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www.etoro.com *
*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.
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How to buy
For those who live in Philippines, a great 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 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 our 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.
Now 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.
How to make your first trade
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.
Contents
About 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?
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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.
What financial instruments can you trade in eToro?
Besides criptocurrencies, there are a few more financial instruments you can trade with in this broker.
About ETFs
Exchange-Traded Funds or ETFs are a kind of passively managed fund, similar to index funds. They can be described as a merge between stocks and mutual funds, including the best features of both. They are publicly traded, that means they can be bought and sold at any moment at market price. However, their advantage is that they offer more alternatives compared to stocks, and have lower fees.
Equities
Now let's discuss the most popular instruments: stocks or shares. Stocks are fractions in which a corporation can be shared. You can get dividends through third-party companies just by putting your money in them. But of course, you have to know how to invest.
There are, basically two types of shares: the ones that divide their earnings regularly among the shareholders, and those that don't payout. The former ones are great, obviously, but investing in the latter can also be a good idea since sometimes you can make even more money by selling the shares.
When trading on eToro, if you invest in stocks that give dividends, you will receive them in your account, and you can withdraw those funds or invest them back. We suggest, if you don't need the money right away, that you don't renounce the magic of compound interest and reinvest it in the company.
If you invest in stocks on eToro, you can use leverage to “dope” your trades. However, it is not advisable, since it would be a CFD and you would not receive dividends. On top of that, shares are usually long-term investments, and you have to pay commissions during the time your operation is open.
About Index Funds
If a long-term investment sounds like something you would do, and you won't need to withdraw your money in at least five years, index funds can be the best alternative. This type of investment is also suitable for beginners since the risks are much lower.
You may think differently, but 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 (with minimal commissions).
The good thing about index funds is that they solve both issues: their fees are insignificant and they beat active managers almost all the time, although in the long term.
Commodity market
The main attraction of trading with commodities is that their price fluctuates less than that of other financial assets. In fact, their intrinsic stability is what makes people often invest in raw materials, to take refuge from economic adversities or fears of inflation. Despite that, the cost of commodities is determined by supply and demand, so if faced with the fear of inflation, demand rises a lot, so will the price.
Consider that commodities don't pay dividends. Therefore, by investing in them you will only have a further income by selling them back.
There are two basic types 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 goods as cocoa, soybeans, rice, or sugar, among many others.
Forex trading
Forex or currency trading is the exchange between two currencies.
If you decide to exchange EUR and USD, you purchase euros at their price in dollars, expecting that the euro will increase compared to the dollar. Then, if you bought each euro for 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 trading with currencies requires investing considerable amounts, and you're right, since increases in prices are never that dramatic, and often you will need to use high leverage (which sometimes can be too much of a risk). In case you are just starting in trading, we don't recommend beginning with Forex, because it is very risky and complex.
You can trade with the most common currency pairs on eToro but take into account that this market works with contract for differences, so you will not be the owner of the underlying asset.
What are CFDs?
If you have entered eToro previously, you must have noticed that the initials CFD appear frequently. Before we come back to it, you should know that CFDs on eToro are only possible if you go short.
FYI, and if you are thinking about day trading cryptocurrency or other practices, you will also meet concepts like short-selling and leverage.
The advantage of eToro is that it allows you to bet both “in the black” and “in negative”. For instance, you have the conviction that the Uniswap will fall, so perhaps you think that the best thing to do is refrain from getting in until it does. But if it really falls, it might mean extra money for you.
You can accomplish that by “going short”. More or less, this is how it works:
- You ask for a loan of, let's say, 100 units of Uniswap, which total price at that moment is $ 5,000 (obviously, these numbers are made imaginary)
- You sell the 100 units and earn $ 5,000
- As you presumed, the price falls, and the unit of Uniswap goes from $ 50 to $ 30
- You purchase the 100 units again, but at $ 3,000
- You return the 100 units
- The difference is yours, so, you will have earned $ 2000
Take into account that it seems much more complicated than how eToro CFDs actually work: we can summarize this whole operation by saying that by trading in Uniswap you can also earn money if you predict it will fall.
Futures Vs CFD
What are the main differences between CFDs and Futures?
- Which are the counterparties? 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. CFDs don’t have expiration date
- Variety of options: The market for Futures is narrower. CFDs include a wide range of possibilities.
