eToro, our reccomended broker for purchasing NEO from New Zealand
Advantages:
- It takes techniques and moves from experienced traders so you can replicate them
- Admits short-trading
- It is really straightforward and user-friendly
- eToro allows leverage
- You can make investments in plenty of different goods
Main site: www.etoro.com/neo
In case you are considering investing in NEO from New Zealand, eToro is probably the best option.
“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 is very useful if you don't have much experience in trading. You can rest assured that you will be making a smart investment since the site duplicates those from subjects with a great deal of expertise. Oppositely, if you are an expert in the subject willing to share your techniques with other traders, eToro pays you for it.
Another thing to mention is how easy the interface is, which turns out perfect for new users that are just learning all about the trading world.
Are you familiar with the term “leverage”? Just in case, we'll define it briefly:
trading allows you to invest even more than you can have in a given time. For instance, if you enter with $ 100 and you choose to leverage x2, the amount of your investment will be $ 200.
Leverage, Take Profit and Stop Loss
Let's pretend that you are confident that NEO will raise its price, and you consider “going long, but you only have $ 1,000 available. However, it is possible to put more and earn higher profits.
Possibly, you could ask your bank for a loan, put something as a guarantee, wait for it to be accepted, wait for the money, and then acquire NEO… However, once you've managed doing all that, probably NEO would be already much higher, and investing wouldn't be a good idea at that moment.
With leverage, you can obtain that amount of money really easily. It's like a loan, but much easier and quicker, and with the benefit that you will be getting it directly from eToro. Before trading, you will how much leverage to use as in the image:
When trading in different markets you can use higher leverage. Why? Because cryptocurrencies regularly represent medium-long term investments. However, leverage is used mostly for short-term operations or day trading. But let's deepen a bit more on how all this works:
- If you decide to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 (remember that$ 1,000 was “borrowed” from eToro).
- Then, turns out that NEO does increases, as you thought, and now the price 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.
Does it sound too wonderful? The trick is that the risk of losing out also increases. If everything goes as you planned, you will earn profits in little time; but if the opposite happens, you will also lose more really quickly.
For instance: 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. Because of that, the terms “Take Profit” and “Stop Loss” are fundamental when operating with leverage.
Take Profit is the automatic sell order that is above the entry price: you buy NEO at $ 100 and you ask eToro to close your position as soon as the price goes up to $ 120. It is very helpful to avoid being blinded by enthusiasm: a 20% profit is usually very good, but once you see the price has risen, you might want to gain a bit more and decide to wait, but this could be a mistake. So, Take Profit helps you reduce risks when trading.
Stop Loss is even more important, particularly when trading with leverage, since a small loss could be fatal for your wallet. Always remember to establish a Stop Loss lower than that suggested by the broker.
What are ETFs?
Exchange-Traded Funds or ETFs 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 the rates are much lower than those of an actively managed fund.
About ETFs
Exchange-Traded Funds or ETFs are a type of passively managed fund, similar to index funds. They can be described as a merge between stocks and mutual funds. They are publicly traded, that means they can be bought and sold at any moment at market price. However, their main benefit is that they offer more alternatives compared to stocks, and have lower fees.
eToro Interface
We mentioned before that one of the best features of eToro is that the platform is very friendly and easy to use. You don't need to read a lot or have previous knowledge to start trading.
You won't have any issues with the interface if you have used any of the most common social networks, like Twitter or Linkedin.
We will explain, roughly, the registration process and the different sections that you will find.
You will have to fill in some information requested when registering.
Before you end up with the sign-up process, you will also have to answer some questions about your previous experience as an investor.
But don't feel intimidated, there is no right or wrong answer. The objective is to know more about you and be clear about which financial instruments they should suggest according to your knowledge and experience.
Let's see what the different sections of the platform are.
With the “Set Price Alerts” tool, you'll be able to program an alert when an asset is at a certain price. Just click the tab and you will be able to set it. This is helpful if you want to purchase 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.
In “Discover” you will find: “Instruments”, “People” and “CopyPortfolios”. As we mentioned in this guide, the financial instruments available on are:
- Cryptocurrencies
- ETFs
- Stocks
- Commodities
- Forex trading
- Index funds
In “People”, you can find eToro users and their historical performance. This is where “social trading” makes sense since you can copy the movements of your preferred investors.
In this section, you can search for those users that you find more interesting. When you choose an investor and indicate the amount you want to invest, eToro will automatically replicate their movements, proportionally. For example, 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 categories: “Top Trader”, “Market” and “Partner”.
Remember that in some cases, it might be better to copy from CopyPortfolios than to particular users, since the former offer more diversity. There are all kinds of portfolios that you can recognize easily and are classified by sectors. So, in case you suspect a specific sector, such as fashion or pharmacy, has good chances to succeed, you can look for that specific portfolio and do your investment.
Investment strategies
There are several cryptotrading methods: from purchasing and holding to day trading using volatility of the market in your favor.
In case you don't have much experience in investment, I suggest a middle point: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work on its own.
For example, if you purchase a cryptocurrency at $ 15, it increases to $ 25 and falls back to $17, the stop-loss will close your position at $ 21 or $ 22. Thus, you will obtain a fine profit.
It may sound way better to sell when the cost is at its highest, right before corrections, but that is simply not possible. The above method is much more realistic and it can give great results.
Later on, you will be able to apply more complex strategies, like short-selling or using leverage.