Contents
eToro is an excellent trading platform for those who are in South Africa and want to purchase Ethereum Classic
Some of its benefits are:
- User-friendly and straightforward
- Allows to learn from other investment moves
- Admits short-selling
- eToro offers leverage
- There are tons of investment opportunities
Homepage: www.etoro.com/ethereum-classic
You should definitely consider eToro in case you are interested in acquiring Ethereum Classic from South Africa.
eToro is known for making “social trading” fashionable. Social trading is a revolutionary way of investing in which traders can emulate the moves of other investors who have been generating income for years.
If you are still a newbie or do not have much experience in investments, eToro is very useful, since it automatizes your investment by repeating strategies from other experienced people with a long profit history. Also, in case you do have experience in investment, the platform pays you for sharing it with the community.
Besides, the platform is so uncomplicated, great for a user who wants to begin in the Ethereum Classic world, without getting crazy with tons of diagrams and figures.
How does eToro work?
We said previously that eToro is very easy to manage. Anyone can start investing without having to read endless explanations.
You won't have any issues with the interface if you have used any other social network.
We will explain, roughly, the registration steps and the different tabs that you will find.
You will have to fill in some information requested when registering.
Additionally, you will have to answer some questions about your experience at investing.
But don't feel like you are taking an exam. The only intention is to know more about you and determine which financial instruments they should suggest according to your knowledge and experience.
Let's review the different functions of the platform.
In “Set Price Alerts”, you have, as its name says, the possibility to set 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 are after a security that is falling, but it seems to you that it has not finished falling yet.
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
- Stocks
- Commodities
- Currencies
- Index funds
The term “social trading” makes sense within “People”: that is where you can replicate the movements of any investor you choose.
Using the search bar, you can find the investors that you find more interesting: by risk level, types of financial instruments, average earnings… Just indicate the amount you want to invest and eToro will be in charge of replicating the movements made by the selected investor, in proportion. This means that if you put $ 1000 and the investor puts 10% of their capital in Amazon, eToro will invest $ 100 of your balance in that asset.
In this section you will also see the three most popular types of CopyPortfolios, which are Top Trader, Market, and Partner.
The benefit of copying to CopyPortfolios instead of individuals is that this way you will diversify the risk. Besides, the different portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … Do you suspect that a certain industry is going to have success in the future? Then look, because surely there is a CopyPortfolio about it.
Can you trust eToro?
eToro is very meticulous with the data about past performances from traders, and its reliability has been tested many times by independent organizations.
eToro fulfills all the strict policies required by the European Union. Specifically, its main offices are in Cyprus, and it is approved by the CySEC or Cyprus Securities Market Commission, which protects up to € 20,000 of the debts that its clients may have with creditors, including those from South Africa.
In Europe, it is backed by the European Financial Instruments Market (MiFID), and in the USA it responds to the Financial Conduct Authority (FCA). Besides all these regulations, eToro has worked for fifteen years and that it has more than 20 million users around the world, so we can rest assured that our funds are safe.
Their customer service functions perfectly. You can use the ticketing system, an online chat, and they also have a phone number available for assistance.
BTW, do you know what leverage is? Just in case, we'll define it shortly:
the good thing about trading is that it lets you invest more money than you can have in a given time. Let's say that you enter with $ 100 and you put them with x2 leverage, you will be really investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Suppose now that you are sure that the price of Ethereum Classic is about to raise its price, thus you are thinking about “going long”.
You are certain that Ethereum Classic 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?
You could consider asking for a loan at your bank, but you must know that all the process takes time, and by the moment you receive the money, Ethereum Classic might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Leverage is exactly like a credit, but it is only a few clicks away! eToro allows you to invest (and earn) much more than what you have on the platform's wallet. As in the image below, you will see the different options you have:
Trading with other assets allows you to use more leverage. Why? Because leverage is most used for short-term operations or day trading, and cryptocurrencies tend to be a medium or long-term investment. But let's see how leverage works with the previous example.
You begin with $ 1,000 and pick leverage x2, then you would really invest $ 2,000 (the extra $ 1,000 to reach $ 2,000 are “borrowed” from eToro).
A week later turns out that Ethereum Classic rises 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 is the money you put in yourself, so the net profit is $ 400.
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment. That is pretty good.
But not everything is wonderful. If all goes as you intended and the asset increases, you will make money. Nevertheless, if the price falls, you will also lose more money really fast.
For instance: if instead of increasing by 20%, the price falls by 10%, you do not lose $ 10, but twice (the leverage) that figure, that would be $ 20. Because of that, the concepts of Take Profit and Stop Loss are crucial when using leverage.
Take Profit is an automatic order of selling once the asset achieves a certain price: you buy Ethereum Classic at $ 100 and you ask eToro to close your position as soon as the price reaches $ 120. It is very helpful to avoid being blinded by greed: we would all take a 20% profit when investing, but when you reach that 20% it is easy to ask yourself “what if this keeps going up and it is a mistake to exit?”. It's like you made sure now of not acting recklessly in the future.
