Contents
Why we reccomend eToro for investing in Dash in USA?
Why do we recommend it?
- It is possible to make investments in tons of different products
- You can leverage
- Very user-friendly and simple
- It uses other successful investment strategies so you can copy them
- You can short sell
Official main site: www.etoro.com/dash
In case you are considering buying Dash from USA, eToro may be the best option.
This broker is known for making “social trading” a trend. Social trading is a revolutionary way of investing in which users can replicate the techniques of other traders who have been making earnings for years.
eToro is very helpful if you don't have much experience in trading. You can rest assured that you are making a smart investment since the site replicates those from subjects with a great deal of expertise. Oppositely, if you are an expert in the subject and want to share your knowledge with others, eToro pays you for it.
Besides, the platform is so uncomplicated, great for a user who wants to start learning about Dash and trading, without getting crazy with tons of graphs and numbers.
What are Contracts for Difference?
If you browsed eToro previously, you must have noticed that the initials CFD appear frequently. We will come back to it, but you should know first that CFDs on eToro are only possible if you are short-selling.
We will also explain terms like short-selling and leverage, in case you are thinking about day trading cryptocurrency or more advanced practices.
Even if you don't have a positive balance, you can still operate on eToro with CFDs. Let's say that you are sure that the Dash will fall, so probably you think that the best thing to do is wait until it does and then go in. But if it really goes down, it is possible to earn some money out of that.
You can do that by “going short”. Here's how it works ,roughly:
- You ask someone for a loan of, let's say, 100 units of Dash, which total value at that moment is $ 5,000 (these numbers are made up)
- Next, you sell them at their market price, $ 5,000
- The Dash goes from $ 50 to $ 30 (as you presumed, the value decreases)
- You obtain the 100 units again, but their current value is now $ 3,000
- Then you return the 100 units to whom made the loan
- You will have made $ 2000, since you keep the difference
It all seems more tricky than it really is. Just consider that by trading in Dash on eToro, with CFDs you can make a profit when you anticipate the price will fall.
How are CFDs and futures different?
How are Futures and CFDs different?
- Counterparties
- Futures: operations are made with another investor or trader.
- CFDs: the operations are not made with someone else, the counterparty is the broker, in this case, eToro.
- Date of expiry:
- Futures: there is a date of expiration. At that point, your operation is closed even if you are in losses.
- CFDs: they do not have an expiry date. It is possible to get back to a good position before closing.
- Trading markets available:
- Futures: very little variety
- CFDs: a lot of variety, there are CFDs of practically anything
- Minimum investment amount or “trade size”:
- Futures: minimum investment is higher
- CFDs: you can start with a lower minimum trade size
- Trading costs and charges:
- Futures: being higher figures, rates are usually proportionally lower
- CFDs: rates are higher
- Leverage:
- Futures: it isn't possible to trade with leverage
- CFDs: completely available
If you haven't heard about the term “leverage”, we'll describe it briefly. When trading, it's the capacity of increasing your investment without putting extra money. That way, if you start with $ 100 and you use x2 leverage, you will be investing $ 200.
Why using leverage and how to do it
Suppose now that you are sure that Dash is going to appreciate, therefore you decide to “go long”.
You are positive that Dash will go up, 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 loan, wait for it to be accepted, wait for the money, and then obtain Dash… Nevertheless, when you finish doing all that, probably Dash would be already at a much higher price, and it wouldn't be a good idea to invest then.
Leverage is like a loan, and you will only have to click a few times! eToro allows you to invest (and earn) much higher amounts than what you actually have on the platform's wallet. Before trading, you will how much leverage to use as in the screenshot below:
Within other markets, you can use more leverage. The reason: cryptocurrencies are a value that is invested in the medium-long term. However, leverage is used mostly for day trading or short-term operations. Let's talk a bit more about how leverage works.
If you have the $ 1,000 and use leverage x2, you will be investing $ 2,000, as we mentioned. eToro would be “loaning” you the extra $ 1,000.
A week later turns out that Dash rises up and now the value of your investment is 20% higher, which means, you have $ 2,400 in Dash. But you don't want to be too reckless, so you decide, wisely, to sell again.
Obviously, the 1k $ from leverage will be deducted, and you'll have $ 1,400 left, of which $ 1000 was yours initially, so the net profit is $ 400.
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is quite good.
Does it sound too wonderful? The thing is, you can also lose money. If everything goes according to plan and the price goes up, you will earn profits in little time; but if the opposite occurs, you will also lose more really quickly.
Supposing that the price didn't increase by 20%, but it went down also by 20%, you won't lose $ 20 but double, $ 40. For that reason, the concepts of Take Profit and Stop Loss are so important when using leverage.
