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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, the best way to buy Ethereum is, without any doubt, 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 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
As soon as eToro has confirmed the receipt of your credit, you just have to search for “Ethereum” 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 Ethereum?
Ethereum is a decentralized platform created to support financial applications and that works with its own token, the Ether, which is also called Ethereum. The original idea is to overcome the limitations of the Bitcoin network, where only sending and receiving cryptocurrencies can be executed.
That is why Ethereum is a programmable platform, which can support other cryptocurrencies (including Bitcoin), smart contracts and decentralized applications or dapps. And the latter are not limited only to the financial world since, we can also find games or small social networks that take advantage of the Ethereum network.
So, as these applications run on the Ethereum blockchain, there is no way to prohibit the use of a dapp or censor it. So, according to the organization itself, if Twitter ran on Ethereum, no one would be able to block an account or stop a user from Tweeting. To which are added the other features of cryptocurrencies such as anonymity and transparency.
Relationship between Ethereum, smart contracts, dapps and the Ether
Every transaction on the Ethereum network must pay a fee to complete, although it is more of a token payment because of how small they are. So just like sending money is a transaction, uploading or executing a smart contract on the Ethereum network is a transaction.
And all transactions over the Ethereum network, even if you are sending Bitcoin, must pay a small fee in the native cryptocurrency: the Ether. This commission is mainly for the network participants who validate the transactions, i.e. the miners.
A dapp is an application whose code was executed on the Ethereum network as a smart contract. This makes the application completely transparent, everyone can verify its code, it is always available and no one can ever modify it in any way.
Therefore, a financial type dapp that channels loans, for example, must pay a commission in Ether for each transaction made. Similarly, following the example of a Twitter on Ethereum, each Twit would be a transaction, even if extremely small.
The future of Ethereum and its cryptocurrency Ether
As we have seen, the Ethereum network is far superior to that of other cryptocurrencies and the number of dapps is increasing all the time.
This causes the number of transactions to increase, thus increasing the demand for the Ether cryptocurrency and with it its price. This is why we can see the evolution of its price in the cryptocurrency market.
Finally, while blockchain technology and cryptocurrencies are here to stay, Ethereum is perhaps the one with the most promising future.
Why do we recommend it?
- Really user-friendly and straightforward
- Allows to learn from other investment strategies
- Allows short-selling
- Leverage is allowed
- There are lots of possibilities for investments
Go to the official page in English: www.etoro.com *
If you are considering investing in Ethereum from Philippines, eToro may be the best option today.
eToro is known for making “social trading” a trend, an innovative form of investing in which investors can imitate the movements of other traders who have been generating income for a long time.
eToro is very helpful if you don't have much experience in trading, because it puts your investment on autopilot by repeating strategies from other experienced people with a long profit history. On the other hand, if you are an expert in the field and decide to share your techniques with others, eToro rewards you with money.
Besides, the interface of this platform is amazingly intuitive, great for a user who wants to begin in the stocks world, without stressing over lots of diagrams and numbers.
Leverage: trading with borrowed money
In case you still don't know what “leverage” is, we'll put it short: it is the ability to invest 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 and the importance of “Take Profit” and “Stop Loss”
Assuming that, for instance, you are certain that Ethereum 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.
You could consider requesting a credit at your bank, but you must know that all the process takes time, and when you receive the money, Ethereum might be already at a much higher price, so you wouldn't be able to invest the way you planned.
Leverage is just like a loan, and you will only have to click a few times to get it! You will be able to invest (and earn) much more than what you have on the platform's wallet. As in the image below, you will see the different options you have:
With other assets, you can use more leverage. The reason is that cryptocurrencies are usually medium-long term investments, and leverage is used primarily for day trading or short-term trading. That said, I'm going to explain better 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 was borrowed from eToro).
- Then, turns out that Ethereum does rises, as you thought, and now the price 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 returned, you will have $ 1,400 left; which means the net profit is $ 400, since the other $1,000 was yours initially.
By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment.
It may sound too good to be true. The trick is that the risk of losing out is also there. If everything goes according to plan and the price goes up, you will earn profits in little time; but if the opposite occurs, you will also lose more really fast.
Supposing that the price didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but $ 40, because of the leverage. Therefore, when trading with leverage it is fundamental to be familiar with two other concepts: 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 Ethereum at $ 100, you can ask eToro to close once it reaches $ 120. That way, you make sure you won't change your mind and decide to wait a bit longer in case it keeps rising, which could be a mistake.
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). For that reason, it is vital to set a Stop Loss more tight than that suggested by eToro.
What are the instruments you can trade in eToro?
You already know about criptocurrencies, there are way more financial instruments you can trade with in this broker.
Stocks or equities are the most common securities. Some enterprises decide to split into portions: you can be one of those shareholders, but first, you have to know where and how to make your investment.
There are, essentially two kinds of shares: the ones that divide their earnings regularly among the shareholders, and those that don't. The former ones are great, of course, but investing in the latter can also be a good idea since sometimes you can make even more money by selling the shares.
