Contents
eToro, an advisable broking platform for those in New Zealand who want to buy Zcash
Advantages:
- Allows to imitate other investment moves
- You can short sell
- User-friendly and straightforward
- eToro allows leverage
- There are tons of investment options
Homepage: www.etoro.com/zcash
In case you are considering it, eToro is the best way to buy Zcash from New Zealand.
“Social trading”, a relatively new investment method that consists in replicating techniques and strategies from other experienced investors, has become popular because of eToro.
eToro has solutions for you, especially if you are still a novice user in trading. You can rest assured that you are doing a smart investment move when replicating those from subjects with a long profit record. And for those skilled investors willing to share their techniques, eToro rewards your knowledge with money.
Besides, the interface of the site is so uncomplicated, great for users who want to start in the Zcash world, without ending up overwhelmed with tons of numbers and information.
Payment methods on eToro
Within the payment methods accepted on eToro 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 a number and select a payment method from the previous ones.
Consider that for security reasons, you must be the holder of the account or the credit card.
The minimum amount allowed is $ 200, and there is a maximum limit for unverified accounts. So, if your intention is to deposit higher amounts, you should contact Support to verify your account first.
eToro allows deposits in any currency, but you will have to pay a fee for the conversion to USD. So it is better to use USD from the beginning.
What's the difference between CFDs and futures?
How are Futures and CFDs different?
- Which are the counterparties? In the case of Futures, the counterparty is another trader. In CDFs, it’s the broker (eToro)
- When do they expire? Futures have a determined expiration, while CFDs don’t expire
- Variety of options for trading Futures include fewer options to trade. With CFDs you can trade in several different markets.
- Minimum investment amount or “trade size” Being higher numbers, Futures require, proportionally, lower costs. Costs for CFDs are a bit higher.
- Leverage With Futures, you can’t leverage; while with CFDs leverage is always available.
By the way, do you know what leverage is? We'll put it simply:
trading lets you invest higher figures than you can have in a given time. For instance, if you have $ 100 and you choose to leverage x2, the amount of your investment will be $ 200.
Why using leverage and how to do it
Assuming that, for example, you are positive that Zcash is going up, and that you have $ 1,000 for “going long”, you must know that you have the option of investing more and making more money.
There's the possibility of asking for a loan, but it is a process that takes time, and by the moment you receive the money, Zcash might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Leverage is like a loan, and you will only have to click a few times! You will be able to invest (and earn) much higher amounts than what you actually have on the platform's wallet. As in the image below, you will see the different options you have:
Within other markets, you can use more leverage. The reason is that cryptocurrencies are usually medium-long term investments. However, leverage is used especially for short-term operations or day trading. Let's talk a bit more about how leverage works.
You begin with $ 1,000 and decide to use 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: Zcash 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.
You will have to give back the $ 1,000 of leverage and you will have made $ 400 (since the other $ 1,000 was your initial investment).
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment.
It may sound too good to be true. The thing is, it can also play against you. If everything goes according to plan and the price goes up, you will earn profits in little time; but if the opposite happens, you will also lose more really fast.
Supposing that the price didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but double, $ 40. For that reason, when using leverage it is fundamental to take into account Take Profit and Stop Loss.
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 Zcash at $ 100, you request eToro to close when it reaches $ 120. That way, you make sure you won't be blinded by greed and decide to keep waiting in case it keeps rising, which could be a mistake since the price could go down again.
Stop Loss is even more necessary, particularly when trading with leverage, since a small loss could be tragic for your wallet. Consider that eToro will recommend a limit for Stop Loss, but it is better to set it lower than the platform suggests.
About ETFs
ETFs or Exchange-Traded Funds are a kind of passively managed fund, similar to index funds. We can say that ETFs are somewhere between stocks and funds: they are traded in the market like stocks, during the day. However, their advantage is that they offer more alternatives compared to stocks, and have lower fees.
Stocks
Now let's talk about the most well-known financial instruments: stocks. Stocks are the parts in which an enterprise can be divided. You may get dividends through third-party companies just by investing money in them. But, obviously, you have to know where to put it.
We can categorize stocks into two different kinds: those that pay dividends and those that do not. Those that pay, at the end of the fiscal year, distribute earnings among the stockholders; the latter, on the contrary, do not. But 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 selling the shares in the future could pay a lot more.
If you invest in equities that pay out dividends, you will receive them into your account on eToro. Then, you can collect that money or you can choose to reinvest it. However, you can benefit a lot from compound interest, so our suggestion is that you reinvest.
If you invest in 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 get dividends. Also, as equities tend to be long-term investments, you will have to pay fees.
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, including the best of both. They can be traded like regular stocks, but include a wide diversity of assets and have lower fees.
About Index Funds
If a long-term investment sounds good to you, and you won't need to take back your money in five years or maybe a decade, index funds can be the best alternative. This type of investment is also great for beginners since it is safer. Besides, the variety is wider.
Perhaps you have a different idea, but it is very hard to beat the market (yes, you have probably heard of managers who obtain huge returns).
But putting aside some remarkable cases, not everything is as good as it sounds: if you hear of someone who has beaten the market, it was probably for a short time, or their charges are really high. In the end, indexing is better because commissions are minimal. Besides, take into account that if something happened in the past it doesn't mean necessarily that it will happen again.
