eToro, an advisable online broker for those in New Zealand who want to purchase Tezos
Why do we recommend it?
- It is possible to invest in countless of different products
- Leverage is allowed
- It is uncomplicated and easy to use
- It uses other successful investment strategies so you can copy them
- Allows you to go short
Official homepage: www.etoro.com/tezos
In case you are considering it, eToro is probably the best way to buy Tezos from New Zealand.
“Social trading”, a relatively new way of investing by replicating techniques and moves from other experienced investors, has become popular because of eToro.
If you are still a newbie or do not have much investment experience, eToro is very helpful. You can rest assured that you will be making a smart investment since the site replicates those from subjects with a great deal of expertise. And for those skilled investors willing to share their techniques, eToro rewards your knowledge with money.
Besides, the platform is so uncomplicated, great for a user who wants to start learning about Tezos and trading, without getting crazy with lots of diagrams and numbers.
How to use eToro
We mentioned previously that eToro is very friendly and intuitive. Anyone can start using it without previous knowledge or long explanations.
If you have used any of the most common social networks, such as Instagram or Facebook, you can perfectly use this platform.
We will explain the registration steps and the different tabs that you will find on eToro.
First of all, you will have to fill in your personal data.
During the sign-up process, you will also have to answer some questions about your previous experience as an investor.
But don't worry: it's not about passing an exam. It is only a way of finding out how much knowledge you have and what type of financial instruments they can suggest. For example, if it is your first experience in the investment world, they will not suggest that you invest in futures.
Let's review the different functions of the interface.
“Set Price Alerts” allows you to set 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 want to purchase a security that is falling, but perhaps you think that it has not finished falling yet.
The section “News Feed” allows users to interact and learn from each other by sharing their opinion and experiences.
“Discover” includes the tabs “Instruments”, “People” and “CopyPortfolios”. And we discussed previously in this guide the kinds of assets that are available on eToro:
- Raw materials
- Forex trading
- Index funds
In the section “People”, you will find eToro users and their past performance. This is where you can duplicate with just one click the movements of the traders that you find most inspiring.
You can search and find users according to your interests. When you select an investor and indicate the amount you want to invest, eToro will automatically replicate their movements, proportionally. For example, if you invest $ 1000 and the trader puts 20% of their funds in an asset, the platform will also invest 20% of your money in the same asset, in this case, $ 200.
You will also see the three main types of CopyPortfolios, which are “Top Trader”, “Market” and “Partner”.
Sometimes you might prefer copying to CopyPortfolios than to individuals, because you avoid putting all your eggs in one basket, or in other words, risk is more diversified. Besides, the portfolios are easily identifiable: one about gaming, another about large drone companies, another about pharmacy … You think that a certain sector will prosper anytime soon? Then you will surely find a CopyPortfolio about it.
Can you rely on eToro?
eToro is very rigorous with the information about past performances from traders, and its integrity has been tested several times times by independent organizations.
eToro complies with all the strict policies requested by the European Union, legislation in which it is found. Specifically, its main offices are in Cyprus, where it is approved by the CySEC or Cyprus Securities Market Commission, which can cover up to € 20,000 of the debts from its clients, including those from New Zealand.
It is also supported by the European Financial Instruments Market or MiFID, and in the USA it responds to the Financial Conduct Authority (FCA). In addition to all these regulations, eToro has worked for fifteen years, with more than 20 million users around the world, so we can rest assured that our funds are safe.
No less important is their excellent customer service. You can reach them by phone or use their online chat.
Have you heard the term “leverage”? We'll put it simply:
trading allows you to invest higher figures than you can have in a given time. Let's say that you enter with $ 100 and you use x2 leverage, you will be actually investing $ 200.
Leverage and the importance of “Take Profit” and “Stop Loss”
Let's say that you have complete certainty that Tezos will raise its price, and you consider “going long. You have $ 1,000, but you actually can invest more and make more money.
There's the possibility of requesting a credit, but it is a process that takes time, and by the moment you receive the money, Tezos might be already so expensive that investing wouldn't be convenient anymore.
Leverage is just like a loan, but it is only a few clicks away! You will be able to invest (and earn) much more than what you have on the platform's wallet. Before trading, you will how much leverage to use as in the image below:
When trading with other assets you can use even more leverage. The reason is that leverage is regularly for short-term operations or day trading, and cryptocurrencies tend to be a medium or long-term investment. That said, I'm going to explain better how leverage works.
You enter with $ 1,000 and decide to use leverage x2, which means you would have $ 2,000 to invest (the extra $ 1,000 to reach $ 2,000 are “borrowed” from eToro).
A few days pass and, indeed, you were right: Tezos increases by 20% and your money has appreciated reaching $ 2,400. Ok, don't be greedy, let's sell.
Obviously, the 1k $ from leverage will be deducted, and you'll have $ 1,400 left, of which $ 1000 is the money you put in yourself, so you'll have earned $ 400.
In conclusion, by investing $ 1000 and obtaining $ 400, your net profit would be 40%. That is pretty decent.
Does it sound too good? The thing is, it can also play against you. If everything goes according to plan and the price goes up, you will earn profits in little time; but in the opposite case, you will also lose more really quickly.
For example: if the price falls by 10%, you do not lose $ 10, but twice (the leverage) that figure, that would be $ 20. Because of that, the concepts of Take Profit and Stop Loss are crucial when trading with leverage.
Take Profit is the automatic order to sell once the asset is above the entry price: you buy Tezos at $ 100 and you ask eToro to close your operation as soon as the price goes up to $ 120. It is very useful to avoid being blinded by enthusiasm: a 20% profit is usually pretty good, but once you see it goes up, 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.
