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eToro, recommended online broking platform for those in South Africa who want to obtain Tether
Why do we recommend it?
- It is very user-friendly
- It takes techniques and moves from successful investors so you can copy them
- You can short sell
- Leverage is allowed
- There are tons of possibilities for investments
Main site: www.etoro.com/tether
You should consider eToro in case you are interested in acquiring Tether from South Africa.
This broker is popular for making “social trading” fashionable. Social trading is an ingenious way of investing in which traders can emulate the strategies of other investors who have been generating profits for years.
eToro has solutions for you, even if you are still a novice user in trading. You can rest assured that you are doing a smart investment move when replicating those from subjects with a great deal of expertise. Additionally, in case you do have experience in investment, eToro pays you for sharing it.
Besides, this platform is completely manageable, great for a user who wants to begin in the Tether world, without ending up overwhelmed with tons of numbers and information.
Is eToro safe for purchasing Tether?
eToro is very rigorous with the data about past performances from users, and its integrity has been tested once and again by independent organizations.
The main office of eToro is in Cyprus, and the platform is certified by the Cyprus Securities Market Commission (known as CySEC), which covers debts up to € 20,000 from its clients. The platform complies, on the other hand, with all the strict requirements of the European Union.
eToro responds to the European Financial Instruments Market or MiFID in Europe, and to the Financial Conduct Authority (FCA) in the United States of America. You should also know that it has a trajectory of fifteen years, with more than 20 million users all over the world. So, you can be sure that your finances are safe.
It is also worth mentioning the great customer service. You can use the ticketing system, an online chat, and they also have a phone number available for assistance.
How to deposit funds into your eToro account
When it comes to depositing money on eToro, there is not much to say, since it is pretty simple. You just have to click “Deposit funds”, set an amount, and choose the payment option you prefer. You can use PayPal, bank transfer, credit card, Skrill, or Neteller.
Consider that for security reasons, you need to be the owner of the account or the credit card.
The minimum amount you can deposit is $ 200 and there is a limited amount if you are not verified. Therefore, if you want to trade with higher amounts, contact Support previously to verify your account.
eToro accepts deposits or transfers in any currency, but you will have to pay a fee for the conversion to USD. That is why we suggest, if possible, depositing in USD directly.
Futures Vs CFD
How are CFDs and Futures different?
- Which are the counterparties? With Futures, the counterparty is another investor. In CDFs, it’s the brokerage, in this case eToro
- Date of expiration Futures have a determined expirationdate, while CFDs don’t have expiry date
- Variety of options for trading The market for Futures is narrower. With CFDs you can trade in several different markets.
- Minimum investment amount or “trade size” Being higher figures, Futures require, proportionally, lower costs. Costs for CFDs are a bit higher.
- Use of leverage With Futures, you can’t leverage; while with CFDs leverage is always available.
Have you heard about “leverage”? We'll put it simply:
trading lets you invest higher amounts than what you really have. Let's say that you enter with $ 100 and you use x2 leverage, you will be really investing $ 200.
Everything you need to know about leverage
Suppose now that you are sure that the price of Tether is about to raise its price, therefore you choose to “go long”.
You are completely certain that Tether will rise, but you can only invest $ 1,000. Isn't it a shame to miss out on the opportunity to earn more money?
You could consider asking for a loan at your bank or other financial company, but it is a process that takes time, and by the moment you finally get the money, Tether might be already so expensive that trading wouldn't be convenient anymore.
Thanks to leverage, you can obtain that amount of money with two clicks. It's exactly like a loan, but much easier and quicker, and with the benefit that you will be getting it directly from eToro. As in the image below, you will see the different options you have:
Within other markets, the leverage you can use is higher. The reason: leverage is most used for short-term operations, and cryptocurrencies tend to be a medium or long-term investment. That said, I'm going to explain better how leverage works:
- If you want to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 ($ 1,000 was borrowed from eToro).
- Then, turns out that Tether does rises, as you assumed, and now the cost of your investment is $ 2,400 (20% higher), so you decide to sell back because you want to play it safe.
- Once the $1,000 from leverage is deducted, you will have $ 1,400 left; which means the net profit is $ 400, since the other $1,000 was yours initially.
In conclusion, by investing $ 1000 you can make a profit of 40% (in the case you earn $ 400). That is quite good.
Does it sound too wonderful? The trick is that the risk of losing out also increases. If everything goes as you planned, you will earn profits in little time; but in the opposite case, 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, when using leverage it is fundamental to know other two terms: 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 purchased Tether at $ 100, you program eToro to close when it reaches $ 120. That way, you make sure you won't change your mind and decide to keep waiting in case it keeps going up, which could make you lose it all.
Stop Loss is even more important, especially when trading with leverage, since a small loss could be fatal for your wallet. Consider that eToro will recommend a limit for Stop Loss, but you should set it lower than the platform suggests.
About ETFs
Have you heard about Exchange-traded funds? They are passively managed funds, known for merging the advantages of stocks and mutual funds: they can be traded regularly at market price, but include a much wider diversity of assets and considerably lower rates.
About ETFs
Exchange-Traded Funds or ETFs are 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 have lower fees.
Index Funds
If you are interested in long-term investments, and you won't need to withdraw your money in at least five years, index funds can be the best choice. This type of investment is also suitable for beginners since the risks are much lower.
