Contents
eToro is an outstanding brokerage for those who want to buy NEO from USA
Why do we recommend it?
- There are tons of goods you can invest in
- You can trade leveraged
- User-friendly and straightforward
- Allows to replicate investment tactics
- Accepts short-trading
Main site: www.etoro.com/neo
eToro is the best option to purchase NEO from USA.
This broker is known for making “social trading” a trend. Social trading is an innovative way of investing in which traders can repeat the strategies of other investors who have been making earnings for years.
eToro is very useful if you don't have much experience in trading, since it puts your investment on automatic by repeating strategies from those who have been doing it for years. Additionally, in case you are an investor, the platform pays for your knowledge.
It is also worth mentioning how easy is to manage the platform, perfect for beginners who are starting with NEO.
ETFs
What do you know about Exchange-traded funds or ETFs? They are similar to index funds and are known for combining the benefits of stocks and mutual funds, because they can be exchanged regularly at market price, but have much more investment possibilities and the fees are significantly lower.
Foreign exchange
Forex or currency trading allows obtaining profits by exchanging one currency for another.
If you decide to trade the EUR/USD pair, for example, you speculate how many dollars it will take to buy a euro, with the expectation that after buying the first currency (the euro) it will raise its price compared to the second (the dollar), to make a profit by selling it. Suppose you entered when a euro is worth 1.10 USD and you leave when a euro is worth 1.15: as a result, you will gain that margin.
You may be thinking by now that trading with currencies requires high investments, and you're right, since increases in prices are never that dramatic, and often you will need to use a lot of leverage (which sometimes can be too much of a risk). Our recommendation for those starting in the world of trading is to choose another market to begin with, since Forex is risky and complex.
The most known currency pairs are available on eToro but bear in mind that in this market sales are always made through contract for differences, so the underlying asset won't be yours.
Commodity market
Most investors trade with raw materials because of their stability. While other assets tend to fluctuate more, commodity prices vary less and offer safety against inflation or market volatility. Nevertheless, prices are subject to supply and demand, so if an economic situation produces higher demand for a certain good, its cost will also rise.
Note that the only intended income from the investment in raw materials will come from their further sale because, unlike stocks, commodities don't distribute dividends or pay interest.
Commodities are commonly classified into hard raw materials, which include precious metals as gold, silver, or copper, as well as industrial metals, and oil; and soft raw materials, which are agricultural products, like soy, cocoa, corn, or rice, for instance.
About Index Funds
If you are interested in long-term investments, and you won't need to take back your money in five or ten years, index funds can be the best alternative. This type of investment is also great for beginners since it is more secure. Besides, they offer more diversity.
You may have a different idea, but it is not easy to beat the market (although you have probably heard of managers who achieve huge returns).
But putting aside some exceptional cases (like Warren Buffett's), not everything is as good as it sounds: if you hear of someone who has beaten the benchmark, they have probably done so for a short period, or the rates are so high that it ends up being better for you to index (whit minimal commissions). Also, past performances do not ensure a future one.
Index funds offer answers for that: although in the long term, they frequently beat active managers, and the fees are minimal.
By the way, do you know what leverage is? We'll put it simply:
the good thing about trading is that it allows you to invest even more than what you really have. Let's say that you enter with $ 100 and you choose to leverage x2, you will be actually investing $ 200.
About leverage, Take Profit and Stop Loss
Let's say now that you are sure that the price of NEO is going to raise its price, thus you are thinking about “going long”.
You are certain that NEO will go up, and you have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
You could consider asking for a loan, but you must know that all the process takes time, and when you receive the money, NEO might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Leverage is just like a loan, but it is only a few clicks away! You will be able to invest (and earn) much higher amounts than what you actually have on the platform's wallet. Before trading, you will be able to choose between the different leverage options as in the image below:
With other assets, the leverage you can use is higher. This is because cryptocurrencies are a value that is invested in the medium-long term. However, leverage is used mostly for short-term operations or day trading. Let's talk a bit more about how leverage 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 gives you the remaining amount to reach that figure.
A week after that, NEO rises up and now the value of your investment is 20% higher, which means, you have $ 2,400 in NEO. But you don't want to be too greedy, so you decide, wisely, 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 good? 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 goes down, you will also lose more in less time.
For example: if the price falls by 10%, you do not lose $ 10, but twice that figure, which means $ 20. Because of that, the concepts of 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 NEO at $ 100, you request eToro to close once it reaches $ 120. That way, you make sure you won't be blinded by greed and decide to wait a bit longer in case it keeps rising, which could be a mistake.
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). You always need to establish a Stop Loss lower than that suggested by the platform.
Is eToro safe for purchasing NEO?
eToro has been independently tested once and again to verify its reliability in the treatment of data from previous users and past performances. Every time, results have shown that eToro is rigorous with the information.
In the legal aspect, eToro complies with all the strict regulations requested by the European Union. Its head office is in Cyprus, and it is certified 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.
In Europe, it is backed by the European Financial Instruments Market or MiFID, and in the USA it responds to the Financial Conduct Authority (FCA). In addition to all these regulations, you should know that eToro has worked for fifteen years and that it has more than 20 million users, so we can be sure that our money is safe.
Finally, their excellent customer service is also worth mentioning. They have a phone number for assistance, a ticketing system, and a live chat.
How to deposit funds on eToro
When it comes to depositing funds on eToro, there is not much to say, since it is really straightforward. You only need to select “Deposit funds”, put an amount, and choose the payment option you prefer. You can pay with PayPal, bank transfer, credit card, Skrill, or Neteller.
