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eToro is an excellent brokerage for those who are in Philippines and want to buy Ethereum
Pros:
- There are uncountable investment options
- Leverage is allowed
- It's straightforward and intuitive
- It offers techniques and moves from experienced investors so you can emulate them
- Allows you to short sell
Go to the official website in English: www.etoro.com/ethereum
You should definitely consider eToro if you are thinking about investing in Ethereum from Philippines.
This broker is well-known for making “social trading” fashionable, an innovative form of investing in which traders can repeat the strategies of other investors who have been generating income for years.
If you are a beginner or do not have much experience in investments, eToro is very useful, because it automatizes your investment by imitating moves from other experienced people with a very long profit history. Additionally, in case you do have experience in investment, eToro pays you for sharing it.
Besides, the platform is so uncomplicated, ideal for a user who wants to begin in the Ethereum world, without ending up overwhelmed with tons of numbers and information.
If you still don't know what “leverage” is, we'll put it short: it is the ability to invest a higher amount than you actually have. That way, if you start with $ 100 and you leverage x2, your initial investment will be $ 200.
Why using leverage and how to do it
Suppose now that you are sure that Ethereum is going to appreciate, thus you choose to “go long”.
You are certain that Ethereum will rise, and you have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
Possibly, you could ask your bank for a credit, wait for it to be accepted and receiving the money, and then acquire Ethereum… However, once you've managed doing all that, probably Ethereum would be already much higher (if your prediction got confirmed), and it wouldn't be a good idea to invest.
With leverage, you can obtain that amount of money just by moving a finger. It's like a loan, but much easier and quicker, and with the advantage that you will be getting it directly from eToro which will let you invest much more than you have on the wallet. It is very simple, before investing you will see the different options as in the screenshot:
When trading in different markets you can use higher leverage. This is because cryptocurrencies are a value that is invested in the medium-long term. However, leverage is used mainly for short-term operations or day trading. But let's explain how leverage works in the practice.
You begin with $ 1,000 and pick leverage x2, which means you would have $ 2,000 to invest, since eToro would put the other $ 1,000 (which is double the initial amount).
A couple of days later, as you thought, Ethereum raises its price 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.
First of all, the 1k $ of the leverage will be deducted. You have $ 1,400 left, of which $ 1000 was yours initially, so the net profit is $ 400.
As you can see, with $ 1000 you get $ 400, in other words, 40% more. That's not bad at all, right?
Still wondering where the catch is? The thing is, you can also lose money. If everything goes as planned, you will earn profits in little time; but if the opposite occurs, you will also lose more really quickly.
Let's suppose that the asset didn't increase by 20%, but it decreased 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 so important when using leverage.
Take Profit is an automatic order of selling once the asset achieves a certain price: you purchase Ethereum at $ 100 and you ask eToro to close your operation as soon as the price goes up to $ 120. It is very useful to avoid being blinded by greed: 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, especially if you trade with leverage, since a reduced loss with leverage can be fatal for your wallet. Take into account that eToro will recommend a limit for Stop Loss, but it is better to place it lower than that.
How are CFDs and futures different?
How are CFDs and Futures 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 expirationdate, while CFDs don’t have expiration date
- Markets available for trading Futures include fewer options to trade. With CFDs you can trade in several different markets.
- Minimum investment amount or “trade size” Costs for Futures are higher than costs for CFDs.
- Leverage With Futures, you can’t leverage; while with CFDs leverage is always available.
What are Contracts for Difference?
You probably have seen the initials CFD repeatedly if you entered eToro before. We will explain its meaning now, but you should know first that cryptocurrency operations on eToro are only CFDs when you go short or leverage above x2 (although the platform does not even allow this).
If you are thinking about day trading cryptocurrency and other more advanced operations, later on we will also refer to concepts like going short and leverage.
eToro allows you not only to bet “in the black”, but with CFDs you can also bet “in negative”. In a hypothetical case: you have the conviction that the Ethereum will go down, so you obviously think “if it is going to depreciate, I'll just wait until it does”. However, if it actually falls, you can make some profits out of that.
