Contents
eToro is an excellent brokerage for purchasing Monero from South Africa
Pros:
- Allows to learn from other investment tactics
- Allows you to short sell
- User-friendly and simple
- Leverage is allowed
- There are tons of investment possibilities
Main site: www.etoro.com/monero
eToro is the best option nowadays to purchase Monero from South Africa.
This platform is popular for making “social trading” a trend. Social trading is a revolutionary way of investing in which investors can replicate the movements of other traders who have been generating earnings for a long time.
eToro has solutions for you, even if you don't have much experience in trading, because it puts your investment on automatic by emulating moves from traders with a long profit history. Also, in case you are an investor, the platform pays for your knowledge.
It is also worth mentioning how accessible is the platform, excellent for new traders who are taking their first steps in the investment world.
Can you trust eToro?
eToro is very rigorous with the information about past performances from investors, and its integrity has been independently tested several times.
The main office of eToro is located in Cyprus, and therefore the broker is approved by the Cyprus Securities Market Commission (known as CySEC), which covers debts up to € 20,000 from its clients, including those from South Africa. The platform complies, on the other hand, with all the strict policies of the European Union.
It is also backed by the European Financial Instruments Market or MiFID, and in the USA it is under the control of the Financial Conduct Authority (FCA). Besides all these regulations, you should know that eToro has more than 20 million users worldwide, and it has been operating for the last fifteen years. To sum up, we can be confident that our finances are safe.
Their customer service functions perfectly. They have a phone number for assistance, a ticket system to track any claim, and a live chat.
Payment methods on eToro
Among the payment options that eToro accepts you will find: bank transfer, PayPal, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Neteller, and Skrill. Depositing funds on eToro is so simple: click “Deposit funds”, type a number and choose a payment method from the previous ones.
Of course, take into consideration that for security policies, you need to be the account or credit card holder.
You can start from $ 200, and if you are not verified you will have a maximum amount allowed. Thus, if you intend to operate with large amounts, you should contact Support to verify your account first.
Additionally, know that you can make the transfer in any currency because eToro converts it to USD, but charges a commission for it, so it is preferable to make the transfer directly in USD.
How are CFDs and futures different?
If you want to know, here are the most important differences between Futures and CFDs:
- Which are the counterparties? In the case of Futures, the counterparty is another trader. In CDFs, it’s the brokerage, in this case eToro
- Expiry date Futures expire in a variable given date. CFDs don’t have expiry date
- Variety of options for trading Futures include fewer options to trade. CFDs include a wide range of possibilities.
- Minimum deposit Costs for Futures are higher than costs for CFDs.
- Use of leverage With Futures, it isn’t possible; while with CFDs it is.
BTW, do you know what leverage is? We'll put it simply:
another good thing about trading is that it allows you to invest more money than you can have in a given time. That is, if you enter with $ 100 and you put them with x2 leverage, the amount of your investment will be $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Let's say that you are sure that Monero will rise, and you want to “go long”. You have $ 1,000, but you actually can invest more and make more money.
Possibly, you could ask a financial company for a credit, wait for it to be accepted, wait for the money, send the money to eToro, confirm that it arrived, and then purchase Monero… But maybe once you have made all that, your prediction could've been confirmed already and Monero is so high that it is not worth trading.
Leverage is like a credit, but it is only a few clicks away! eToro allows you to invest (and earn) much higher amounts than what you actually have on the platform. It is really simple, before investing you will see the different options as in the screenshot:
Trading with other assets allows you to use even more leverage. The reason is that 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 this works with the previous example.
You begin with $ 1,000 and pick leverage x2, then you would have $ 2,000 to invest (the extra $ 1,000 to reach $ 2,000 are “borrowed” from eToro).
A week after that, turns out that Monero goes up by 20% and now your investment costs 2,400. So, a wise decision is to sell them back now.
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).
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment.
But watch out: if everything goes ok and the price rises, you will make money. On the contrary, if the asset decreases, you will also lose more money than you invested.
For example: if the price falls by 10%, you won't lose $ 10, but twice (the leverage) that figure, that would be $ 20. That is why to operate with leverage it is crucial to take into account Take Profit and Stop Loss.
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 Monero at $ 100, you can ask 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.
On the other hand, when using leverage you also have to use Stop Loss, because a small decrease in the price of an asset can lead to a substantial loss. You always need to establish a Stop Loss lower than that suggested by eToro.
Exchange-Traded Funds
What do you know about Exchange-traded funds? They are passively managed funds, known for combining the advantages of stocks and mutual funds: they can be traded regularly at market price, but have much more investment possibilities and considerably lower fees.
About ETFs
ETFs or Exchange-Traded Funds are a kind of passively managed fund, similar to index funds. We can say that ETFs are halfway between stocks and funds: they can be traded like regular stocks, but include a wide diversity of assets and the rates are much lower than those of an actively managed fund.
About Index Funds
Are the best option for those who want to invest for the long term, mostly for beginners. If you don't need to use the amount of money you'll invest in less than five or ten years, index funds offer you security and diversity.
Contrary to common perception, very few fund managers can beat their benchmark return (although you have probably heard of managers who obtain huge returns).
