world of investment, our recommendation is something in between: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
This means that if, for instance, you purchase a cryptocurrency at $ 10, it reaches $ 20, and after that it falls to $ 12, your operation will be closed at $ 16-17 and you will obtain a pretty good profit.
Perhaps you are wondering: why not selling when the price is at its peak? But that would only work for a psychic or a fortune-teller. The mentioned method is more down-to-earth and can work out perfectly.
Eventually, you will be prepared for applying advanced investment techniques, like using leverage or going short.