You can do that by “going short”. More or less, it functions like this:
- You ask someone for a loan of, let's say, 100 units of Ethereum, which cost $ 5,000 at the moment (these numbers aren't real)
- You sell the 100 units and earn $ 5,000
- As you supposed, it devaluates, and the unit of Ethereum goes from $ 50 to $ 30
- You get the 100 units again, but at their current price, $ 3,000
- You pay back the 100 units
- The difference is yours, so, you will have made $ 2000
Take into account that it sounds much more tricky than it really is: we can summarize this whole operation by saying that by trading in Ethereum you can also earn money if you predict it will go down.
eToro Interface
We mentioned before that eToro is very easy to manage. Anyone can start investing without previous knowledge or long explanations.
If you have used any of the most popular social networks today, such as Twitter or Facebook, you can perfectly use eToro's interface.
We will explain, roughly, the registration process and the different tabs that you will find on the page.
When you register, you will have to fill in your personal data.
Also, you will have to answer some questions about your experience at investing.
But don't feel intimidated. They only intend to find out about your previous experience and knowledge to know which instruments to recommend for you.
Let's review the different tabs 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 ideal in case you want to buy a security that is falling but you believe it will decrease more to a certain point.
“News Feed” is for social purposes. This is the section where users can share opinions and learn from each other.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. As we discussed previously, the types of financial assets available on are:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Raw materials
- Forex trading
- Index funds
In “People” are all the profiles and historical performances of other users, and you can replicate their movements with just one click. This is where the “social trading” term is best applied.
You can search for those users that you find more interesting: by average earnings, types of instruments or risk level, for instance. Just indicate the amount of your investment and eToro will be in charge of replicating the movements made by the selected investor, in proportion. This means that if you have $ 1000 and the trader puts 10% in an asset, the platform will invest also 10% of your funds (that is, $ 100) in that same asset.
Also, here you will see CopyPortfolios classified into three categories, Top Trader, Market, and Partner.
The benefit of using CopyPortfolios instead of copying individuals is that this way the risk will be more diversified. There are all kinds of portfolios that you can recognize easily and are classified by sectors. So, if you think a specific sector, like biotechnology or pharmacy, has a good chance of prospering, you can look for that specific portfolio and invest.
Trading strategies
You can trade cryptocurrencies in many different ways: for instance, you can buy and hold, or you can day trade (taking advantage of price fluctuations).
My suggestion for those who are starting to invest is going for a middle point: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
For instance, if you purchase a cryptocurrency when its price is $ 15, then it rises up to $ 25 and decreases again to $17, the stop-loss will allow your operation to be closed, perhaps at $ 21 or $ 22. Hence, you will get a pretty good income.
It might sound way better to sell when the cost is at its highest, but unless you're a fortuneteller, that's impossible. The mentioned strategy is much more down-to-earth and, well applied, it can work very well for you.
And when you have gained more experience, you will be ready for more advanced investment strategies, like using leverage or going short.
Practice account
For those who still don't have much experience in investing, using a demo account can be useful. Just assure yourself that the virtual mode is set in the top left corner of the page and you can start trading with fictional funds.
This can be a great way of practicing before trading with real money. You will have an amount of $ 100.000 (“fake” or virtual, of course) to begin with, and you will be able to operate with all the different assets available on eToro, not just with Ethereum.
Don't worry, since if you lose all your virtual balance, you can contact support so they can add back the $ 100,000 to your portfolio and you can make a second attempt.
Nevertheless, keep in mind that you need to be prudent for trading, and demo account trading can have the opposite effect. It is not the same to risk your own money than to operate with virtual funds that you don't mind losing.
And of course, if you want to invest in the medium or long-term, with earnings almost guaranteed just by duplicating a strategy, it doesn't make sense that you waste years investing with a demo account. On the other hand, you may be interested in the virtual mode if you want to practice with short and medium-term operations.