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eToro, a great online broker for those who are in New Zealand and want to acquire Monero
Why do we recommend it?
- It's very user-friendly
- It uses strategies from experienced traders so you can emulate them
- Allows “shorting” or short-selling
- Leverage is allowed
- Allows you to invest in plenty of different goods
Official site in English: www.etoro.com/monero
In case you are interested in buying Monero from New Zealand, eToro is probably the best option.
“Social trading”, an innovative investment method that consists in replicating techniques and moves from other experienced investors, has become trendy thanks to eToro.
If you are a novice user or do not have much experience in investments, eToro is great for you, because it puts your investment on automatic by replicating moves from those who have been doing it for years. And for those skilled investors willing to share their techniques, eToro pays for it.
Besides, this platform is completely intuitive, ideal for a user who wants to begin in the Monero world, without stressing over tons of diagrams and numbers.
Is eToro trustworthy for purchasing Monero?
Many independent tests have been applied to eToro to certify its fidelity in displaying previous performance statistics. And it has been confirmed every time that eToro is meticulous with the data.
The main headquarters 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 New Zealand. Furthermore, eToro follows all the strict policies of the European Union.
It is also supported by the European Financial Instruments Market or MiFID, and in the USA it is under the control of the Financial Conduct Authority (FCA). In addition to all these regulations, you should know that eToro has more than 20 million users around the world, and it has been operating for fifteen years. To sum up, we can be certain that our money is in good hands.
Their excellent customer service is also worth mentioning. They have a phone number for assistance, a ticket system, and a live chat.
Futures Vs CFD
How are CFDs and Futures different?
- Counterparties
- Futures: operations are made with someone else, another trader.
- CFDs: you don't “play” against another individual, the counterparty is the brokerage, in this case, eToro.
- Expiration:
- Futures: they have an expiry date. At that moment, the contract is closed even if you are in losses.
- CFDs: on the contrary, there is no expiration date. Thus, you can wait for your position to rise before exiting.
- Trading options:
- Futures: there are fewer options for investment
- CFDs: they include lots of different assets, commodities and currencies
- Minimum investment amount or “trade size”:
- Futures: you have to invest much more
- CFDs: you can get in with a small deposit
- Costs and commissions:
- Futures: as you need to pay more in the first place, costs are lower
- CFDs: rates are higher
- Leverage:
- Futures: it isn't possible to leverage
- CFDs: completely available
In case you are not familiar with the term “leverage”, we'll describe it briefly: it is, simply, the ability to invest a higher amount than you actually have. For example, if you start with $ 100 and you leverage x2, your initial investment will be $ 200.
Everything you need to know about leverage
Let's pretend that you are confident that Monero will rise, and you want to “go long”. You have $ 1,000, but you actually can invest more and make more money.
You could go to your bank, ask for a credit, wait for it to be accepted and receiving the money, send the money to eToro, confirm that it arrived, and then buy Monero… But maybe once you have made all that, your prediction could've been confirmed a long time ago, and Monero would be already so high that it is not worth trading.
Thanks to leverage, you can get that amount of money just by clicking your mouse. It's just like borrowing money, but much better: you will get it from eToro, which allows you to invest a lot more than you have on the platform. As in the image below, you will see the different options you have:
With other assets, you can use more leverage. This is because cryptocurrencies regularly represent medium-long term investments. However, leverage is used primarily for day trading or short-term operations. Let's talk a bit more about how leverage works.
If you have the $ 1,000 and use leverage x2, your investment is 2 * $ 1,000, that is to say, $ 2,000. eToro would be “loaning” you the extra $ 1,000.
A couple of days later, as you predicted, Monero increases by 20% and your money has appreciated reaching $ 2,400. But you don't want to take too much risk, so it's time to sell back.
First of all, the 1k $ of the leverage will be deducted. You have $ 1,400 left, of which $ 1000 is the money you put in yourself, so the net profit is $ 400.
With $ 1000 you get $ 400, in other words, 40% more. That's not bad at all, right?
Does it sound too wonderful? The thing is, you can also lose money. If everything goes according to plan and the price goes up, you will earn more money in less time; but if the value of the asset goes down, you will also lose more in less time.
For example: if instead of increasing by 20%, the price falls by 10%, you do not lose $ 10, but twice (the leverage) that figure, that would be $ 20. For that reason, when using leverage it is fundamental to know about Take Profit and Stop Loss.
Take Profit is a trading limit you can set for your assets: you program your operation and ask the platform to sell them once they get to a point above the entry price. For instance, you can buy Monero at $ 100 and request that your position is closed automatically when it goes up to $ 120. It is very useful to avoid being blinded by enthusiasm: we would all accept a 20% profit when investing, but when you reach that 20% it is easy to ask yourself “what if this keeps increasing and it is a mistake to exit?”. It's like you made sure now of not acting recklessly in the future.
