Contents
eToro, an advisable broker for those who want to buy Dash from New Zealand
Why do we recommend it?
- It's very easy to handle
- Allows to imitate investment moves
- Accepts short-trading
- eToro allows leverage
- There are tons of possibilities for investments
Official page in English: www.etoro.com/dash
You should consider eToro in case you are thinking about purchasing Dash from New Zealand.
eToro is famous for making “social trading” a trend. Social trading is an innovative way of investing in which investors can imitate the movements of other traders who have been making profits for a long time.
eToro has solutions for you, even if you are still a beginner in trading. You can rest assured that you are making a smart investment since the site emulates those from subjects with a long profit record. And for those skilled investors willing to share their techniques with others, eToro rewards your knowledge with money.
It is also very convenient how easy is the interface of the platform, perfect for beginners who are starting with Dash.
Exchange-Traded Funds
Exchange-Traded Funds or ETFs are a type of passively managed fund, similar to index funds. We can say that ETFs are somewhere between stocks and funds: they are publicly traded and therefore can be exchanged at any time at market price. However, their advantage is that they offer more alternatives compared to stocks, and have lower fees.
Stocks
Let's discuss the most well-known financial instruments: stocks. Stocks are portions of publicly traded companies. It is possible to get dividends with the performance of third-party companies just by putting your money in them. But of course, you have to know where to put it.
We can categorize stocks into two different kinds: the ones that divide their earnings regularly among the investors, and those that don't. The former ones are great, obviously, but investing in the latter can be a good idea too since the profit you can make by selling the shares can be even larger.
If you invest in equities that payout, you will receive the funds into your eToro account, and you can withdraw them or invest back. However, compound interest can do magic, so our suggestion is that you reinvest if you don't need the money immediately.
If you invest in stocks on eToro, you will be able to use leverage. However, it is not advisable, since it would be a CFD and you would not get dividends. Besides, as equities tend to be long-term investments, you will have to pay commissions.
About Index Funds
Index funds are most adequate for those planning to invest for the long term, particularly for beginners. If you don't need to use the amount of money you'll invest in less than five or ten years, index funds offer you variety and lower risks.
Contrary to what it may seem, it is not easy at all to beat the market (yes, you have probably heard of investors who achieve huge returns).
But putting aside some remarkable cases, all that glitters is not gold: if you hear of someone who has beaten the market, it was probably for a limited time, or their charges are really high. Also, take into account that if something happened once or twice, it doesn't mean necessarily that it will happen again.
The good thing about index funds is that they solve these two issues: their commissions are minor and in the long term they tend to beat active managers.
Commodities (raw materials)
Most people invest in raw materials because of their stability. While other assets tend to fluctuate more, commodity prices vary less and offer security against inflation or market volatility. However, prices are subject to supply and demand, so if the fear of possible inflation produces greater demand for a certain good, the price will also rise.
Consider that the only intended income from the investment in raw materials will come from their further sale because, unlike shares, commodities don't pay dividends.
Raw materials are usually categorized into two types: first, we have hard raw materials, which are precious metals (gold, silver, copper, and platinum), industrial metals, and oil; in second place are soft raw materials, which are agricultural goods like sugar, cocoa, soybeans, among others.
Have you heard the term “leverage”? We'll put it simply:
trading allows you to invest more money than you can have in a given time. Let's say that you enter with $ 100 and you use x2 leverage, you will be really investing $ 200.
Why using leverage and how to do it
Assuming that, for example, you are positive that Dash is going up, and that you have $ 1,000 for “going long”, you should know that you can increase your investment and make more money.
You could go to your bank, ask for a credit, wait for it to be accepted and receiving the money, and then acquire Dash… But by then it is likely that your prediction was confirmed already and Dash is so high that it is not worth trading.
Leverage is just like a credit, and you will only have to click a few times! eToro allows you to operate with much higher amounts than what you actually have on the platform. Before trading, you will be able to choose between the different leverage options as in the image:
Within other markets, you can use more leverage. The reason is that leverage is most common in short-term operations, and cryptocurrencies tend to be a medium or long-term investment. That said, I'm going to explain better how leverage works.
You begin with $ 1,000 and decide to use leverage x2, which means you would have $ 2,000 to invest (the extra $ 1,000 to reach $ 2,000 are “borrowed” from eToro).
A few days later, as you predicted, Dash increases by 20% and the value of your investment is now $ 2,400. But you don't want to take too much risk, so it's time to sell.
First of all, the 1k $ of the leverage will be deducted. You have $ 1,400 left, of which $ 1000 was yours initially, so you'll have earned $ 400.
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is quite good.
But not everything is wonderful. If all goes as you planned and the asset increases, you will make profits. Nevertheless, if the price falls, you will also lose more money really fast.
For example: if the price falls by 10%, you won't lose $ 10, but twice (the leverage) that figure, that would be $ 20. Therefore, when operating with leverage it is crucial to take into account Take Profit and Stop Loss.
Take Profit is the automatic order to sell once the asset is above the entry price: you buy Dash at $ 100 and you ask eToro to automatically close your position as soon as the price reaches $ 120. It is very useful to avoid being blinded by enthusiasm: a 20% profit is usually pretty good, but once you see it goes up, you might consider you can make higher profits, which is not always the case. As a result, you might lose money if you don't close on time. So, Take Profit helps you reduce risks when trading.