You may think differently, but beating the benchmark is far from being a piece of cake and very few fund managers have done it, apart from some famous cases.
If a fund manager brags about having beaten the benchmark, they probably did it for a short time or on a specific occasion, or sometimes the fees are so high that indexing would be a better decision anyway.
The great advantage of index funds is that they solve these two issues: their fees are minor and in the long term they tend to beat active managers.
Currency market
What is known as Forex trading consists in the trading of currencies. It's the conversion between two currencies to make a profit through the operation.
In case you decide to exchange EUR and USD, you acquire euros and pay with dollars, with the expectation that after obtaining 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 exit when it is worth 1.15: consequently, that difference will be yours once you sell back.
You may be thinking by now that trading with currencies requires investing considerable amounts, and you are not wrong, since variations are usually minimal, and often you will need to use a lot of leverage (which sometimes can be too much of a risk). In case you are new to the world of trading, we don't recommend beginning with Forex, because it's not the safest alternative.
You can trade with almost every popular currency on eToro but consider that in this market sales are always made through contract for differences, which means you will not be the owner of the underlying asset.
Stocks
Stocks or equities are the most popular financial instruments. Some corporations decide to split into fractions and have several shareholders. By investing money in them, you can own a fraction of a company and obtain returns.
We can group stocks into two main types: the ones that payout at the end of every fiscal year to the investors, and those that don't payout. The former ones are great, of course, but investing in the latter can be a good idea too since the profit you can make by selling the shares can be even larger.
When trading on eToro, if you invest in stocks that give dividends, you will receive them in your account, and you can withdraw your money or reinvest it. Our suggestion is, if you don't need the money right away, that you benefit from compound interest and reinvest it in the company itself.
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. Besides, as shares tend to be long-term investments, you will have to pay commissions.
Commodity market
Most investors trade with raw materials because of their stability. While other assets tend to fluctuate more, raw materials prices vary less and offer security against inflation or market volatility. Nevertheless, prices are subject to supply and demand, so if an economic situation produces greater demand for a certain good, its cost will also go up.
Consider that, unlike shares, raw materials don't pay dividends. So, the only prospective earnings would come from a sale of the asset.
Commodities are commonly categorized into two types: 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 products like coffee, rice, soy, or sugar.
About Contracts for Difference
You probably have found the acronym CFD repeatedly if you already accessed eToro. Before we come back to it, we must say that CFDs on eToro are only possible if you are short-selling or leverage above x2 (and this is not even available on eToro).
In case you want to try at some point day trading cryptocurrency or other trading practices, we will also explain terms like leverage and “going short”.
The advantage of eToro is that it allows you not only to bet when you are “in the black”, but through CFDs you can also bet “in red”. For instance, you are sure that the Tether will fall, so probably you consider that it is better to refrain from getting in until it does. But if it really falls, it might mean extra money for you.
You can do that by “going short”. Here's how it works:
- You get from a loan 100 units of Tether, valued at a total of $ 5,000 (these numbers are imaginary)
- Then, you sell them at their current price, $ 5,000
- The Tether goes from $ 50 to $ 30 (as you presumed, it devaluates)
- Again, you purchase the 100 units, but at the current price, $ 3,000
- You give back the 100 units to whom made the loan
- There: the $ 2000 difference is yours
Take into account that it is much simpler than it sounds: we can summarize this whole operation by saying that by trading in Tether you can also earn money if you predict the downs.
eToro Interface
We said 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, knows enough to use eToro.
Now we are going to detail the sign-up process and the sections of the page that you should know.
First of all, you will have to enter your personal data.
Before you end up with the sign-up process, you will also have to answer some questions about your previous experience as an investor.
However, it is not like you are answering an exam. They only intend to know how much knowledge you have and what type of assets they can recommend. For instance, if it is your first experience in the investment world, they will not suggest that you invest in futures.
Let's see what the different sections of the platform are.
In the “Set Price Alerts” tab, you have, as its name says, the option to put alerts on the price of certain securities. You only need 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 useful when you want to buy an asset which price is decreasing, but perhaps you think that it has not finished falling yet.
“News Feed” is for social purposes and interaction. This is the section where users can share opinions and information.
“Instruments”, “People” and “CopyPortfolios” are within “Discover”. As we discussed before, the trading instruments available on are:
- Cryptocurrencies
- ETFs
- Shares
- Commodities
- Forex
- Index funds
In “People”, you will find eToro users and their performances. This is where you can duplicate with just one click the movements of your preferred traders.
You can search for those traders that you find more interesting. You can search by risk level, trading market, profits or country, among other filters. When you select an investor and indicate how much you want to invest, eToro will automatically replicate their movements, proportionally. For instance, if you have $ 1000 and the user puts 20% of their funds in an asset, the platform will invest $ 200 of your funds in the same asset as well.
You will also find the CopyPortfolios divided into three main kinds: “Top Trader”, “Market” and “Partner”.
Remember that in some cases, it might be better to copy from CopyPortfolios than to other investors, since you avoid putting all your eggs in one basket. Besides, the different portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … Do you suspect that a certain sector is going to have success anytime soon? Then you will surely find a CopyPortfolio about it.