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How to buy
For those who live in Kenya, the best way to invest in Coinbase shares 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 your 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: you should 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.
If you have a choice, we do not recommend bank transfer because it takes longer, and it can be very frustrating to see the price of Coinbase rising while you wait for your transfer to be done.
How to make your first purchase
As soon as eToro has confirmed the receipt of your credit, you just have to search for “Coinbase” 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.
Payment methods on eToro
When it comes to depositing money on eToro, there isn't really much to say, since it is really straightforward. You only need to select “Deposit funds”, type an amount, and choose the payment option you prefer. You can pay with PayPal (available for some countries), bank transfer, credit card, Skrill, or Neteller.
(Consider that you should be the account or credit card holder, for security policies).
The lowest amount you can deposit is $ 200, and there is a maximum allowed for unverified accounts. Therefore, in case you plan to operate with higher amounts, contact Support previously to verify your account.
Additionally, know that you can make the deposit in any currency you want because eToro will make the conversion to USD, although it charges a fee, so it is better to make the transfer directly in USD.
About Contracts for Difference
If you already browsed eToro, you must have seen how the acronym CFD appears frequently. Before we come back to it, you should know that cryptocurrency operations on eToro are only CFDs when you short sell or leverage over x2 (nevertheless, the platform does not even allow this option).
FYI, and in case you want to know about day trading cryptocurrency and other more advanced practices, below you will also find terms like short-selling and leverage.
eToro allows you not only to bet if you are “in the black”, but through CFDs you can also bet “in red”. For instance, you believe that the Coinbase will fall, so perhaps you consider that the best thing to do is refrain from getting in until it actually falls. But if it really falls, it might mean extra money for you.
You can do this through a practice known as “going short”. Its operation, roughly, works like this:
- You ask for a loan of, let's say, 100 units of Coinbase, which total price at that moment is $ 5,000 (obviously, these numbers are made imaginary)
- You sell them at their current price, $ 5,000
- The Coinbase devaluates from $ 50 to $ 30
- You get the 100 units again, but at $ 3,000
- Now you pay back the 100 units to the loaner
- The rest is yours, so, you will have made $ 2000
Consider that it is much easier than it sounds: we can just say that by trading in Coinbase you can also make money if you foretell the downs.
What's the difference between CFDs and futures?
How are Futures and CFDs different?
- Who is the counterparty? With Futures, the counterparty is another trader. In CDFs, it’s the brokerage, in this case eToro
- Date of expiration Futures expire in a variable given date. CFDs don’t have expiration date
- Variety: Futures include fewer options to trade. CFDs include a wide range of possibilities.
- Minimum investment amount: Costs for Futures are higher than costs for CFDs.
- Leverage: with Futures, you can’t leverage; while with CFDs it is always possible.
In case you are not familiar with the term “leverage”, we'll describe it briefly: it is the possibility to use a higher amount than you actually have. That way, if you start with $ 100 and you use x2 leverage, you will be investing $ 200.
Leverage, Take Profit and Stop Loss
Assuming that, for instance, you are positive that Coinbase price is going up, and that you have $ 1,000 for “going long”, you must know that you can increase your investment and earn higher profits.
There's the possibility of requesting a loan at your bank, but you must know that all the process takes time, and by the moment you finally get the money, Coinbase might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Leverage is like a loan, and you will only have to click a few times to get it! eToro allows you to invest (and earn) much higher amounts than what you actually have on the platform. Before trading, you will find the leverage options as in the screenshot:
Within other markets, you can use more leverage. This is because leverage is most common in short-term operations, and cryptocurrencies tend to be a medium or long-term investment. Let's talk a bit more about how leverage works:
- If you decide to invest $ 1,000 and you use leverage x2, you will be starting with $ 2,000 (remember that$ 1,000 are a “loan” from eToro).
- A few days later, Coinbase price does increases, as you thought, and now the price of your investment is $ 2,400 (20% more), so you decide to sell back.
- Once the $1,000 from leverage is deducted, you will have $ 1,400 left; which means you've earned $ 400, since the other $1,000 was yours from the beginning.
In conclusion, by investing $ 1000 you can make a profit of 40% (in the case you earn $ 400). That is pretty decent.
Still wondering where the catch is? The thing is, it can also play against you. If everything goes as planned, you will earn more money in less time; but 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 $ 40, because of the leverage. For that reason, when trading with leverage it is fundamental to be familiar with other two terms: Take Profit and Stop Loss.
Take Profit is a limit you can set when trading: you set the platform to sell your assets once they get to a point above the entry price. For instance, you can buy Coinbase shares at $ 100 and ask eToro to close your position automatically when it goes up to $ 120. It is very useful to avoid being blinded by enthusiasm: a 20% profit is usually very good, but once you see the price has risen, you might want to gain a bit more and decide to wait, but this could be a mistake. So, Take Profit helps you to trade more safely.
Also, if you use leverage you absolutely need to place a Stop Loss order (take into account that any small loss is greater with leverage). Consider that eToro will recommend a limit for Stop Loss, but you should set it closer to current price than the platform suggests.
What are the instruments you can trade in eToro?
Besides criptocurrenciesstocks, there are other financial instruments you can trade with in this broker.
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. They can be traded like regular stocks, but include a wide diversity of assets and have lower fees.
About Index Funds
In case you are interested in long-term investments, and you won't need to withdraw your money in five or ten years, index funds can be the best alternative. This type of investment is also great for beginners since it is more secure.
Unlike a lot of people think, benchmark returns are very difficult to beat and very few fund managers have done it, apart from some famous cases.
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.
Index funds offer these two advantages: most of the time, they beat active managers in the long term, and the fees are so much lower.
Most people invest in raw materials due to their stability. While other assets tend to fluctuate more, raw materials prices vary less and offer security against inflation or market volatility. However, prices do depend on supply and demand, so if the fear of possible inflation provokes greater demand for a certain good, its cost will also increase.
Note that the only intended income from the investment in raw materials will be the hypothetical capital gain after selling them: unlike stocks, these don't pay dividends.
Raw materials are generally 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 products such as sugar, cocoa, soybeans, among others.
There are lots of ways to trade cryptocurrencies: from purchasing and waiting to day trading (taking advantage of price volatility).
In case you are a beginner in the world of investment, I suggest something in the middle: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
This means that if, for example, you purchase a cryptocurrency at $ 10, it rises to $ 20, and after that it decreases to $ 12, your position will be closed at $ 16-17 and you will have made a decent profit.
Perhaps you are wondering: why not selling when the cost is at its peak? But that would only work for a psychic or a fortune-teller. The mentioned strategy is more down-to-earth and can work out perfectly if it is well applied.
Sooner or later, you will be ready for applying more advanced trading strategies, such as short-selling or using leverage.
For those who still don't have much experience in investing, using a demo account can be useful. Just make sure the virtual mode is set in the upper left corner of the page and you can start practicing with a “fictional” balance.
A virtual account can help you to practice and gain experience before starting to trade with real money. When you create your demo account, you will begin with a virtual amount of $ 100.000, to trade with a variety of financial instruments available on the platform, besides Coinbase.
Don't worry, since if you lose all your virtual funds, you can contact support so they can add back the $ 100k to your portfolio and you can make a second attempt.
Nevertheless, remember that you need to be prudent for trading, and demo account trading can have the reverse effect. It is not the same to risk your own money than to operate with virtual funds which loss does not suppose any drama.
As you may suppose, the virtual mode is kind of pointless if you want to invest in the medium or long-term (which almost assures you a profit only by replicating an index), since you would be wasting years. Demo accounts may be useful for trying out before trading in the short or medium-term.
* 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.