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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 Philippines, a great way to buy Bitcoin is, definitely, this popular broker.
eToro*, one of the main brokers around the world, is registered and licensed, among others, by the Cyprus Securities and Exchange Commission, and therefore complies with all the regulations of the European Union, the most demanding in the world.
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 Philippines, 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 button 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 “Bitcoin” 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 Bitcoin?
Bitcoin is a platform created by Satoshi Nakamoto, whose true identity is still unknown, and launched in 2009. It was conceived as a peer-to-peer, decentralized, open source payment network that works with cryptography on a blockchain.
Its token or cryptocurrency, named the same as the platform (Bitcoin) is used as a means to transfer value, as a commodity and as an investment asset. The latter due to its price volatility, which allows investors to extract large profits from the market in a short time.
Principal characteristics of Bitcoin
There is no way someone else can charge you or make payments with your money without your authorization. In addition, all transactions are secured by military-grade cryptography, ensuring that Bitcoin always reach their destination.
There is no central body regulating Bitcoin, instead, transactions are validated by participants and recorded on the blockchain.
Impossible to forge:
Because Bitcoin works with cryptography, it is not possible to counterfeit a token or use it twice, thus preventing fraud.
It is possible to make transactions without revealing your identity, thus avoiding the problems caused by using credit card numbers.
With Bitcoin, you can complete a transfer from South Africa to Canada in less than 10 minutes. Compared to an international bank transfer which takes at least three days.
Ease of use:
You can make a payment from your cell phone anywhere, anytime by simply scanning the Bitcoin destination address.
As well as transfer speed, low fees give Bitcoin an advantage over traditional banks. Sending and receiving money with Bitcoin has fees close to zero and when they are very small amounts, no commission is applied.
All transactions are recorded on the blockchain and once recorded, they are impossible to modify. In addition, the blockchain is an accounting ledger that can be accessed by anyone and verify the veracity of the information.
The future of Bitcoin
Bitcoin is here to stay and not only among cryptocurrency enthusiasts since, a growing number of large companies are beginning to accept Bitcoin as a form of payment. Among these we can mention:
And more and more companies are joining those that already accept Bitcoin to the point that, surely in your locality, there are also small businesses that accept the cryptocurrency as a form of payment for their products or services.
Is eToro reliable for purchasing Bitcoin?
eToro is very rigorous with the information about past performances from traders, and its integrity has been tested many times by independent organizations.
The main headquarters of eToro is located in Cyprus, and therefore the broker is approved by the Cyprus Securities Market Commission (or CySEC), which covers debts up to € 20,000 from its clients. Furthermore, eToro follows all the strict policies of the European Union.
In Europe, it is backed by the European Financial Instruments Market (MiFID), and in the USA it is under the control of the Financial Conduct Authority (FCA). In addition to all these regulations, eToro has more than 20 million users around the world, and it has been operating for fifteen years. In short, we can be confident that our money is in good hands.
It is also worth mentioning the good functioning of its customer service. You can reach them by phone or use their live chat.
About Contracts for Difference
You probably have seen the acronym CFD now and then if you entered eToro before. We will explain exactly what this means, but you should know first that CFDs on eToro are only possible when you go short or leverage above x2 (nevertheless, the platform does not even allow this).
We will also explain concepts like going short and leverage, in case you are considering day trading cryptocurrency or more advanced practices.
eToro allows you not only to bet when you are “in the black”, but through CFDs you can also bet “in negative”. Let's say that you are sure that the Bitcoin will go down, so perhaps you think that the best thing to do is wait until it does and then go in. However, if it actually falls, you can earn some money out of that.
You can do that by “going short”. Here's how it works:
- Someone lends you, for example, 100 units of Bitcoin, with a total value of $ 5,000 (these numbers are imaginary)
- You sell them at their price at the moment, $ 5,000
- As you supposed, the price falls, and the unit of Bitcoin now costs $ 30 instead of $ 50
- You get the 100 units again, but their current value is now $ 3,000
- You return the 100 units to whoever loaned them to you
- You save the $ 2000 difference!
Take into account that it seems much more tricky than how eToro CFDs actually work: we can just say that by trading in Bitcoin you can also make money if you predict it will go down.
Differences between futures and CFDs
Here is a brief comparison between Futures and CFDs, in case you want to know more:
- Futures: the exchange is made with another trader.
- CFDs: you don't operate with someone else, the counterparty is the broker, in this case, eToro.
- Expiration date:
- Futures: there is an expiration date. Once the contract expires, it is closed and can't be reopened.
- CFDs: there is no expiration date. It is possible to wait until you are in a good shape to exit.
- Options for trading:
- Futures: it is more restricted
- CFDs: there is an enormous amount of options for trading
- Minimum investment amount or “trade size”:
- Futures: you have to invest much more
- CFDs: it is very low
- Trading costs:
- Futures: as you need to invest more, costs are lower
- CFDs: higher (although not too much)
- Use of leverage:
- Futures: you can't leverage
- CFDs: completely available
Instruments available in this broker
Besides criptocurrencies, there are way more financial instruments available.
This is the best option for people who can invest in the long term, mostly for those who are starting to trade, because it is less expensive, diversified, and safer.