But except for Warren Buffett and a couple more, not everything is as good as it sounds: if you hear of someone who has beaten the market, it was probably for a short time, or their rates are really high. In the end, indexing is better because commissions are minimal. Also, take into account that if something happened once or twice, it doesn't mean necessarily that it will happen again.
With index funds, you don't have to worry about that: although in the long term, they regularly beat active managers, and the charges are minimal.
Forex trading
Currency trading or Forex consists, as the name says, in the trading of currencies. Put differently, is the conversion of one currency to another, and the aim is, evidently, to obtain a benefit out of this.
If you want to exchange euros and dollars, you speculate how many dollars it will take to buy a euro, thinking that the first currency (the euro) will revalue 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 close when the price has gone up to 1.15: that margin is yours once you make the operation.
You may be thinking by now that this form of trading requires high investments, and you are not wrong, since fluctuations are usually minimal, and if you use a lot of leverage to counter that, you will take a considerable risk. Our advice for those who are new in the world of trading is not to start with Forex, but with a safer and simpler market.
eToro allows trading with the most known currency pairs. However, take into consideration that in Forex trading sales are made through CFDs, thus you will not be the owner of the underlying asset.
Commodity market
Most investors trade with raw materials due to their stability. While other assets present higher fluctuation, raw materials prices vary less and offer security against inflation or market volatility. However, prices do depend on supply and demand, so if an economic situation produces higher demand for a certain good, the price will also rise.
Take into account that commodities don't pay dividends. Therefore, the only potential further earnings would come from a sale of the asset.
Commodities are usually categorized 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 coffee, rice, soy, or sugar.
About Contracts for Difference
If you browsed eToro before, you must have seen how the acronym CFD appears frequently. We will come back to it, but first, you should know that CFDs on eToro are only possible when you short sell.
We will also explain terms such as leverage and “going short”, in case you are thinking about day trading cryptocurrency or other more advanced practices.
Even if you don't have a positive balance, you can still bet on eToro with CFDs. In a hypothetical case: you are sure that the Monero will fall, so perhaps you consider that it is better to refrain from getting in until it actually falls. However, if you are convinced that it is going down, why not making some profits out of it?
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 Monero, which total price at the moment is $ 5,000 (these numbers aren't real)
- You make $ 5,000 by selling the 100 units
- The price is reduced, as you calculated, and the unit of Monero goes from $ 50 to $ 30
- You buy all 100 units one more time, but at the current price, $ 3,000
- You pay back the 100 units
- The difference is yours, so, you will have made $ 2000
Take into account that it is much simpler than it sounds: we can summarize this whole operation by saying that by trading in Monero you can also earn money if you anticipate it will go down.
eToro Interface
We mentioned before that eToro is very easy to manage. Anyone can start investing without previous experience or long explanations.
You won't have any issues with the interface if you are familiar with any of the most common social networks.
Now we are going to detail the sign-up process and the sections of the eToro interface that you should familiarize yourself with.
First of all, you will have to fill in your personal data, like first name, last name, address….
Additionally, you will have to answer some questions about your experience as an investor.
But don't feel intimidated, it is not a test that you have to pass. They only intend to find out how much you know and which assets to recommend for you.
Let's get to know the different sections of the interface.
“Set Price Alerts” allows you to put alarms on the price of certain assets. You just have to click on the three points at the end of the line and you will be able to program a price alert. It is a very useful tool for when you are after an asset which price is decreasing, but perhaps you think that it will decrease even more.
“News Feed” is the more “social” section. There, traders can interact and share experiences.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. And we already discussed the kinds of assets on eToro:
- Cryptocurrencies
- Exchange-Traded Funds
- Stocks
- Raw materials
- Currencies
- Index funds
The concept “social trading” makes sense within “People”: there, you can replicate the strategies of any investor you choose with just one click.
You can search for those investors that you find more interesting: by average profits, market or risk level, for example. You just have to type the amount of your investment and eToro itself will replicate the movements of the investor you chose, in proportion. “In proportion” means that if you put $ 1000 and the investor puts 10% of their capital in Amazon, eToro will invest $ 100 of your money in the same asset.
Also, here you will see CopyPortfolios classified into: Top Trader, Market, and Partner.
In some cases, it might be better to copy from CopyPortfolios than to individuals, because you avoid putting all your eggs in one basket. The different portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … Do you suspect that a certain sector will prosper in the future? Then you will surely find a CopyPortfolio about it.
Virtual account
In case you do not have much experience as an investor, you can start by practicing with a “demo” option. Setting a virtual account and trading with fictional money is very simple.
This can be a great way of gaining experience and confidence before trading with real money. You will have an amount of $ 100.000 (“fake” or virtual, of course) to begin with, and you will be able to operate with all the different instruments available on eToro, not just with Monero.
The first attempt is not usually that good. But don't worry, because you can ask support to deposit back the virtual funds to your portfolio, and the second time you should do better.
But remember that investing is mostly about being cold-minded, and demo account trading can have an adverse effect. It is not the same to risk your own money than to trade with virtual funds which loss does not suppose any drama.
Evidently, the demo mode is kind of absurd if you want to trade in the medium or long-term, since you would be wasting years. Demo accounts may be helpful for practicing short or medium-term investments.