Contents
Why we reccomend eToro for acquiring IOTA from South Africa?
Some of its benefits are:
- It is possible to make investments in thousands of other products
- Leverage is allowed
- It is uncomplicated and manageable
- It uses strategies from skilled traders so you can emulate them
- You can short sell
Official homepage: www.etoro.com/iota
In case you are considering it, eToro is probably the best way to purchase IOTA from South Africa.
eToro is well-known for making “social trading” fashionable, a revolutionary form of investing in which traders can emulate the moves of other investors who have been making profits for years.
eToro is very useful if you are still a novice user in trading, because it automatizes your investment by repeating strategies from those who have been doing it for years. And for those skilled investors willing to share their techniques with the community, eToro rewards your knowledge with money.
Besides, the platform is so uncomplicated, ideal for a user who wants to begin in the IOTA world, without ending up overwhelmed with tons of numbers and information.
How does eToro work?
As we have mentioned previously, one of the best things about eToro is its simplicity: anyone can trade without having to read endless guides.
You won't have any problems with the interface if you have used any other social network.
We will talk about the sign-up process and the different tabs you will find on the platform.
When you open your account, you will have to enter all the information that eToro asks for: first and last name, address…
Also, you will have to answer some questions about your experience at investing.
But you don't need to worry: it is not an exam. It is only a way of finding out how much knowledge you have and what type of financial instruments they can recommend. For example, if it is your first experience in the investment world, they will not suggest that you invest in futures.
Next, we will explain the fundamental sections of the site.
With the “Set Price Alerts” tool, you'll be able to program an alarm when a security is at a certain price. This is ideal if you want to purchase a security and you are waiting for it to decrease.
In the “News Feed” tab is the most social part of eToro: where users are interacting all the time and sharing opinions, tips, and other valuable information.
In “Discover” you will find the tabs: “Instruments”, “People” and “CopyPortfolios”. And we already mentioned the kinds of assets on eToro:
- Cryptocurrencies
- ETFs
- Shares
- Raw materials
- Forex trading
- Index funds
In “People” are all the profiles and historical performances of other investors, and you can replicate their strategies with just one click. This is where the “social trading” term is best applied.
You can search for those investors that best suit your interests: by average earnings, market or risk level, for instance. Just indicate the amount of your investment and eToro itself 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, the platform will invest also 10% of your funds (in this case $ 100) in that same asset.
Also, here you will see CopyPortfolios classified into: Top Trader, Market, and Partner.
Sometimes it might be better to copy from CopyPortfolios than to other users, since the former offer more diversity. There are all kinds of portfolios that you can recognize easily and are classified by sectors. So, if you suspect a specific industry, such as e-commerce or drones, will have good incomes in the future, you should probably look for that specific portfolio.
Can you rely on eToro?
Many independent tests have been applied to eToro to prove its integrity in the treatment of data from previous users and past performances. Every time, it has been confirmed that eToro is rigorous with the information.
Legally, eToro follows all the strict regulations requested by the European Union. Specifically, its main headquarters 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 South Africa.
eToro is backed by the European Financial Instruments Market (MiFID) in Europe, and by the Financial Conduct Authority (FCA) in the U.S. Apart from the above, it has a trajectory of fifteen years, with more than 20 million users all over the world. So, you can be sure that your money is safe.
Finally, their customer service functions perfectly. You can use the ticketing system, an online chat, and they also have a phone number available for assistance.
eToro deposit methods
When it comes to depositing funds on eToro, there is not much to say, since it is pretty simple. You only need to select “Deposit funds”, set an amount, and choose your payment method. You can pay with PayPal (available for some countries), bank transfer, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), 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 will need to verify your account previously.
The platform allows transfers in any currency, but charges a commission for making the conversion to USD. That is why we suggest, if possible, depositing in USD from the beginning.
What is an ETF?
Exchange-Traded Funds or ETFs are similar to index funds. They can be described as a combination of stocks and mutual funds, including the best of both. They can be traded like regular stocks, but include a wide diversity of assets and have lower fees.