- Minimum investment amount or “trade size”: Being higher figures, Futures require, proportionally, lower costs. Costs for CFDs are a bit higher, although not too much.
- Use of leverage: with Futures, it isn’t possible; while with CFDs it is.
How to deposit funds on eToro
Within the payment methods accepted on eToro you will find: credit card, PayPal, bank transfer, Neteller, and Skrill. There is not much to say here: making a deposit with eToro is really simple. You just have to go to “Deposit funds”, choose an amount and the payment method you prefer.
Remember that for security reasons, you need to be the owner of the account or the credit card.
You can start with a $ 200 deposit, and there is a limited maximum for unverified accounts. So, if you aim to operate with large amounts, you should contact Support to verify your account.
You can make the deposit in any currency and eToro will do the conversion to USD. Nevertheless, it is better to deposit directly in USD since the platform charges a fee for the conversion.
Trading strategies
When trading cryptocurrencies, there are different possible methods or strategies, like buying and holding or day trading (and using price fluctuation to your advantage), for naming just a few.
My recommendation for those who are starting to invest is something in the middle: placing a dynamic stop-loss (15-20% under the highest price) when you open your Uniswap operation and wait for it to work.
Therefore, if for example you acquire a cryptocurrency at $ 10, it reaches $ 20 and then falls to $ 12, your position will be closed at $ 16-17 and you will have earned a considerable profit.
You may be wondering: why not selling 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 give good results.
At some point, you can take your first steps with advanced trading techniques, such as going short to profit from bear markets or using leverage.
Trading with leverage
In case you still don't know what “leverage” is, we'll put it short. When trading, it's the capacity of increasing your investment without putting more money. That way, if you start with $ 100 and you leverage x2, your initial investment will be $ 200.
What you should know about leverage
Suppose now that you know that the price of Uniswap is going to raise its price, thus you are thinking about “going long”.
You are certain that Uniswap will rise, and you just have $ 1,000 at that moment, but the fact is, you have the chance of investing more.
You could go to your bank, ask for a credit, wait for it to be accepted and receiving the money, send the money to eToro, confirm that it arrived, and then purchase Uniswap… But by that moment it is possible that your prediction was confirmed a long time ago, and Uniswap would be already so high that it is not worth trading.
Leverage is 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 money than what you have on the platform. Before trading, you will how much leverage to use as in the image:
With other assets, the ability to leverage is greater. 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.
You enter with $ 1,000 and pick leverage x2, then you would really invest $ 2,000, since eToro would put the other $ 1,000.
A few days later, as you predicted, Uniswap has risen by 20% and your money has appreciated reaching $ 2,400. But you don't want to take too much risk, so it's time to sell.
You will have to give back the $ 1,000 of leverage and you will have made $ 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.
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; however, if the value of the asset decreases, you will also lose more in less time.
Let's suppose that the price didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but double, $ 40. That is why to operate with leverage it is fundamental to know about Take Profit and Stop Loss.
Take Profit is the automatic order to sell once the asset is above the entry price: you purchase Uniswap at $ 100 and you ask eToro to automatically close your operation as soon as the price reaches $ 120. It is very useful to avoid being blinded by enthusiasm: we would all accept a 20% profit when making the investment, but when you reach that 20% it is easy to want some more and risk losing it all. It's like you got assured in advance that you won't be irresponsible.
Stop Loss is even more important, especially when trading with leverage, since a small loss could have a significant impact. Always remember to set a Stop Loss lower than that suggested by the platform.
How does a demo account work?
In case you are taking your first steps as an investor, the option to operate in “demo” mode will be helpful. You only need to set the “virtual” option and you will be able to operate with “imaginary” funds.
A virtual portfolio can be a good way of gaining confidence before starting to trade with real funds. When you create your demo account, you will begin with a virtual amount of $ 100.000, to operate with a variety of assets available on the platform, besides Uniswap.
The first attempt is not usually that good. But don't worry, because you can ask eToro to deposit back the virtual $ 100k to your portfolio.
Nevertheless, remember that trading is mainly about being cold-minded, and using a practice account can have the reverse effect. It is completely different to risk your own money than to operate with virtual funds that you don't mind losing. Also, 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 investing in the long or medium-term, it makes no sense that you try the virtual mode and wait for years. On the other hand, it can be ideal if you want to practice short and medium-term investment.
Common 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.