Take Profit is a limit you can set when trading: you set the platform to sell your assets once they get to a point above the entry price. For instance, you can buy Dash at $ 100 and ask eToro to close your position automatically when it reaches $ 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 to trade more safely.
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). Take into account that eToro will recommend a limit for Stop Loss, but it is better to set it lower than the platform suggests.
ETFs
Exchange-Traded Funds or ETFs 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.
Equities
The most common financial assets are stocks: these are portions of publicly traded corporations. It is possible to obtain a profit with the performance of third-party companies just by putting your money in them. But, obviously, you have to know how to invest.
Basically, there are two types of stocks: the ones that divide their earnings regularly among the investors, and those that don't payout. The former ones are great, of course, but investing in the latter can also be a good idea since sometimes you can make even more money by selling the shares.
When trading on eToro, if you choose a company that distributes dividends, these will be reflected in your balance, and you can collect them in cash or reinvest them. Our suggestion is, if you don't need the money right away, that you take advantage of compound interest and reinvest it in the company itself.
If you invest in stocks on eToro, you will be able to use leverage. However, we don't recommend that, since it would be a CFD and you would not receive dividends. Besides, equities are usually long-term investments, and you have to pay fees while your operation is open.
Commodity market
Most investors trade with raw materials due to their stability. While other assets tend to fluctuate more, raw materials prices vary less and offer safety against inflation or market volatility. Nevertheless, prices do depend on supply and demand, so if an economic situation provokes higher demand for a certain good, its cost will also rise.
Keep in mind that the only intended income from the investment in raw materials will be the hypothetical capital gain after selling them back: unlike stocks, these don't pay dividends.
Commodities are usually classified into two kinds: first, we have hard raw materials, which are precious metals (gold, silver, copper, and platinum), industrial metals, and oil; in second place are soft raw materials, which are agricultural goods such as sugar, cocoa, soybeans, among others.
What is an ETF?
Exchange-Traded Funds or ETFs are a kind of passively managed fund, similar to index funds. They can be described as a merge between stocks and mutual funds. They are publicly traded and therefore can be bought and sold at any time at market price. However, their advantage is that they are more diversified compared to stocks, and the rates are much lower than those of an actively managed fund.
Can you trust eToro?
eToro is very careful with the data about past performances from investors, and its integrity has been tested several times times by independent organizations.
eToro fulfills all the strict policies of the European Union. Specifically, its head office is in Cyprus, where it is validated by the Cyprus Securities Market Commission or CySEC, which can cover up to € 20,000 of the debts from its clients, including those from USA.
eToro responds to the European Financial Instruments Market or MiFID, and to the Financial Conduct Authority or FCA in the U.S. You should also know that it has a trajectory of fifteen years, with more than 20 million users around the globe. So, you can be sure that your money is safe.
No less important is their excellent customer service. You can use the ticketing system, an online chat, and they also have a phone number available for assistance.
eToro Interface
We mentioned before that eToro is very friendly and intuitive. Anyone can start investing without previous experience or long explanations.
Everyone who has used social networks like Instagram or Linkedin, has enough skills to use eToro.
We will explain the registration process and the different sections that you will find on the platform.
When you register, you will have to fill in your personal data.
Before you end up with the sign-up process, you will also have to answer some questions about your previous investment activities.
But don't feel intimidated. They only intend to find out how much you know and which instruments to recommend for you.
When you fill in all your information in your profile, you will stop seeing the “incomplete profile” message.
Now we will talk about the different sections of the platform.
In “Set Price Alerts” you can set alerts 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 alert. This is very helpful when you want to purchase an asset which price is decreasing, but perhaps you think that it will decrease even more.
The section “News Feed” allows users to interact and learn from each other by sharing their opinion and experiences.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we discussed in this guide, the six types of instruments on eToro are:
- Cryptocurrencies
- ETFs
- Shares
- Raw materials
- Currencies
- Index funds
The term “social trading” makes sense in the section “People”: that is where you can copy the trading strategies of any investor you choose. You'll be able to see all their profiles and performances.
Through the search engine, you can find the investors that you find more interesting: by risk level, types of instruments, average earnings… Just indicate the amount of your investment and eToro will replicate the movements made by the selected investor, in proportion. “In proportion” means that if you have $ 1000 and the trader puts 10% of his or her balance in an asset, eToro will invest also 10% of your funds (in this case $ 100) in that same asset.
Also, here you will see CopyPortfolios classified into three categories, Top Trader, Market, and Partner.
In some cases, you might prefer copying to CopyPortfolios than to other traders, because the former offer more diversity. 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 sector is going to succeed in the future? Then look, because surely there is a CopyPortfolio about it.