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*67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money Cryptoassets are highly volatile unregulated investment products. No EU investor protection.
How to buy
For those who live in Kenya, the best way to buy Uniswap is, without any doubt, this popular broker.
eToro*, one of the main brokers around the world, is registered and licensed, among others, by the United Kingdom's Financial Conduct Authority (FCA).
We recommend eToro because you can create an account for free with this broker, and its fees for trading online are very low. Besides, eToro is available in our language, accepts users from Kenya, it is really easy to manage, and its friendly interface is ideal for those who are starting to trade with cryptocurrencies and stocks.
How to sign up, step by step
The first thing you need to do is click here and fill in the fields on the right: enter your name, email, and set a password.
Then check your email inbox: you have received an email from eToro, click on the link and your account will be verified.
Once on eToro, you just have to click on “Deposit funds”, in the page menu.
There, you can choose how much money you want to add to your account (the minimum is $ 200) and the payment method:
As you can see in the image, the first deposit can be made by credit card, PayPal, or bank transfer.
How to make your first purchase
When eToro has confirmed the receipt of your credit, you just have to search for “Uniswap” in the search bar, click on “Invest” and choose the amount in dollars you want to invest.
*67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.
What is Uniswap?
Uniswap is the most widely used decentralized cryptocurrency exchange today and one of the largest exchanges by daily trading volume. Although it is actually a smart contract that is responsible for providing liquidity to the exchange market automatically.
It was created in 2018 by Hayden Adams inspired by some comments from Vitalik Buterin, the genius behind Ethereum. The Uniswap smart contract was designed to fulfill three basic functions: exchanging, sending and stacking cryptocurrencies.
And because it is a smart contract on the Ethereum network, it allows these operations to be performed with any ERC-20 cryptocurrency. ERC-20 are cryptocurrencies that work on the Ethereum platform, among them we can mention BinanceCoin, Tether, DAI stablecoin, among others.
How does Uniswap work?
How we already mentioned, it is a smart contract implemented on the Ethereum network so there are no people behind its daily operation. All the operation was set in advance in the main contract and after executed, it cannot be modified in any way.
In addition, Uniswap contains a smart contract for each cryptocurrency pair exchanged on the platform. That is, there is a contract to exchange Ethereum for Tether, another for DAI for BinanceCoin, and so on for each pair that can be exchanged.
Similarly, it has another contract for sending cryptocurrencies that allows you to exchange one token for another before it is sent to the destination address. So, if you have Ethereum in your wallet and you have to pay for something with Tether, you can send the Ethereum with Uniswap and the person will receive Tether. All with a small commission of 0.30% per transaction.
The most interesting thing is that Uniswap maintains the liquidity balance in the market automatically based only on a mathematical formula. Although it is the Uniswap users who participate in the stacking or pooling that actually provide the liquidity.
In the latter, users who stack or pool in Uniswap, deposit an amount of cryptocurrencies to the contract that maintains the liquidity of a certain pair and in return receive interest on the deposit made. Like a savings account, but with cryptocurrencies.
In this way, Uniswap fulfills its three established functions in a completely decentralized way, controlled only by smart contracts within the Ethereum network and in a completely transparent way, as there is no way to alter its operation.
These are the financial assets available in eToro
Besides criptocurrencies, there are way more financial assets available.
Have you heard about Exchange-traded funds or ETFs? They are passively managed funds, known for combining the advantages of stocks and mutual funds: they can be traded at any moment in the market, but include a much wider diversity of assets and considerably lower rates.
Now let's discuss the most popular assets: stocks. Stocks are the parts in which a firm can be shared, and you may be a shareholder of a company and have returns, but first, you should know where to invest your money.
Basically, there are two types of shares: the ones that divide their earnings regularly among the stockholders, 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 sometimes you can make even more money by selling the shares later.
If you invest in equities that pay out dividends, you will receive them into your account on eToro. Then, you can withdraw that money or you can choose to reinvest it. Nevertheless, you can take advantage of compound interest, so our suggestion is that you reinvest in the company if you don't need the money immediately.
If you trade with stocks on eToro, you can use leverage to “dope” your trades. However, we don't recommend that, since it would be a CFD and you would not receive dividends. On top of that, as shares tend to be long-term investments, you will have to pay fees.
About Index Funds
Are most adequate for those interested in long-term trading, mostly for beginners. If you don't need an amount of money for the next five or ten years, index funds offer you variety and lower risks.
Contrary to common perception, very few investors can beat the benchmark (yes, you have surely heard of investors who obtain huge returns).
But putting aside some unusual cases (like Warren Buffett's), not everything is as good as it sounds: if you hear of someone who has beaten the market, 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). Besides, take into account that past performances do not ensure a future one.
With index funds, you don't have to worry about that: although in the long term, they usually beat active managers, and the charges are minimal.
About Contracts for Difference
If you already accessed eToro, you must have noticed that the acronym CFD appears repeatedly. Before we come back to it, we must say that CFDs on eToro are only possible if you short sell.
We will also explain concepts such as leverage and “going short”, in case you are interested in day trading cryptocurrency or other more advanced practices.
The good thing about eToro is that it allows you not only to bet if you are “in the black”, but through CFDs you can also bet “in red”. Let's say that you have the certitude that the Uniswap will go down, so perhaps you consider that it is better to refrain from getting in until it does. Nevertheless, if it really falls, it might mean extra money for you.