Stop Loss is even more important, especially if you use leverage, since a small loss with leverage can have a significant impact on your wallet. Consider that eToro will recommend a limit for Stop Loss, but you should place it lower than that.
ETFs
ETFs or Exchange-Traded Funds are a kind of passively managed fund, similar to index funds. They can be described as a merge between stocks and mutual funds, including the best features of both. They can be traded like regular stocks, but include a wide diversity of assets and their fees are much lower than those of an actively managed fund.
Foreign exchange market
Forex or currency trading is the exchange between two currencies in order to gain money.
In case you decide to exchange EUR and USD, you buy euros and pay with dollars, hoping that the first currency (the euro) will increase compared to the second (the dollar), to make a profit by selling it. Suppose you entered when the price of one euro is 1.10 USD and you exit when it is worth 1.15: that difference is yours once you sell again.
You may be thinking that this form of trading requires high investments, and you're right, since fluctuations are usually minimal, and if you use a lot of leverage to counter that, you will take a considerable risk. If you are just starting to trade, it is not a good idea to begin with this market, because it is very risky and intricate.
eToro allows exchanging the most popular currency pairs but bear in mind that this market works with contract for differences, therefore the underlying asset won't be yours.
Equities
The most popular financial instruments are stocks: these are the parts in which a company that chooses to go public is divided. You can obtain a profit through third-party companies just by investing money in them. But of course, you have to know how to invest.
We can classify stocks into two different kinds: the ones that payout at the end of every fiscal year to the stockholders, and those that don't. The former ones are great, obviously, but investing in the latter can be a good idea too since sometimes you can make even more money by selling the shares later.
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 don't renounce the magic of compound interest and reinvest it in the company itself.
Remember that on eToro you can “dope” your trades with leverage, but in that case, you will not receive interest as the trade is a CFD. That is why for long-term investments, it is not advisable to use leverage: not only because you lose dividends, but also because you will have to pay fees while you keep the position open, and these can end up with your gains.
Commodity market
The major advantage of investing in raw materials is that prices are more stable than those of other assets. Actually, their stability is what makes most investors choose commodities when facing financial insecurities or fears of inflation. Despite that, the cost of commodities is determined by supply and demand, so if faced with the fear of inflation, demand rises a lot, so will the price.
Consider that raw materials don't pay dividends. Therefore, the only potential further earnings would come from a future sale of the asset.
Raw materials are commonly classified into hard raw materials, which include precious metals, industrial metals, and oil; and soft raw materials, which are basically agricultural goods, like soy, cocoa, corn, or rice, for instance.
About ETFs
Have you heard about Exchange-traded funds or ETFs? They are similar to index funds and are known for merging the advantages of stocks and mutual funds, because they can be traded regularly at market price, but have much more investment possibilities and considerably lower rates.
Index Funds
If a long-term investment sounds good to you, and you won't need to withdraw your money in five or ten years, index funds can be the best choice. This type of investment is also great for beginners since the risks are much lower. Besides, the variety is wider.
You may think differently, but beating the benchmark is far from being a piece of cake and very few fund managers achieve that, apart from some specific cases, like Warren Buffett's.
In practice, if a fund manager achieves to beat the benchmark, it is only for a short time or on a specific occasion. Or perhaps they would charge very high rates and indexing would be a better decision anyway (with minimal commissions).
Index funds offer these two advantages: although in the long term, they regularly beat active managers, and the commissions are minimal.
Trading strategies
When trading cryptocurrencies, there are different possible methods or strategies, such as buying and holding or day trading, for naming just a few.
If you don't have much experience trading, I suggest something in between: when you open your position, set a stop-loss 15-20% under the highest price, and let the magic happen.
For example, if you buy a cryptocurrency when its price is $ 15, then it rises up to $ 25 and decreases back to $17, the stop-loss will close your position at $ 21 or $ 22. Hence, you will obtain a fine profit.
You may be wondering: why not selling when the cost is at its highest? But that would only work for a psychic or a fortune-teller. The mentioned method is more down-to-earth and can work out perfectly.
Eventually, you will be ready for applying more advanced trading techniques, like using leverage or going short to make money from bear markets.
Virtual account
For those who still don't have much experience in investing, using a demo account can be very helpful. Just assure yourself that the virtual mode is set and you can start trading with “fake” funds.
This is a great tool for those who are new to this world and want to put their talents to the test before playing for real money. With your virtual portfolio, you will begin with a $ 100,000 balance (which of course, is fake) to do your operations, not only with Ethereum Classic, but you can also work with a diverse portfolio with a variety of assets.
Don't worry, since if you lose all your virtual funds, you can contact support so they can add back the $ 100,000 to your demo account and you can try again.
Keep in mind that you should always be cautious when investing, however, using a demo account might have the opposite effect. It will never be the same as risking your own money.
As you may suppose, the virtual mode is kind of absurd if you intend to invest in the medium or long-term, since you would be wasting years to see the outcome. Virtual accounts may be useful for practicing before trading in the short or medium-term.