Stop Loss is even more important, especially if you trade with leverage, because a small loss with leverage can be fatal for your wallet. Always remember to establish a Stop Loss lower than that suggested by eToro.
eToro deposit methods
When it comes to depositing funds on eToro, there isn't really much to say, since it is pretty simple. Just click “Deposit funds”, put an amount, and choose the payment option you prefer. You can pay with PayPal, bank transfer, credit card (Visa, MasterCard, Diners, Visa Electron and Maestro), Skrill, or Neteller.
(Keep into consideration that you should be the account or credit card holder, for security policies).
You can start from $ 200, and there is a limited maximum for unverified accounts. Thus, if you intend to trade with large amounts, you will need to verify your account previously.
You can pay in any currency you want and eToro will automatically convert it to USD. However, it is better to use USD anyway since the platform charges a commission for the conversion.
What do you know about Exchange-traded funds or ETFs? They are similar to index funds and are known for combining the advantages of stocks and mutual funds: they can be traded at any moment in the market, but offer much more variety and the fees are significantly lower.
Forex or currency trading is the exchange between two currencies.
For example, if you decide to exchange euros and dollars, you speculate how many dollars it will take to buy a euro, with the expectation that after buying the first currency (the euro) it will increase compared to the second (the dollar), to make a profit by selling it. Let's say you entered when a euro is worth 1.10 USD and you leave when the price has gone up to 1.15: that difference is yours once you make the operation.
As you may have already inferred, operating with currencies usually implies investing a lot, since variations are normally low, or using much leverage, which you know is a risk. In case you are a novice in trading, we don't recommend beginning with Forex, because it's not the safest alternative.
Most currencies are available on eToro but remember that in Forex sales are always made through contract for differences, so the underlying asset won't be yours.
About Index Funds
This is the best option for people who can invest in the long term, mostly for beginners, because it is less expensive, diversified, and the risk is lower.
You may think differently, but benchmark returns are very difficult to beat and very few fund managers have done it, apart from some specific cases.
In practice, if a fund manager achieves to beat the benchmark, it is only for a short period or on a specific occasion. Or perhaps they would charge very high fees and indexing would be a better decision.
Index funds offer these two great benefits: although in the long term, they frequently beat active managers, and the commissions are so much lower.
Commodities or raw materials
The main benefit of investing in raw materials is that prices are more stable than those of other financial assets. Actually, their intrinsic stability is what makes people often invest in raw materials, to take refuge from possible inflation or market volatility. Even so, the cost of commodities depends on supply and demand, so if faced with the fear of inflation, demand rises a lot, so will the price.
Consider that raw materials don't pay dividends. Therefore, by trading with these you will only have a further income by selling them back.
Commodities can be classified into two main types: hard raw materials and soft raw materials. The former include precious metals (such as gold, silver, copper, and platinum), industrial metals (like aluminum, iron, or zinc), and oil; while the latter are agricultural resources, like sugar, coffee, corn, soy.
About Contracts for Difference
If you already have been on eToro, you must have seen how the initials CFD appear over and over. Before we explain this further, you must know that CFDs on eToro are only possible when you are short-selling.
For the record, and if you want to try at some point day trading cryptocurrency and other advanced operations, you will also meet terms like short-selling and leverage.
Even if you don't have a positive balance, you can still operate on eToro with CFDs. Let's say that you have the certitude that the Tezos will go down, so perhaps it is obvious to think “if it is going to depreciate or go down in price, I'll just wait and go when it has gone down”. Nevertheless, if you are almost sure that it is going down, why not making some profits out of it?
You can do by “going short” which consists in something like this:
- You obtain from a loan 100 units of Tezos, with a total price of $ 5,000 (these numbers are imaginary)
- You sell the 100 units at $ 5,000
- The Tezos devaluates from $ 50 to $ 30
- You obtain the 100 units again, but their current value is now $ 3,000
- You pay back the 100 units
- You save the $ 2000 difference!
It is far more simple than it may seem. Just consider that by trading in Tezos on eToro, with CFDs you can make a profit if you foretell downs in the price.
You can operate cryptocurrencies in many different ways: from purchasing and waiting to day trading using price volatility in your favor.
My recommendation for those who are starting to invest is going for a middle point: when you open your Tezos position, set a dynamic stop loss 15-20% below the top price, and forget about the operation.
For example, if you purchase a cryptocurrency at $ 15, it increases to $ 25 and decreases again to $17, the stop-loss will allow your operation to be closed, maybe at $ 21 or $ 22. Therefore, you will obtain a good profit.
You may be wondering: why not selling back when the price is at its peak? But unless you are a psychic, that is just not possible. The mentioned strategy can work perfectly and is more realistic.
At some point, you can take your first steps with advanced trading strategies, such as using leverage or going short to profit from bear markets.
How does a demo account work?
Are you taking your first steps in trading? 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 trading with fictional funds.
This can be a great way of practicing before starting to trade with real funds. You will have an amount of $ 100.000 (“fake” or virtual, of course) to begin with, and you will be able to trade with all the different assets available on eToro, not only with Tezos.
Don't worry, since if you lose all your virtual funds, you can contact support so they can add them back to your portfolio and you can make a second attempt.
But remember that you need to be prudent for trading, and demo account trading can have the reverse effect. It is completely different to risk your real savings than to trade with virtual funds that you don't mind losing. Besides, using fake money can prevent you from learning to control your emotions, something you should be able to do when trading.
As you may suppose, if you are interested in trading in the long or medium-term, there is no point in using the virtual mode and having to wait for years. But it can be very useful if you want to practice short and medium-term investment.