Contents
Why we reccomend eToro for investing in Stellar in Thailand?
Why do we recommend it?
- You can learn from other investment moves
- Allows you to go short
- It's uncomplicated and accessible
- eToro offers leverage
- It is possible to make investments in plenty of other products
Main site: www.etoro.com/stellar
You should absolutely consider eToro if you are interested in purchasing Stellar from Thailand.
eToro is well-known for making “social trading” fashionable, an innovative form of investing in which users can imitate the techniques of other traders who have been generating income for a long time.
If you are a beginner or do not have much experience in investments, eToro is great for you. You can rest assured that you are making a smart investment since the site duplicates those from subjects with a long profit record. On the contrary, if you are an expert in the subject willing to share your methods with other traders, eToro pays up for it.
It is also very convenient how accessible is this platform, ideal for new traders who are starting with Stellar.
What are Contracts for Difference?
It is possible that you have seen the term CFD repeatedly if you entered eToro before. Before we explain this further, we must say that cryptocurrency operations on eToro are only CFDs if you are short-selling or leverage above x2 (nevertheless, this is not even an option on the platform).
FYI, and if you are interested in day trading cryptocurrency and other more advanced practices, below you will also meet terms like leverage and “going short”.
The good thing about eToro is that it allows you to bet both “in the black” and “in negative”. For instance, you are sure that the Stellar will fall, so you obviously think “if it is going to depreciate, I'll just wait until it does”. But if you really consider that it's going down, why not take advantage of that?
You can accomplish that by “going short”. More or less, it works like this:
- You obtain from a loan 100 units of Stellar, with a total price of $ 5,000 (these are completely fictional numbers)
- Next, you earn $ 5,000 by selling them at their price at that moment
- The Stellar goes from $ 50 to $ 30 (as you thought, it devaluates)
- You obtain the 100 units again, but at $ 3,000
- You return the 100 units to the loaner
- There: the $ 2000 difference is yours
Consider that it is much simpler than it sounds: we can just say that by trading in Stellar you can also make money if you foretell the downs.
Differences between futures and CFDs
What are the differences between Futures and CFDs?
- Counterparties
- Futures: operations are made with someone else, another investor.
- CFDs: the operations are not made with someone else, but the counterparty is the brokerage, in this case, eToro.
- Date of expiry:
- Futures: they expire. Once the contract expires, it is closed and can't be reopened.
- CFDs: on the contrary, there is no expiration date. This means that you can wait for your position to rise before closing.
- Options for trading:
- Futures: options are much more limited
- CFDs: they include lots of different assets, commodities and currencies
- Minimum deposit amount or “trade size”:
- Futures: minimum investment is higher
- CFDs: you can start with a lower minimum trade size
- Pricing and rates:
- Futures: as you have to pay more in the first place, rates are lower
- CFDs: higher (although they are not excessively high either)
- Leverage:
- Futures: there is no leverage leverage
- CFDs: completely available
By the way, do you know what leverage is? We'll put it simply:
the good thing about trading is that it lets you invest higher figures than what you really have. For instance, if you have $ 100 and you choose to leverage x2, you will be really investing $ 200.
Everything you need to know about leverage
Let's assume that you know that the price of Stellar is going to raise its price, therefore you are thinking about “going long”.
You are completely certain that Stellar will go up, but you only have $ 1,000 available. Isn't it a shame to miss out on the possibility of earning more money?
Perhaps you could go to your bank, request a loan, wait for it to be accepted and receiving the money, and then obtain Stellar… Nevertheless, once you've managed doing all that, probably Stellar would be already much higher (if your prediction got confirmed), and investing wouldn't be a good idea at that moment.
Using leverage, you can obtain that amount with two clicks. It's like borrowing money, but much easier and quicker, and with the advantage that you will be getting it directly from eToro. Before trading, you will how much leverage to use as in the screenshot:
Trading with other assets allows you to 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 see how leverage works.
You enter with $ 1,000 and pick leverage x2, then you would really invest $ 2,000, since eToro would put the other $ 1,000 (which is double your initial amount).
A week later Stellar goes up by 20% and now your investment costs 2,400. So, a wise decision is to sell them back now.
You need to pay back the $ 1,000. You have $ 1,400 left, of which $ 1000 was yours initially, so the net profit is $ 400.
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment.
Does it sound too wonderful? The trick is that the risk of losing out is also there. If everything goes according to plan and the price goes up, you will earn profits in little time; but in the opposite scenario, you will also lose more really quickly.