You can accomplish that by “going short”. Basically, it functions like this:
- Someone lends you, let's say, 100 units of Uniswap, valued at a total of $ 5,000 (these are completely fictional figures)
- You make $ 5,000 by selling the 100 units
- The Uniswap devaluates from $ 50 to $ 30
- Again, you buy the 100 units, but at the current value, $ 3,000
- Then you give back the 100 units
- The difference is yours, so, you will have earned $ 2000
It all seems more complicated than it really is. Just bear in mind that by trading in Uniswap on eToro, with CFDs you can earn money if you anticipate downs in the price.
What's the difference between CFDs and futures?
How are Futures and CFDs different?
- Who is the counterparty? In the case of Futures, the counterparty is another trader. In CDFs, it’s the brokerage, in this case eToro
- Expiration date Futures expire in a variable given date, while CFDs don’t have expiration date
- Markets available: Futures include fewer options to trade. CFDs include a wide range of possibilities.
- Minimum deposit: Costs for Futures are higher than costs for CFDs.
- Leverage: with Futures, you can’t leverage; while with CFDs it is always possible.
Have you heard about “social trading”?
The first platform that conceived trading as a social activity was eToro, and the idea spread like wildfire. Other brokers have also adopted this concept, but we have tried them all and eToro is still the leader.
But it wasn't just about creating yet another social network to talk about investment. The main achievement was in allowing users to copy the strategies of advanced investors, who were in turn paid for their ideas.
When you access eToro you will find in the menu on the left the options “Copy People” and “Invest in CopyPortfolios”.
“CopyPortfolios” are kinds of exchange-traded funds or thematic index funds, a portfolio that bundles a number of assets in a certain sector. For instance, if you consider that a particular sector will succeed in the near future but you don't know which stocks to invest in, you just have to choose a portfolio that includes a variety of related companies in that industry.
You should know that in the past year, CopyPortfolio has given returns of 100%. And you can benefit from it just by choosing a portfolio, enter your selected amount, place the stop-loss order and click on the “Invest” button.
A second option is to directly copy users of the platform: in “Copy People” you can locate eToro users who are very successful investing and whose strategies you can duplicate.
You will see in the profile of users: the kind of financial instruments they trade with (forex, cryptocurrencies, commodities, stocks…), their risk profile (a higher risk implies higher possibilities of earning more or losing more money), as well as their trading history.
Besides duplicating other investor's moves, which is really interesting and helpful, we also suggest that you benefit from the community by reading other user's comments. You can learn a lot from their experiences, particularly if you aim to make a living from trading.
There are different methods or ways for crypto trading, like day trading or buying and holding, for naming just a couple.
In case you don't have much experience trading, our suggestion is a middle point: placing a dynamic stop-loss (15-20% under the highest price) when you open your trade and wait for it to work.
Therefore, if for example you buy a cryptocurrency at $ 10, it goes up to $ 20, and after that it falls to $ 12, your operation will be closed at $ 16-17 and you will obtain a pretty good profit.
You may be wondering: why not selling back when the price 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 if it is well applied.
At some point, you can take your first steps with advanced trading strategies, like using leverage or going short.
What is leverage
Have you heard about “leverage”? We'll put it simply: the good thing about trading is that it lets you invest more money than what you really have. For instance, if you have $ 100 and you use x2 leverage, the amount of your investment will be $ 200.
What you need to know about leverage
Let's say now that you know that the price of Uniswap is about to raise its price, and you are thinking about “going long”.
You are completely certain that Uniswap will rise, but you can only invest $ 1,000. Despite that, why miss the opportunity to make more money?
There's the possibility of requesting a loan, but it is a process that takes time, and by the moment you receive the money, Uniswap might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Using leverage, you can obtain that amount of money just by moving a finger. It's exactly like borrowing money, but much easier and quicker, and with the advantage that you will be getting it directly from eToro. You will simply see the different options as in the image below:
With other assets, the ability to leverage is greater. Why? Because cryptocurrencies usually represent medium-long term investments, and leverage is used primarily for day trading or short-term trading. Let's talk a bit more about how leverage works.
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 later turns out that Uniswap goes up and now the value of your investment is 20% higher, which means, you have $ 2,400 in Uniswap. But you don't want to be too reckless, so you decide, wisely, to sell back.
You will have to pay back the $ 1,000 of leverage and the net profit would be $ 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. That is pretty good.
It may sound too good to be true. The trick is that the risk of losing out is also there. If everything goes as you planned, you will earn more money in less time; however, if the value of the asset decreases, you will also lose more in less time.
Supposing that the asset didn't increase by 20%, but it went down also by 20%, you won't lose $ 20 but double, $ 40. Therefore, when using leverage it is fundamental to know about 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 Uniswap at $ 100, you request 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 rising, which could make you lose it all.
Stop Loss is even more necessary, especially if you use leverage, because a reduced loss with leverage can be tragic for your wallet. Consider that eToro will recommend a limit for Stop Loss, but you should place it closer to current price than the platform suggests.
How does a demo account work?
Are you taking your first steps in trading? Using a demo account can be very helpful. You just need to set the virtual mode and you can start practicing with an “imaginary” amount.
This can be a great way of practicing before starting to trade with real money. You will have an amount of $ 100.000 (“fake” or virtual, of course) to begin with, and you can operate with all the different assets available on eToro, not just with Uniswap.
The first attempt is not usually that good. But you can ask support to replenish the virtual funds to your account, and the second time you should do better.
Keep in mind that trading is mainly about being cold-minded, nevertheless, using a virtual account might have the opposite effect. It will never be the same as risking your own money.
Evidently, the demo mode is kind of pointless if you intend to trade in the medium or long-term, since you would be wasting years to see the outcome. Demo accounts may be useful for trying out before trading in the short or medium-term.
Frequently asked questions
* Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Disclaimer: 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.