The good thing about index funds is that they perfectly solve these two issues: their rates are insignificant and they beat active managers almost all the time, although in the long term.
Commodities or raw materials
Most people invest in raw materials due to their stability. While other assets present higher fluctuation, raw materials prices vary less and offer security against inflation or market volatility. Nevertheless, prices are subject to supply and demand, so if an economic situation produces greater demand for a certain good, its cost will also go up.
Note that, unlike stocks, raw materials don't pay dividends. Thus, the only potential further income would come from a sale of the asset.
There are two main types of commodities: hard raw materials and soft raw materials. The former are precious metals (such as gold, silver, copper, and platinum), industrial metals (for instance, aluminum, iron, or zinc), and oil; while the latter are agricultural products as cocoa, soybeans, rice, or sugar.
How do Contracts for Difference Work?
If you have entered eToro before, you probably realized that the acronym CFD appears repeatedly. We will come back to it, but first, you should know that CFDs on eToro are only possible if you go short.
For your information, and in case you want to know about day trading cryptocurrency or other trading operations, later on you will also find information about terms like short-selling and leverage.
Even if you don't have a positive balance, you can still operate on eToro with CFDs. For instance, you are sure that the Zcash will go down, so perhaps you consider that the best thing to do is wait until it does and then go in. However, if you really think that it's going down, why not take advantage of that?
You can do that by “going short”. Basically, this is how it works:
- You obtain from a loan 100 units of Zcash, with a total value of $ 5,000 (these numbers are fictional)
- You make $ 5,000 by selling the 100 units
- The Zcash devaluates from $ 50 to $ 30
- Again, you purchase the 100 units, but at the current price, $ 3,000
- Now you return the 100 units
- The difference is yours, so, you will have made $ 2000
It is far more simple than it may seem. Just remember that by trading in Zcash on eToro, you can earn money when you anticipate the price will fall.
How does eToro work?
We mentioned before 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.
We will explain the registration steps and the different tabs that you will see.
When you open your account, you will have to enter your personal data.
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 review the different tabs of the platform.
“Set Price Alerts” allows you to put alarms on the price of certain assets. You only need to click on the three points at the end of the line and you will be able to program a price alarm. It is a very useful tool for when you want to purchase an asset which price is decreasing, but perhaps you think that it has not finished falling yet.
In the “News Feed” tab is the most social part of eToro: where users are interacting all the time and sharing valuable information.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. And we discussed previously in this guide the kinds of assets on eToro:
- Cryptocurrencies
- ETFs
- Stocks
- Commodities
- Forex trading
- Index funds
The term “social trading” comes to life in the section “People”: there, you can copy the trading strategies of any user you choose. You'll be able to see all their profiles and historical performances.
You can search for those investors that best suit your interests: by risk level, types of instruments, average earnings… Just indicate the amount you want to invest and eToro will replicate the movements of the investor you selected, in proportion. “In proportion” means that if you put $ 1000 and the investor puts 10% of their capital in Amazon, eToro will invest $ 100 of your money in that asset.
Also, here you will see CopyPortfolios classified into: Top Trader, Market, and Partner.
The advantage of copying to CopyPortfolios instead of particular investors is that this way you will diversify the risk. There are all kinds of portfolios that you can identify easily and are divided by sectors. So, if you suspect a specific industry, such as e-commerce or oil, has a good chance of prospering, you should look for that specific portfolio.
Investment strategies
When trading cryptocurrencies, there are different possible methods or strategies, such as day trading or buying and holding, for naming just a couple.
In case you don't have much experience in investment, I recommend something in the middle: when you open your Zcash position, place a stop-loss 15-20% below the maximum price, and forget about the operation.
Therefore, if for example you acquire a cryptocurrency at $ 10, it rises to $ 20, and after that it decreases to $ 12, your stop loss will take you out of the trade at $ 16-17 and you will obtain a pretty good profit.
It may sound more appealing to sell when the price is at its maximum, but that is simply not possible. The above strategy is much more realistic and, well applied, it can work very well for you.
And when you have gained more experience, you will be ready for more advanced trading strategies, like going short to profit from bear markets or using leverage.
How does a virtual account work?
Are you taking your first steps in trading? Using a demo account can be very helpful. Just make sure the virtual mode is set in the top left corner of the page and you can start practicing with a “fictional” balance.
A virtual account can be a good way of gaining confidence before starting to operate with real funds. When you create your demo account, you will begin with a virtual balance of $ 100.000, to trade with a variety of financial instruments available on the platform, besides Zcash.
The first attempt is not usually that good. But you can ask eToro to replenish the virtual funds to your account.
But remember that investing is mainly about being cautious, and using a demo account can have the reverse effect. It is completely different to risk your own money than to do operations with virtual funds which loss does not suppose any drama. Also, using fake money can prevent you from learning to control your emotions, as a true investor should.
Evidently, if you want to invest in the medium or long-term, with earnings almost assured only by replicating a strategy, it is absurd that you waste years investing in virtual mode. On the other hand, the virtual mode can be helpful to practice with short and medium-term operations.