Consider that for security reasons, you must be the holder of the account or the credit card.
The minimum first time deposit is $ 200, and there is a maximum limit for unverified accounts. Thus, if your intention is to deposit higher amounts, you should contact Support to verify your account first.
eToro accepts 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.
Futures Vs CFD
In case you want to know, here are the major differences between CFDs and Futures:
- Counterparty
- Futures: operations are made with someone else, another trader.
- CFDs: the counterparty is the broker, in this case, eToro.
- Expiration date:
- Futures: there is an expiration date. Once the contract expires, it is closed and can't be reopened.
- CFDs: they do not have an expiry date. It is possible to get back to a good position before exiting.
- Trading options:
- Futures: there are limited options for investment
- CFDs: they include lots of different assets, commodities and currencies
- Minimum deposit amount or “trade size”:
- Futures: very high minimum investment
- CFDs: you can get in with a lower minimum trade size
- Trading costs and charges:
- Futures: costs are usually lower
- CFDs: rates are higher
- Use of leverage:
- Futures: there is no leverage leverage
- CFDs: it is always possible to leverage
What are Contracts for Difference?
It is possible that you have seen the acronym CFD now and then if you already registered on eToro. Before we explain what this is, you should know that cryptocurrency trading on eToro is only CFD if you go short or leverage higher than x2 (nevertheless, the platform does not even allow this option).
For the record, and in case you want to try at some point day trading cryptocurrency or other operations, next you will also find concepts such as leverage and “going short”.
The good thing about eToro is that it allows you to bet both “in the black” and “in red”. Let's say that you believe that the NEO will fall, so perhaps you consider that it is better to wait until it does and then go in. But if you are almost sure that it is going down, why not making some profits?
The practice known as “going short” will allow you to do that. It works, more or less, like this:
- You ask for a loan of, let's say, 100 units of NEO, which cost $ 5,000 at the moment (obviously, these figures aren't real)
- You sell the 100 units at $ 5,000
- The NEO goes from $ 50 to $ 30 (as you predicted, it devaluates)
- You purchase 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 complex than it really is. Just consider that by trading in NEO on eToro, with CFDs you can make a profit when you anticipate the price will fall.
eToro Interface
We already mentioned that one of the best features of eToro is how simple it is. You don't need to read a lot or have previous knowledge to start trading.
You won't have any problems with the interface if you are familiar with any other social network, like Whatsapp or Linkedin.
We will talk about how to register and the different tabs you will find on the page.
You will have to fill in some information requested when registering.
Also, you will have to answer some questions about your experience at investing.
However, it's not like they're testing you or anything. It is only a way of finding out how much knowledge you have and what type of assets they can recommend. For instance, 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, the annoying “incomplete profile” bar will disappear.
Let's get to know the different sections of the platform.
In the “Set Price Alerts” tab you can put alerts 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. This is very helpful when you want to buy an asset which price is decreasing, but it seems to you that it has not finished falling yet.
In “News Feed”, investors interact and share opinions, tips, and other valuable information.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. And we discussed previously in this guide the kinds of assets on eToro:
- Cryptocurrencies
- ETFs
- Stocks
- Raw materials
- Forex trading
- Index funds
In “People”, you can find eToro users and their performances. This is where the term “social trading” makes sense since you can duplicate the strategies of the users that you prefer.
In this section, you will be able to find those traders that you find more interesting. You can search by risk level, trading market, or average profits, among other filters. When you select an investor and indicate how much you want to invest, eToro will automatically replicate their movements, in proportion. For instance, if you invest $ 1000 and the user puts 20% of their funds in an asset, eToro will put $ 200 of your balance in the same asset or company as well.
Finally, you will also see the CopyPortfolios divided into three main kinds: “Top Trader”, “Market” and “Partner”.
Remember that in some cases, it might be preferable to copy from CopyPortfolios than to individuals, because you avoid putting all your eggs in one basket. There are all kinds of portfolios that you can recognize easily and are classified by sectors. Therefore, in case you suspect a specific sector, like fashion or drones, has good chances to succeed, you can look for that specific portfolio and invest.
Investment strategies
There are different methods or ways for crypto trading, such as day trading or buying and holding, for naming just a few.
My recommendation for those who are starting to invest is something in the middle: placing a dynamic stop-loss (15-20% under the highest price) when you open your operation and wait for it to work on its own.
For instance, if you purchase a cryptocurrency when it is worth $ 15, then it rises up to $ 25 and decreases again to $17, the stop-loss will allow your operation to be closed, maybe at $ 21 or $ 22. Thus, you will get a pretty good income.
Perhaps you are wondering: why not selling back when the price is at its peak? But unless you are a psychic, that is just not possible. The mentioned strategy can work perfectly and give good results.
Eventually, you will be ready for applying advanced investment strategies, such as short-selling or using leverage.
How does a demo account work?
In case you do not have much experience investing, the possibility to operate in “demo” mode may be useful. 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 “imaginary” funds.
A virtual portfolio can help you to practice and gain experience before starting to trade 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 (not only with NEO).
If your first attempts don't go as planned and you go back to zero, there is always a possibility to replenish your virtual balance. You'll probably do better on the second try.
Take into account that you should always be prudent when investing, and perhaps using a demo account can prevent you from controlling your impulses. It will never be the same as risking your own money.
And of course, if you are going to invest in the medium or long-term, with earnings almost guaranteed just by duplicating a strategy, it doesn't make sense that you invest in the virtual mode and wait for years. On the other hand, short and medium-term investments are ideal to try out with the demo mode.