You may have a different idea, but very few investors can beat their benchmark return (although you have probably heard of managers who achieve huge profits).
But putting aside some unusual cases (like Warren Buffett's), not everything is as good as it sounds: when someone brags about having beaten the index, they have probably done so for a short time, or the rates are so high that it ends up being better for you to index (whit minimal commissions). Also, take into account that past performances do not ensure a future one.
Index funds offer solutions for that: they usually beat active managers in the long term, and the commissions are lower than you imagine.
What is an ETF?
What do you know about Exchange-traded funds or ETFs? They are passively managed funds, known for combining the advantages of stocks and mutual funds, because they can be traded at any moment in the market, but have much more diversity and the fees are significantly lower.
Commodities (raw materials)
Most investors trade with raw materials because of their stability. While other assets tend to fluctuate more, raw materials prices vary less and offer safety against inflation or market volatility. Nevertheless, prices do depend on supply and demand in the market, so if an economic situation provokes greater demand for a certain good, the price will also go up.
Consider that, unlike stocks, raw materials don't pay dividends. Thus, by investing in them 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 (for instance, iron, nickel, or aluminum), and oil; while the latter are agricultural goods, like wheat, soybeans, vegetables, or even dairy.
Forex or currency trading allows obtaining profits by converting one currency for another.
In case you want to trade EUR and USD, you speculate how many dollars it will take to buy a euro, thinking that after buying the first currency (the euro) it will revalue 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 a euro is worth 1.15: as a result, that margin will be yours once you sell back.
Perhaps you already inferred this, but operating with foreign exchange requires investing a lot, since variations tend to be low, or using a lot of leverage, which is a bit like skating on thin ice. In case you are just starting to trade, we don't recommend beginning with this market, because it's not the safest alternative.
You can operate with almost all well-known currency pairs on eToro but take into consideration that Forex trading works through CFDs, which means you will not own the real asset.
Let's discuss the most well-known financial instruments: stocks or shares. Stocks are the parts in which an enterprise that chooses to go public is divided. You can own a proportion of a company and have returns, but you must know where to invest your money.
There are two types of stocks: the ones that divide their earnings regularly among the shareholders, and those that don't. The former ones are great, obviously, 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 equities that give dividends, these will be reflected in your balance, and you can collect them in cash or reinvest them. We recommend, if you don't have financial urgencies, that you benefit from compound interest and reinvest it in the company itself.
Take into account that on eToro you can use leverage to “dope” your trades, but in that case, you will not receive gains as the trade would be a contract for difference. For that reason, for long-term investments, it is not advisable to use leverage: not just because you lose dividends, but you will also have to pay commissions while you keep the position open, and these can end up with your gains.
Do you know what “social trading” is?
The first platform that thought of trading as a social activity was eToro, and the idea spread like wildfire. Other brokers have also taken 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 real achievement was in allowing users to replicate the moves of experienced traders, who were in turn paid for their ideas.
In the left menu of the site, you will see “Copy People” and “Invest in CopyPortfolios”.
“CopyPortfolios” are types of ETF or thematic index funds, a portfolio that includes a number of different assets of the same sector. For example, if you anticipate that a particular sector will have significant profits but you are not sure which investments to make, you just have to pick a portfolio that groups together a variety of related companies in that industry.
You should know that in the last twelve months, CopyPortfolio has generated returns of 100%. And you can benefit from it just by choosing a portfolio, enter your selected amount, place the stop-loss and click on “Invest”.
But it is also possible to copy other users of the platform who are successful investors. With “Copy People” you can locate them and duplicate their moves easily.
In each user profile, you will see their risk profile (the higher the risk, the more chances of winning more and losing more), their performance, and the kind of instruments they trade..
Copying strategies from others can be very interesting and useful, but I also recommend taking advantage of the community to read other users and learn from them. It is a great source of information and knowledge, especially if you want to turn investing into a lifestyle.
You can operate cryptocurrencies in many different ways: from buying and waiting to day trading using price volatility to your advantage.
In case you don't have much experience in investment, my suggestion is something in the middle: placing a dynamic stop-loss (15-20% under the highest price) and wait for it to work.
For instance, if you buy a cryptocurrency when its price is $ 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 fine profit.
Perhaps you are wondering: why not selling back when the cost is at its maximum? 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.
Later on, you will be able to apply more complex techniques, like short-selling or using leverage.
In case you are taking your first steps as an investor, the option to operate in “demo” mode may be useful. You only need to set a virtual account and you will be able to trade with an imaginary balance.
This option is great for those who are new to this world and want to put their talents to the test before playing for real money. With your virtual account, you will begin with a $ 100,000 balance (which of course, is fake) to do all the operations that you can think of: not only with Bitcoin, you can also create a diverse portfolio.
Don't worry, since if you lose all your virtual balance, you can contact support so they can add back the $ 100,000 to your portfolio and you can make a second attempt.
Take into account that you should always be cold-minded when investing, however, using a virtual portfolio might have the opposite effect. It will never be the same as risking your own money.
And of course, the demo mode is kind of absurd if you intend to invest in the medium or long-term (with almost guaranteed returns only by replicating an index), since you would be wasting years to see the results. Virtual accounts may be useful for trying out before investing 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.