Why we reccomend eToro for buying Litecoin from Philippines?
Advantages:
- It uses strategies from experienced investors so you can replicate them
- You can short sell
- User-friendly and simple
- Leverage is allowed
- There are lots of possibilities for investments
Main site: www.etoro.com/litecoin
In case you are thinking about buying Litecoin from Philippines, eToro is certainly the best way to do it.
eToro is well-known for making “social trading” fashionable, a revolutionary way of investing in which investors can replicate the movements of other traders who have been generating income over time.
If you are still a newbie or haven't gained much experience in investments, eToro is very useful, because it automatizes your investment by emulating moves from those who have been doing it for years. Oppositely, if you are an expert in the field willing to share your abilities with other traders, eToro rewards you with money.
Another advantage is how manageable the interface is, which turns out perfect for new users that are just learning all about Litecoin.
Payment methods on eToro
Among the payment options accepted on eToro you will find: credit card, PayPal, bank transfer, Neteller, and Skrill. There is not much to say here: making a deposit with eToro is very easy. Just go to “Deposit funds”, type the amount and select your preferred method.
Of course, take into consideration that for security reasons, you should be the holder of the account or the credit card.
The lowest amount you can deposit is $ 200, and there is a maximum allowed for unverified accounts, so if you want to trade with higher amounts, you should verify your account previously.
The platform accepts deposits or transfers 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.
If you haven't heard about “leverage”, 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 leverage x2, your initial investment will be $ 200.
About leverage, Take Profit and Stop Loss
Let's say now that you are sure that the price of Litecoin is going to raise its price, thus you decide “going long”.
You are completely sure that Litecoin will rise, and you have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
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, Litecoin might be already so expensive that trading wouldn't be convenient anymore.
With leverage, you can get 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 platform. As in the image below, you will see the different options you have:
When trading with other kinds of assets you can use higher leverage. Why? Because leverage is regularly for short-term operations, and cryptocurrencies tend to be a medium or long-term investment. But let's deepen a bit more on how all this works.
If for your investment of $ 1,000, you 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 few days later, as you predicted, Litecoin 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 pay back the $ 1,000 of leverage and you will have made $ 400 (since the other $ 1,000 was your initial investment).
In conclusion, by investing $ 1000 you can make a profit of 40% (in the case you earn $ 400). That is pretty decent.
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 more money in less time; however, if the value of the asset decreases, you will also lose more in less time.
For instance: if instead of increasing by 20%, the price falls by 10%, you won't lose $ 10, but twice (the leverage) that figure, that would be $ 20. For that reason, the terms “Take Profit” and “Stop Loss” are so important when using 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 bought Litecoin at $ 100, you can ask eToro to close your operation when it reaches $ 120. That way, you make sure you won't change your mind and decide to wait a bit longer in case it keeps rising, which could make you lose it all.
Stop Loss is even more necessary, particularly if you trade with 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 it is better to place it lower than that.
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 their commissions are much lower than those of an actively managed fund.
Equities
The most well-known financial instruments are stocks or shares: these are fractions in which an enterprise can be shared. You can be a shareholder of a company and obtain a profit, but first, you should know where and how to invest your money.
We can classify stocks into two different kinds: those of companies that distribute their earnings among the shareholders and those that don't pay regularly. But that doesn't mean that those of the second type have less to offer. If a company does not pay every year but has a lot of potential, it can still represent a good inversion, since the capital gain you will get from the sale of the shares can be much greater than what you would earn through dividends.
If you invest in stocks that pay out dividends, you will receive them into your account on eToro. Therefore, you can collect that money or you can choose to reinvest it. However, compound interest can do magic, so our suggestion is that you reinvest in the company if you don't need the money immediately.
Consider that when investing in shares on eToro you can use leverage to “dope” your trades, but in that case, you will not receive interest as the trade is a contract for difference. For that reason, for long-term investments, it is not advisable to use leverage: you can end up losing money, because you will not receive dividends and also you will have to pay commissions while your position is open.
Exchange-Traded Funds
Have you heard about Exchange-traded funds? They are similar to index funds and are known for combining the advantages of stocks and mutual funds, because they can be exchanged at any moment in the market, but have much more investment possibilities and the fees are significantly lower.
Index Funds
This is the best option for people who can invest in the long term, mostly for beginners, because it is inexpensive, diversified, and the risk is lower.
Contrary to what it may seem, it is very hard to beat the market (yes, you have probably heard of investors who obtain huge profits).
But except for Warren Buffett and a couple more, not everything is as good as it sounds: if you hear of someone who has beaten the benchmark, it was probably for a limited time, or their fees are really high. In the end, indexing is better because commissions are minimal. Besides, take into account that past performances do not ensure a future one.
The good thing about index funds is that they perfectly solve both issues: their commissions are minor and in the long term they almost always beat active managers.
How does eToro work?
We mentioned before that eToro is very friendly and intuitive. Anyone can start using it without previous knowledge or long explanations.
Everyone who has previously used Twitter, Linkedin or any of the most common social networks, has enough skills to use eToro.
We will explain the registration steps and the different sections that you will see on the page.
First, you will have to fill in your personal data, like first name, last name, address….
Additionally, you will have to answer some questions about your experience at investing.
But don't worry: it is not an exam. They are only measures to know how much knowledge you have and what type of assets they can recommend. For example, if you have never invested before, they will not suggest that you invest in futures.
As soon as you are registered and have completed your profile, you will stop seeing the “incomplete profile” message.
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 in case you want to buy a security and you are waiting for it to decrease.
The section “News Feed” allows users to interact and share their experiences and knowledge.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. As we discussed before, the six types of instruments on eToro are:
- Cryptocurrencies
- ETFs
- Stocks
- Raw materials
- Forex
- Index funds
The concept “social trading” comes to life in the section “People”: that is where you can replicate the movements of the users you find most inspiring with just one click.
Through the search engine, you can find the users that you find more interesting: by risk level, types of instruments, average earnings… You just have to type 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 have $ 1000 and the investor puts 10% in an asset, eToro will invest also 10% of your funds (in this case $ 100) in that same asset.
Finally, you will see in this section the popular CopyPortfolios. There are three types: Top Trader, Market, and Partner.
The advantage of using CopyPortfolios instead of copying particular traders is that this way the risk will be more diversified. The portfolios are identified so you can recognize them easily: one about gaming, another about large drone companies, another about pharmacy … Do you suspect that a certain industry will prosper in the future? Then you will surely find a CopyPortfolio about it.
Investment strategies
There are many ways to trade cryptocurrencies: from buying and waiting to day trading (and benefit from price fluctuations).
My recommendation for those who are starting to invest is going for a middle point: placing a dynamic stop-loss (15-20% under the highest price) when you open your operation and wait for it to work its magic.
Therefore, if for example you buy a cryptocurrency at $ 10, it reaches $ 20 and then decreases to $ 12, your stop loss will take you out of the trade at $ 16-17 and you will have made a decent profit.
I know it's tempting to look to sell when the price is at its maximum, right before corrections, but unless you're psychic, that's impossible. The above strategy is much more down-to-earth and, well applied, it can work very well for you.
Eventually, you will be prepared for applying advanced investment strategies, like using leverage or going short.