If you invest in equities that pay out dividends, you will receive them into your account on eToro. Therefore, you can withdraw that money or you can choose to reinvest it. Nevertheless, you can benefit a lot from compound interest, so we would suggest reinvesting.
Consider that when investing in shares on eToro you can use leverage to “dope” your trades, but in that case, you will not receive dividends as the trade would be a contract for difference. For long-term investments, it is better not to use leverage: you can end up losing money, because you will not get dividends and, on top of that, you will have to pay commissions while your operation is open.
Most investors trade with raw materials due to their stability. While other assets present higher fluctuation, commodity prices vary less and offer safety against inflation or market volatility. However, prices are subject to supply and demand in the market, so if an economic situation produces higher demand for a certain good, the price will also go up.
Note that raw materials don't pay dividends. Thus, by investing in them you will only have a further profit by selling them back.
There are two basic kinds of commodities: hard raw materials and soft raw materials. The former include precious metals (such as gold, silver, copper, and platinum), industrial metals, and oil; and the latter are agricultural products as cocoa, soybeans, rice, or sugar, among many others.
About Index Funds
Are suitable for those interested in long-term trading, mostly for beginners. If you don't need to take back your money in less than five or ten years, index funds offer you variety and lower risks.
Contrary to what it may seem, it is not easy at all to beat the market (although you have probably heard of investors who obtain huge returns).
But putting aside some remarkable cases (like Warren Buffett's), not everything is as good as it sounds: if you hear of someone who has beaten the index, it was probably for a limited time, or their rates are really high. In the end, indexing is better because commissions are minimal. Also, take into account that past performances do not ensure a future one.
Index funds provide solutions to both concerns: their rates are minor and in the long term they almost always beat active managers.
Foreign exchange trading or Forex consists, as the name says, in the exchange of currencies. Put differently, is the conversion of one currency to another, and the aim is, evidently, to make a profit out of this.
If you decide to trade EUR and USD, you acquire euros at their price in dollars, hoping that the euro will raise its price compared to the dollar. Therefore, if you purchased each euro at 1.15 USD and you sell them back when their price is 1.20 USD, that margin will be yours.
You may be thinking by now that this form of trading requires high investments, and you're right, because variations are usually minimal, and often you will need to use high leverage (which is an important risk). If you are just starting to trade, we don't recommend beginning with Forex, because it is very risky and intricate.
Most currencies are available on eToro but remember that Forex trading functions with contract for differences, therefore you will not own the underlying asset.
If you are beginning as an investor, the possibility to operate in “demo” mode may be helpful. You only need to set the “virtual” option and you will be able to trade with an imaginary balance.
A virtual portfolio can help you to practice and gain experience before starting to operate with real money. When you open your demo account, you will begin with a virtual amount of $ 100.000, to operate with a variety of financial instruments available on eToro (not just with Ethereum).
If your trials don't go as planned and your balance ends at zero, you can always ask eToro support to replenish $ 100k of virtual funds. The second try will probably be better.
But keep in mind that you need to be prudent for trading, and demo account trading can have the opposite effect. It is not the same to risk your real savings than to operate with a fake balance that you don't mind losing.
As you may suppose, if you are interested in investing in the long or medium-term, there is no point in using the virtual mode and having to wait for years. On the other hand, it can be very useful if you want to practice short and medium-term investment.
We mentioned before that one of the best things about eToro is how simple it is to use the interface. You don't need to read a lot or have previous knowledge to start investing.
You won't have any issues with the interface if you have used any of the most common social networks.
We will explain, roughly, the registration steps and the different sections that you will find.
When you register, you will have to enter all the information that eToro asks for: first and last name, address…
During the sign-up process, you will also have to answer some questions about your previous experience as an investor.
However, it's not like they're testing you or anything. They only intend to know how much knowledge you have and what type of financial instruments they can recommend. For example, if you have never invested before, 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 can put alarms on the price of certain assets. You only need 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 share their experiences and knowledge.
In “Discover” you will find the investment tabs: “Instruments”, “People” and “CopyPortfolios”. As we discussed in this guide, the six types of instruments on eToro are:
- Forex trading
- Index funds
In the section “People” are all the profiles and historical performances of other users, and you can replicate their movements with just one click. This is where the “social trading” concept is best applied.
In this section, you can search and find users according to your interests. When you choose an investor and indicate the amount you want to invest, eToro will automatically replicate their movements, proportionally. If you invest $ 1000 and the trader puts 20% of their funds in an asset, the platform will invest $ 200 of your balance in the same asset or company as well.
You will also find the CopyPortfolios divided into three main categories: “Top Trader”, “Market” and “Partner”.
The advantage of copying to CopyPortfolios instead of specific traders is that this way the risk will be more diversified. There are all kinds of portfolios that you can recognize easily and are divided by sectors. So, in case you suspect a specific sector, like fashion or oil, will prosper in the future, you should look for that specific portfolio.
* 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.