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eToro, recommended online broker for those who are in New Zealand and want to acquire Ethereum
Some of its advantages are:
- It's uncomplicated and easy to use
- It takes other successful investment strategies so you can replicate them
- You can short sell
- eToro offers leverage
- Lets you make investments in tons of other goods
Homepage: www.etoro.com/ethereum
You should definitely consider eToro in case you are interested in investing in Ethereum from New Zealand.
“Social trading”, a relatively new investment method that consists in replicating techniques and strategies from other experienced investors, has become trendy because of eToro.
eToro has solutions for you, especially if you are still a beginner in trading. You can rest assured that you will be doing a smart investment move when replicating those from subjects with a great deal of expertise. And for those skilled investors willing to share their techniques, eToro rewards your knowledge with money.
Another thing to mention is how intuitive the interface is, which turns out perfect for new users that are learning all about Ethereum.
About Contracts for Difference
If you already registered on eToro, you must have seen how the initials CFD appear over and over. We will explain exactly what this means, but first, you should know that cryptocurrency trading on eToro is only CFD when you are short-selling or select leverage higher than x2 (nevertheless, this is not even an option on eToro).
We will also explain concepts like leverage and “going short”, in case you are thinking about day trading cryptocurrency or other more advanced practices.
The advantage of eToro is that it allows you to bet both “in the black” and “in negative”. In a hypothetical case: you have the conviction that the Ethereum will fall, so perhaps it is obvious to think “if it is going to depreciate (go down in price), I simply wait and I'll go in when it has gone down”. Nevertheless, if you really consider that it's going down, why not take advantage of that and earn money?
You can do that by “going short”. Here's how it works:
- You get from a loan 100 units of Ethereum, with a total price of $ 5,000 (these numbers are imaginary)
- You sell them at their price on the market, $ 5,000
- The Ethereum devaluates from $ 50 to $ 30
- You buy all 100 units again, but at the current price, $ 3,000
- Then you pay back the 100 units to whoever made the loan in the first place
- The rest is yours, so, you will have made $ 2000
It is far more simple than it may seem. Just remember that by trading in Ethereum on eToro, with CFDs you can make money if you anticipate downs in the price.
Futures Vs CFD
What are the main differences between CFDs and Futures?
- Counterparties
- Futures: the exchange is made with another trader.
- CFDs: you don't operate with someone else, but the counterparty is the broker.
- Date of expiration:
- Futures: they have an expiry date. Once the contract expires, it is closed even if you have losses.
- CFDs: on the contrary, there is no expiration date. It is possible to get back to a good position before you close.
- Options for trading:
- Futures: options are much more limited
- CFDs: there is an enormous amount of options for trading
- Minimum deposit amount or “trade size”:
- Futures: you need to get in with a higher amount
- CFDs: you can start with a lower minimum trade size
- Trading costs:
- Futures: costs are usually lower
- CFDs: higher (although they are not excessively high either)
- Use of leverage:
- Futures: there is no leverage leverage
- CFDs: accessible leverage
About ETFs
Have you heard about Exchange-traded funds or ETFs? They are similar to index funds and are known for combining the advantages of stocks and mutual funds: they can be traded regularly at market price, but include a much wider diversity of assets and considerably lower rates.
About ETFs
Have you heard about Exchange-traded funds or ETFs? They are passively managed funds, known for combining the advantages of stocks and mutual funds, because they can be traded regularly at market price, but include a much wider diversity of assets and the rates are significantly lower.
About Index Funds
This is the best option for people who can invest in the long term, especially for those who are starting to trade, because it is inexpensive, diversified, and the risk is lower.
Perhaps you have a different idea, but very few investors can beat the benchmark (although you have probably heard of investors who achieve huge returns).
But putting aside some unusual cases, not everything is as good as it sounds: when someone brags about having beaten the benchmark, it was probably for a limited time, or their fees are really high. Also, take into account that if something happened in the past it doesn't necessarily represent a regular behavior.
Index funds provide solutions to both concerns: their rates are insignificant and in the long term they almost always beat active managers.
Currency market
Forex or currency trading is the exchange between a pair of currencies in order to obtain a profit.
In case you want to exchange EUR and USD, you buy euros at their price in dollars, thinking 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 they cost 1.20 USD, that margin will be yours.
Perhaps you already inferred this, but trading with currencies requires large resources, because prices rarely increase that much, or using much leverage, which could be incautious, as you know. In case you are just starting in trading, it is not a good idea to begin with this market, because it's not the safest option.
You can operate with almost every popular currency on eToro. However, consider that this market functions through contract for differences, which means you will not be the owner of the underlying asset.
Equities
Stocks are the most common securities. Some publicly traded enterprises decide to split into portions: you can be one of those shareowners, but first, you have to know where and how to make your investment.
There are two types of stocks: the ones that payout at the end of every fiscal year to the shareholders, 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.