On the other hand, when using leverage you also have to use Stop Loss, because a small decrease in the price of an asset can have a big impact on your wallet. Consider that eToro will recommend a limit for Stop Loss, but it is better to place it lower than that.
ETFs
ETFs or Exchange-Traded Funds are a kind of passively managed fund, similar to index funds. They can be described as a merge between stocks and mutual funds, including the best of both. 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.
Forex trading
Forex or currency trading is the exchange between two currencies.
If you decide to trade euros and dollars, for instance, you acquire euros and pay with dollars, with the expectation that the euro will rise compared to the dollar. Therefore, if you bought each euro for 1.15 USD and you sell them back when their price is 1.20 USD, you'll be keeping that difference.
You may be thinking that operating with currencies requires investing considerable amounts, and that is correct, because variations are usually minimal, and if you use a lot of leverage to counter that, you will take a considerable risk. In case you are new to the world of trading, we don't recommend beginning with Forex, because it is very risky and intricate.
Most currencies are available on eToro but keep in mind that this market functions with CFDs, which means you will not own the underlying asset.
ETFs
What do you know about Exchange-traded funds? They are passively managed funds, known for merging the benefits of stocks and mutual funds, because they can be traded regularly at market price, but have much more investment possibilities and considerably lower rates.
What are Contracts for Difference?
You probably have found the term CFD now and then if you already accessed eToro. We will come back to it, but first, you should know that CFDs on eToro are only possible if you go short or choose leverage above x2 (although this is not even available on eToro).
For the record, and in case you want to know about day trading cryptocurrency and other more advanced operations, next you will also find out about concepts such as leverage and “going short”.
The advantage of eToro is that it allows you to bet both “in the black” and “in red”. Let's say that you believe that the Monero will go down, so probably you think that the best thing to do is refrain from getting in until it does. Nevertheless, if it actually goes down, you can earn some money out of that.
You can do this through what is known known as “going short” which consists in something like this:
- You ask for a loan of, let's say, 100 units of Monero, which cost $ 5,000 at the moment (these numbers aren't real)
- You sell the 100 units and earn $ 5,000
- As you presumed, it depreciates, and the unit of Monero now costs $ 30 instead of $ 50
- You get the 100 units again, but at $ 3,000
- You pay back the 100 units to whoever 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 Monero you can also make money if you foretell the downs.
How to use eToro
We said before that eToro is very friendly and intuitive. 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 Instagram or Facebook.
Let's talk about how to register and the different sections of eToro that you should know.
When you open your account, you will have to fill in all the information that eToro asks for: first and last name, address…
During the sign-up process, you will also find some questions about your previous experience as an investor.
But don't feel like you are taking an exam. The objective is to know more about you and be clear about which financial instruments they should recommend according to your knowledge and experience.
Let's review the different tabs of the interface.
With the “Set Price Alerts” tool, you'll be able to program an alarm when an asset is at a certain price. This is helpful in case you want to purchase a security that is falling but you believe it will decrease more to a certain point.
In the “News Feed” tab is the most social part of eToro: where users are interacting all the time and sharing opinions, tips, and other valuable information.
In “Discover” you will find the tabs: “Instruments”, “People” and “CopyPortfolios”. As we mentioned in this guide, the six types of instruments on eToro are:
- Cryptocurrencies
- ETFs
- Stocks
- Raw materials
- Forex trading
- Index funds
In “People” are all the profiles and historical performances of other users, and you can replicate their strategies with just one click. This is where the “social trading” concept is best applied.
You can search for those investors that best suit your interests: by average earnings, market or risk level, for example. Just indicate the amount of your investment and eToro will be in charge of replicating the movements of the selected investor, in proportion. This means that if you put $ 1000 and the investor puts 10% of their capital in Amazon, eToro will also invest $ 100 of your balance in that asset.
Also, here you will see CopyPortfolios classified into: Top Trader, Market, and Partner.
In some cases, it might be better to copy from CopyPortfolios than to particular investors, since you avoid putting all your eggs in one basket. Besides, the portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … You think that a certain sector will prosper in the future? Then look, because surely there is a CopyPortfolio about it.
Virtual account: How does it work?
For those who still don't have much experience in investing, using a demo account can be useful. Just make sure the virtual mode is set and you can start practicing with an “imaginary” amount.
A virtual account can be a good way of practicing before starting to operate with real funds. When you open your demo account, you will begin with a virtual amount of $ 100.000, to trade with a variety of assets available on eToro, besides Monero.
The first attempt is not usually that good. But don't worry, because you can ask eToro to replenish the virtual funds to your portfolio.
However, keep in mind that you need to be prudent for trading, and using a demo account can have an adverse effect. It is not the same to risk your real savings than to operate with virtual funds that you don't mind losing.
As you may suppose, the demo mode is kind of absurd if you intend to trade in the medium or long-term (with almost guaranteed returns only by replicating an index), since you would be wasting years to see the results. Demo accounts may be ideal for trying out short or medium-term operations.