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eToro, recommended broker for those in New Zealand who want to obtain IOTA
Why do we recommend it?
- Allows you to make investments in tons of other products
- eToro allows leverage
- Very intuitive and simple
- Allows to imitate investment tactics
- Allows “shorting” or short-selling
Official main site: www.etoro.com/iota
You should certainly consider eToro if you are interested in acquiring IOTA from New Zealand.
“Social trading”, a relatively new form of investing by replicating techniques and moves from other experienced investors, has become popular thanks to eToro.
If you are still a newbie or do not have much experience in investments, eToro is great for you, since it puts your investment on autopilot by repeating strategies from those who have been doing it for years and making profits. 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 start learning about IOTA and trading, without getting crazy with tons of diagrams and numbers.
eToro Interface
We said previously that eToro is very easy to manage. Anyone can start investing without having to read endless explanations.
You won't have any issues with the interface if you have used any other social network, 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 register, you will have to fill in all the information that eToro asks for: first and last name, address…
Additionally, you will see that they ask you some questions about your experience at investing.
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.
Let's see what the different sections of the site are.
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 if you want to buy an asset and you are waiting for its price to fall.
The section “News Feed” allows users to interact and share their experiences and knowledge.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. And we discussed previously in this guide the different financial instruments that are available on eToro:
- Cryptocurrencies
- ETFs
- Shares
- Raw materials
- Forex trading
- Index funds
In “People” are all the profiles and historical performances of other investors, and you can replicate their strategies with just one click. This is where the “social trading” term is best applied.
Through the search engine, you can find the investors 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 itself will be in charge of replicating the movements of the selected investor, in proportion. “In proportion” means that if you have $ 1000 and the investor puts 10% of his or her balance in an asset, the platform will invest also 10% of your money (in this case $ 100) in that same asset.
Also, here you will see CopyPortfolios classified into: Top Trader, Market, and Partner.
Sometimes you might prefer copying to CopyPortfolios than to individuals, since you avoid putting all your eggs in one basket. There are all kinds of portfolios that you can find easily and are classified by sectors. Thus, if you think a specific sector, such as gaming or pharmacy, will prosper in the future, you can find that specific portfolio and invest in it.
Can you trust eToro?
eToro has been tested by independent organizations once and again to validate its reliability in the handling of data from previous users and past performances. Every time, it has been confirmed that eToro is very meticulous with the information.
Legally, eToro fulfills all the strict regulations requested by the European Union, legislation in which it is found. Its main offices are in Cyprus, and it is certified by the Cyprus Securities Market Commission or CySEC, which can cover up to € 20,000 of the debts that its clients may have with creditors (those from New Zealand included).
eToro responds to the European Financial Instruments Market or MiFID, and to the Financial Conduct Authority or FCA in the USA. You should also know that it has a trajectory of fifteen years, with more than 20 million users around the globe. So, yes, it is a safe broker.
No less important is their excellent customer service. You can use the ticketing system, an online chat, and they also have a phone number available for assistance.
In case you still don't know what “leverage” is, we'll describe it briefly: it is the possibility to invest a higher amount than you actually have. For example, you can enter with $ 100, but if you use x2 leverage, you will be investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Assuming that, for example, you are sure that IOTA is going up, and that you have $ 1,000 for “going long”, you should know that you have the option of investing more and making more money.
There's the possibility of requesting a loan at your bank, but you must know that all the process takes time, and by the moment you receive the money, IOTA might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Leverage is just like a loan, but it is only a few clicks away! eToro allows you to operate with much more money than what you have on the platform's wallet. Before trading, you will find the leverage options as in the image below:
When operating in different markets you can use even more leverage. The reason: cryptocurrencies are usually medium-long term investments. However, leverage is used especially for short-term operations or day trading. But let's see how leverage works.
You enter with $ 1,000 and pick leverage x2, then you would really invest $ 2,000, since eToro would put the other $ 1,000.
A couple of days pass and turns out that you were right: IOTA has risen 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 back.
Obviously, the 1k $ from leverage will be deducted, and you'll have $ 1,400 left, of which $ 1000 is the money you invested yourself, so the net profit is $ 400.
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment.