Forex trading
What is known as Forex trading consists in the exchange of currencies. It's the conversion of one currency to another, and the aim is, evidently, to obtain a benefit out of this.
If you want to exchange the EUR/USD pair, you speculate how many dollars it will take to buy a euro, with the expectation that the euro will rise compared to the dollar. Therefore, if you purchased each euro at 1.15 USD and you sell them back when their price is 1.20 USD, that margin will be yours.
As you may have deduced, operating with currencies usually implies large resources, since fluctuations are typically low, or using much leverage, which could be incautious, as you know. If you are just starting in trading, it is not a good idea to begin with Forex, because it's not the safest option.
You can operate with almost every currency on eToro but consider that in Forex sales are made through CFDs, which means you won't own the underlying asset.
Shares
Stocks are the most common financial instruments. Some publicly traded enterprises divide their capital into fractions and have many shareholders. By investing money in them, you can own a fraction of a company and obtain dividends.
We can classify stocks into two main types: those that pay dividends and those that do not. Those that pay, at the end of the fiscal year, distribute profits among the stockholders; the latter, on the contrary, do not. Does that mean that you should only consider the former? No, of course not: if a company does not pay out dividends but has a lot of potential, you should not give it up just because it does not pay you every year, 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 equities that pay out dividends, you will receive them into your account on eToro. Therefore, you can withdraw that money or you can choose to reinvest it. However, you can take advantage of compound interest, so we would recommend reinvesting in the company.
If you invest in stocks on eToro, you can use leverage to “dope” your trades. But it is not advisable, since it would be a CFD and you would not receive dividends. Also, as shares tend to be long-term investments, you will have to pay commissions while your operation is open.
Raw materials
Most people invest in raw materials because of their stability. While other assets present higher fluctuation, commodity prices vary less and offer safety against inflation or market volatility. However, prices do depend on supply and demand in the market, 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 the sale since, unlike shares, these do not give returns or pay interest.
Commodities are commonly 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 like coffee, rice, soy, or sugar.
About ETFs
Exchange-Traded Funds or ETFs are a type of passively managed fund, 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. However, their advantage is that they offer more alternatives compared to stocks, and have lower fees.
About Contracts for Difference
You probably have seen the acronym CFD all the time if you entered eToro before. Before we explain what this is, we must say that CFDs on eToro are only possible if you go short.
In case you are considering day trading cryptocurrency and other advanced practices, later on you will also find out about concepts like short-selling and leverage.
Even if you don't have a positive balance, you can still bet on eToro with CFDs. In a hypothetical case: you believe that the IOTA will fall, so perhaps it is obvious to think “if it is going to depreciate or go down in price, I'll simply wait until it does and then I'll bet”. Nevertheless, if it really goes down, it is possible to earn some money out of that.
You can accomplish that by “going short”. Here's how it works:
- You ask for a loan of, let's say, 100 units of IOTA, which total price at the moment is $ 5,000 (these numbers are made imaginary)
- You sell the 100 units at $ 5,000
- The IOTA goes from $ 50 to $ 30 (as you presumed, the value decreases)
- Again, you purchase the 100 units, but now their price is $ 3,000
- You return the 100 units
- The rest is yours, so, you will have earned $ 2000
Consider that it sounds much more complicated than it really is: we can summarize this whole operation by saying that by trading in IOTA you can also make money if you foretell the downs.
How does a demo account work?
For those who still don't have much experience in investing, a demo account can be useful. You just need to set the virtual mode and you can start operating with fictional funds.
This can be a great way of practicing before trading with real money. The platform will give you an amount of $ 100.000 (“fake” or virtual, of course) to begin with, and you can trade with a variety of financial instruments, not only with IOTA.
If your performance is not that good and your balance ends at zero, you can always ask eToro support to replenish $ 100k of virtual funds. Probably the second time will be much better.
Take into account that trading is mostly about being cold-minded, however, using a virtual portfolio might have the opposite effect. It is not the same to operate with your own money than with fake funds, which you can lose without any consequences.
Finally, the virtual mode is kind of pointless if you want to invest in the medium or long-term, since you would be wasting years to see the results. Virtual accounts may be useful for trying out short or medium-term investments.