For instance: if the price falls by 10%, you do not lose $ 10, but twice (the leverage) that figure, that would be $ 20. For that reason, the terms “Take Profit” and “Stop Loss” are crucial 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 Stellar at $ 100, you program eToro to close once 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 make you lose it all.
Also, if you use leverage you absolutely need to place a Stop Loss order (take into account that any small loss is greater with leverage). Always remember to set a Stop Loss lower than that suggested by the platform.
About ETFs
ETFs or Exchange-Traded Funds are similar to index funds. We can say that ETFs are halfway between stocks and funds: they are traded in the market like stocks, during the day. But their main benefit is that they offer more alternatives compared to stocks, and the rates are much lower than those of an actively managed fund.
Forex trading
Forex or currency trading allows obtaining profits by converting one currency for another.
If you decide to exchange euros and dollars, you buy euros at their price in dollars, anticipating that after buying the first currency (the euro) it will increase compared to the second (the dollar), to make a profit by selling it. Let's say you entered when a euro is worth 1.10 USD and you close when it is worth 1.15: as a result, you will gain that margin.
As you may have already inferred, this kind of trading requires large resources, because prices rarely increase that much, or using much leverage, which is always a risk. Our advice for those starting in the world of trading is to choose another market to begin with, since Forex is risky and complex.
You can exchange with the most common currency pairs on eToro. Nevertheless, keep in mind that in Forex sales are made through CFDs, thus you will not own the real asset.
About ETFs
ETFs or Exchange-Traded Funds are similar to index funds. We can say that ETFs are somewhere between stocks and funds: they can be traded like regular stocks, but include a wide diversity of assets and have lower fees.
Trading strategies
There are different methods or ways for crypto trading, like buying and holding or day trading, for naming just a few.
If you are new in the world of investment, our recommendation is something in between: 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 when its price is $ 15, it rises up to $ 25 and decreases back to $17, the stop-loss will allow your operation to be closed, maybe at $ 21 or $ 22. Therefore, you will obtain a good profit.
You may be wondering: why not selling when the price is at its maximum? But unless you are a psychic, that is just impossible. The mentioned strategy can work perfectly and give good results.
And when you have more experience, you can take your first steps with advanced investment strategies, like going short to profit from bear markets or using leverage.
How does a demo account work?
If you are taking your first steps as an investor, you can start by practicing with a “demo” option. You just have to make sure that the “Virtual” option is set in the upper left corner and your operations will be carried out with an imaginary balance.
This option is ideal for those who want to give it a few tries before trading with real funds. When you create your account, you will start with $ 100,000 of virtual balance to do all the operations that you can think of: not only with Stellar, you can also work with a diverse portfolio.
Don't worry, since if you lose all your virtual funds, you can contact support so they can add back the $ 100k to your demo account and you can make a second attempt.
Keep in mind that you should always be prudent when trading, nevertheless, using a demo account might have the opposite effect. It will never be the same as risking your own money.
Evidently, if you are going to invest in the medium or long-term, with profits almost assured only by duplicating an index, it is absurd that you waste years investing in virtual mode. On the contrary, short or medium-term operations are ideal to try out with the virtual mode.
eToro Interface
As we have mentioned before, one of the best things about eToro is its simplicity: anyone can trade without having to read endless guides.
You won't have any issues with the interface if you have used any of the most common social networks.
Now we will detail the registration process and the sections of the eToro interface that you should know.
You will have to provide some personal data when registering.
To complete your profile, you will see that they ask you some questions about your experience at investing.
But don't feel intimidated, it is not a test that you have to pass. They only intend to find out about your previous experience and knowledge to determine which financial instruments to recommend for you.
Now we will explain the fundamental sections of the site.
In “Set Price Alerts” you can put alarms on the price of certain securities. You just have 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 buy a security which price is decreasing, but it seems to you that it has not finished falling yet.
The section “News Feed” allows users to interact and share their experiences and knowledge.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. And we already discussed the kinds of assets on eToro:
- Cryptocurrencies
- ETFs
- Stocks
- Commodities
- Currencies
- Index funds
The concept “social trading” makes sense in the section “People”: there, you can copy the strategies of the best investors with just one click.
In this section, you will be able to search and find users according to your interests. You can search by risk level, trading market, or average profits, among other filters. When you select an investor and indicate how much money 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, the platform will also invest 20% of your money in the same asset, in this case, $ 200.
You will also see the three main types of CopyPortfolios, which are “Top Trader”, “Market” and “Partner”.
The advantage of using CopyPortfolios instead of copying individuals is that this way you will diversify the risk. The different portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … Do you suspect that a certain industry will prosper anytime soon? Then you will surely find a CopyPortfolio about it.