Does it sound too wonderful? The thing is, you can also lose. If everything goes according to plan and the price goes up, you will earn profits in little time; but in the opposite scenario, you will also lose more really fast.
Supposing that the price didn't increase by 20%, but it went down also by 20%, you won't lose $ 20 but $ 40, because of the leverage. For that reason, the concepts of Take Profit and Stop Loss are crucial when trading with leverage.
Take Profit is used as a form of reducing risks when trading. When you enter, you can set a profit limit and ask that your position is automatically closed when the asset reaches a price.
If you purchased IOTA at $ 100, you program eToro to close when it reaches $ 120. That way, you make sure you won't change your mind and decide to keep waiting in case it keeps going up, which could make you lose it all.
Stop Loss is even more necessary, particularly if you use leverage, because a reduced loss with leverage can have a significant impact. Take into account that eToro will recommend a limit for Stop Loss, but you should place it lower than the platform suggests.
What is an ETF?
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.
Forex trading
Foreign exchange trading or Forex consists, as the name says, in the exchange of currencies. It is the conversion of one currency to another to make a profit through the operation.
If you decide to trade EUR and USD, for example, you speculate how many dollars it will take to buy a euro, expecting that the first currency (the euro) will revalue compared to the second (the dollar), to make a profit by selling it. Let's say you entered when the price of one euro is 1.10 USD and you close when the price has gone up to 1.15: that difference is yours once you make the operation.
You may be thinking by now that trading with currencies requires high investments, and you are not wrong, because increases in prices are never that dramatic, and if you use a lot of leverage to counter that, you will take a considerable risk. Our advice for those starting in the world of trading is to choose another market to begin with, since Forex is risky and complex.
The most usual currency pairs are available on eToro. Nevertheless, remember that in Forex trading sales are always made through CFDs, therefore the underlying asset won't be yours.
Equities
Stocks or shares are the most common securities. Some publicly traded 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 profits among their shareholders; the latter, on the contrary, do not. However, that doesn't mean that the latter have less to offer. If a company does not pay every year but has a lot of potential, it is also worth investing in it, since the capital gain you will get from the sale of the shares can be much greater than what you would earn through dividends.
When trading on eToro, if you choose a company that pay out dividends, these will be deposited into your account, and you can withdraw your money or reinvest it. We suggest, if you don't need the money right away, that you take advantage of compound interest and reinvest it in the company.
Remember that on eToro you can “dope” your trades with leverage, but in that case, you will not receive dividends as the trade is a CFD. For long-term investments, it is better not to use leverage: not just because you lose dividends, but you will also have to pay commissions while you keep the position open, and these can end up eating your gains.
Trading strategies
There are lots of cryptotrading methods: from buying and holding to day trading (taking advantage of price fluctuations).
If you are just starting in the world of trading, I suggest something in between: placing a dynamic stop-loss (15-20% under the highest price) when you open your operation and wait for it to work.
For instance, if you purchase a cryptocurrency when it is worth $ 15, then it increases to $ 25 and decreases back to $17, the stop-loss will allow your operation to be closed, perhaps at $ 21 or $ 22. Thus, you will get a pretty good income.
Perhaps you are wondering: why not selling back when the price is at its peak? But unless you are a psychic, that is just not possible. The mentioned strategy can work perfectly and give good results.
Later on, you will be able to apply more complex strategies, like using leverage or going short to profit from bear markets.
How does a demo account work?
In case you are beginning as an investor, the possibility to operate in “demo” mode may be useful. You just have to set the “virtual” option” in the upper left corner and you will be able to trade with “imaginary” funds.
This option is ideal for those who are new to this world and want to give it a few tries before trading with real money. With your virtual account, you will begin with a $ 100,000 balance (which of course, is fake) to do your operations, not only with IOTA, but you can also create a diverse portfolio with all the different instrument that are available on eToro.
The first attempt is not usually that good. But you can ask eToro to replenish the virtual funds to your account.
Nevertheless, keep in mind that you need to be prudent for trading, and using a practice account can have an adverse effect. It is not the same to risk your own money than to do operations with virtual funds that you don't mind losing.
As you may suppose, 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. But it can be ideal if you want to practice short and medium-term investment.