When trading on eToro, if you invest in equities that distribute dividends, you will receive them in your account, and you can collect them in cash or reinvest them. Our suggestion is, if you don't need the money right away, that you don't renounce the magic of compound interest and reinvest it in the company.
If you trade with stocks on eToro, you can use leverage to “dope” your trades. However, it is not advisable, since it would be a CFD and you would not receive dividends. Also, as shares tend to be long-term investments, you will have to pay fees during the time your operation is open.
Raw materials
The major attraction of investing in raw materials is that their price fluctuates less than that of other assets. Actually, their security is what makes people often invest in raw materials, to take refuge from possible inflation or market volatility. Still, the cost of commodities is determined by supply and demand, so if faced with the fear of inflation, demand rises a lot, so will the price.
Consider that the only intended profit from the investment in raw materials will come from their further sale because, unlike shares, commodities don't give returns or pay interest.
Commodities can be classified into two main types: hard raw materials and soft raw materials. The former include precious metals (such as gold, silver, copper, and platinum), industrial metals (like iron, nickel, or aluminum), and oil; while the latter are agricultural resources as cocoa, soybeans, rice, or sugar, among many others.
Trading strategies
There are many methods to trade cryptocurrencies: from buying and waiting to day trading using price fluctuations to your advantage.
If you are just starting in the world of trading, I suggest a middle point: when you open your position, place a stop-loss order 15-20% below the top price, and let the rest happen on its own.
This means that if, for instance, you buy a cryptocurrency at $ 10, it reaches $ 20 and then decreases to $ 12, your position will be closed at $ 16-17 and you will have earned a considerable profit.
Perhaps you are wondering: why not selling back when the price is at its peak? But that would only work for a psychic or a fortune-teller. The mentioned strategy is completely realistic and can work out perfectly.
Later on, you will be able to apply more sophisticated strategies, such as going short or using leverage.
How to deposit funds into your eToro account
Within the payment options that eToro accepts you will find: bank transfer, PayPal, credit card, Neteller, and Skrill. There is not much to explain here: making a deposit with eToro is really simple. Just go to “Deposit funds”, type the amount and choose your preferred method.
Remember that for security policies, you must be the holder of the account or the credit card.
The minimum first time deposit is $ 200, and there is a maximum limit for unverified accounts. Thus, if you aim to operate with large amounts, you will need to verify your account previously.
eToro accepts deposits in any currency, but charges a commission for making the conversion to USD. So it is better to use USD from the beginning.
Virtual portfolio
Are you beginning in trading? Using a demo account can be useful. Just make sure the virtual mode is set in the upper left corner of the page and you can start trading with “fake” funds.
A virtual portfolio can help you to practice and gain experience before starting to trade with real money. When you create your demo account, you will begin with a virtual balance of $ 100.000, to operate with a variety of financial instruments available on eToro, besides Ethereum.
If your performance is not that good and you lose your funds, you can always ask the platform to replenish $ 100k of virtual balance. You'll probably do better on the second try.
However, keep in mind that you need to be prudent for trading, and using a practice account can have an adverse effect. It is completely different to risk your real savings than to operate with a false balance that you don't mind losing. Also, investing virtual money can prevent you from learning to control your emotions, something you should be able to do when trading.
Evidently, if you are interested in investing in the long or medium-term, there is no point in using the virtual mode and having to wait for years. On the other hand, it can be very useful if you want to practice short and medium-term investment.
eToro Interface
We already mentioned that one of the best features of eToro is that the platform is very intuitive and easy to use. It isn't necessary to read a lot or have previous knowledge to start investing.
Everyone who has used Whatsapp, Pinterest or any of the most common social networks, knows enough to operate with the eToro interface.
Let's talk about how to register and the different sections of eToro that you should know.
You will have to fill in some requested data when registering.
To complete your profile, you will have to answer some questions about your experience at investing.
But you don't need to worry: it is not an exam. It is only a way of finding out how much knowledge you have and what type of assets they can recommend. For instance, if you have never invested before, they will not suggest that you invest in futures.
Let's review the different functions of the interface.
With the “Set Price Alerts” tool, you'll be able to program an alert when a security 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 buy a security that is falling but you believe it will decrease even more.
In the “News Feed” tab is the most social part of eToro: where users are interacting all the time and sharing valuable information.
In “Discover” you will find the investment tabs: “Instruments”, “People” and “CopyPortfolios”. And we discussed previously in this guide the different financial instruments on eToro:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Commodities
- Forex trading
- Index funds
In “People”, you will find eToro users and their historical performance. This is where you can replicate with just one click the movements of your preferred investors.
You can find those users that you find more interesting. When you select an investor and indicate how much money 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 invest $ 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”.
The advantage of using CopyPortfolios instead of copying individual investors is that this way you will diversify the risk. There are all kinds of portfolios that you can recognize easily and are classified by sectors. So, in case you think a specific sector, such as e-commerce or drones, has good chances to succeed, you can find that specific portfolio and do your investment.