Stop Loss is even more important, especially if you trade with leverage, since a small loss with leverage can be fatal for your wallet. That is why it is essential to establish a Stop Loss lower than that suggested by the broker.
Payment methods on eToro
When it comes to depositing funds on eToro, there isn't really much to say, since it is really straightforward. Just click “Deposit funds”, type an amount, and choose your payment method. You can use PayPal (available for some countries), bank transfer, credit card, Skrill, or Neteller.
(Keep into consideration that you must be the account or credit card owner, for security policies).
The minimum amount you can deposit is $ 200 and there is a maximum limit of how much you can deposit if you are not verified, so if you plan to operate with higher amounts, you should verify your account previously.
You can make the payment in any currency you want and eToro will do the conversion to USD. But we suggest depositing directly in USD since the platform charges a commission for the conversion.
Futures Vs CFD
What are the differences between CFDs and Futures?
- Counterparty
- Futures: operations are made with another trader.
- CFDs: you do not operate with someone else, the counterparty is the brokerage.
- Expiration:
- Futures: they expire. Once the contract expires, it is closed even if you are in red.
- CFDs: on the contrary, there is no expiration date. Therefore, you can wait until you get in a good position before exiting.
- Trading options:
- Futures: options are much more limited
- CFDs: there is an enormous amount of possibilities
- Minimum deposit amount or “trade size”:
- Futures: minimum investment is higher
- CFDs: you can start trading with a low amount
- Costs and commissions:
- Futures: as you need to invest more, costs are lower
- CFDs: costs are higher
- Leverage:
- Futures: it isn't possible to trade with leverage
- CFDs: accessible leverage
What are Contracts for Difference?
You probably have found the initials CFD all the time if you already accessed eToro. Before we come back to this, we must say that CFDs on eToro are only possible if you go short.
If you are interested in day trading cryptocurrency or other advanced trading operations, next you will also meet concepts such as leverage and “going short”.
The advantage of eToro is that it allows you not only to bet “in the black”, but with CFDs you can also bet “in negative”. Let's say that you have the conviction that the Dash will fall, so the logical thing is to think “if it is going to depreciate, I'll simply wait until it does”. Nevertheless, if it really falls, it might mean extra money for you.
You can do that by “going short”. More or less, it functions like this:
- They lend you, let's say, 100 units of Dash, with a total price of $ 5,000 (these are completely fictional numbers)
- You make $ 5,000 by selling the 100 units
- The Dash goes from $ 50 to $ 30 (as you predicted, it devaluates)
- Again, you buy the 100 units, but now their price is $ 3,000
- You pay back the 100 units
- The difference is yours, so, you will have made $ 2000
It all sounds more complex than it really is. Just remember that by trading in Dash on eToro, with CFDs you can make a profit if you foretell downs in the price.
eToro Interface
We mentioned previously that eToro is very friendly and intuitive. Anyone can start investing without having to read endless explanations.
You won't have any problems with the interface if you have used any of the most common social networks, like Twitter or Facebook.
Now we will detail the registration process and the different sections of the eToro interface that you should know.
When you open your account, you will have to enter your personal data.
During the sign-up process, you will also find some questions about your previous trade experience.
But don't feel like you are taking an exam. They only intend to find out about your previous experience and knowledge to determine which assets to recommend for you.
You will see a bar that says “incomplete profile” until you fill in all the information.
Let's see what the different sections of the page are.
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 buy a security and you are waiting for it to decrease.
“News Feed” is the more “social” section. There, users can interact and share experiences.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. And we already discussed the kinds of assets that are available on eToro:
- Cryptocurrencies
- ETFs
- Stocks
- Commodities
- Forex trading
- Index funds
The concept “social trading” makes sense within “People”: there, you can replicate the strategies of any user 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 users that you find more interesting. When you choose an investor and indicate how much you want to invest, eToro will automatically replicate their movements, in proportion. For example, if you have $ 1000 and the trader puts 20% of their funds in an asset, eToro will put $ 200 of your funds in the same asset as well.
You will also see the three main types of CopyPortfolios, which are classified into “Top Trader”, “Market” and “Partner”.
The benefit of copying to CopyPortfolios instead of particular traders is that this way the risk will be more diversified. 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 is going to succeed in the future? Then you will surely find a CopyPortfolio about it.
Practice account: How does it work?
If you do not have much experience investing, the possibility to operate in “demo” mode will be useful. You only need to set a virtual account and you will be able to operate with an imaginary balance.
A virtual account can help you to practice and gain experience before starting to operate with real money. When you open your demo account, you will begin with a virtual amount of $ 100.000, to operate with a variety of assets available on eToro (not only with Dash).
The first attempt is not usually that good. But don't worry, since you can ask support to deposit back the virtual $ 100k to your account, and the second time you should do better.
Nevertheless, keep in mind that trading is mainly about being prudent, and using a demo account can have the opposite effect. It is completely different to risk your real savings than to do operations with virtual funds that you don't mind losing.
And of course, the demo mode is kind of pointless if you intend to invest in the medium or long-term, since you would be wasting years. Virtual accounts may be ideal for trying out before investing in the short or medium-term.