Trading in cryptocurrencies is becoming increasingly popular and eToro is without a doubt, one of the world’s leading exchange and trading platforms.
In 2017, they announced the impending launch of a blockchain wallet for multiple assets that would allow users to store all of their blockchain-based currency in one location, making it much easier for traders that hold a diverse portfolio, to trade all of their assets efficiently.
So far, the wallet has not been launched, but in this article, we will take a closer look at eToro, the types of trading that can be done on it, and why you should give it a go for yourself!
Let us read on to find out more.
What Is eToro?
eToro is what is known as a social trading platform.
In other words, it is a totally global investment marketplace where users and traders can trade a range of fiat currencies, cryptocurrencies, commodities, CFD stocks, indices via the internet.
The aim of the game is to allow beginner, intermediate, and experienced investors to benefit from each other’s experience, whilst also realising the collective potential of the trading community in a simple and easy to understand manner.
The company was founded as RetailFX in Israel back in 2006 and it now has offices in Cyprus, Israel and the United Kingdom. In addition to this, it is regulated by CySec, the FCA and several prominent, American regulatory authorities.
eToro also has a presence in Australia through its relationship with IC Markets and it boats globally, over 6 million users.
What makes eToro really stand out from the crowd of other service providers is its social aspect.
Through its innovative OpenBook trading platform, investors can trade in a range of financial instruments and its CopyFund feature allows beginner or less-experienced traders to copy the trading decisions of more experienced traders which allows them to make less risky decisions whilst they are still learning the way that the markets work.
This type of trading can also increase the chance of success as they are benefiting from the experience of a professional, rather than taking the risky trades of a beginner.
By leveraging the skills of the top, community traders, less experienced traders can hope to increase their revenue stream more quickly.
For more detailed information, visit our eToro Review.
Different Kinds Of Trading On eToro
First of all, you need to decide what it is that you want to trade.
On eToro, you can trade on the value of oil, gold, silver, platinum, fiat currencies such as € and $, cryptocurrencies such as Bitcoin and Ethereum, or stocks and indices.
Then you need to decide which method of trading you will go for and these are regular trading or margin trading.
The typical kind of trading you can engage in on eToro is known as regular trading. For example, the EUR/USD rate represents the number of USD that a single EUR could buy you.
If you believe that the value of the Euro will increase against the value of the US Dollar, then you buy Euros with US Dollars so that then if the exchange rate rises, you sell the Euros back and are able to cash in the profit that you have made.
But this type of trading is not just limited to currency, you can trade on the value of stocks and indices, precious metals and oil, as well as cryptocurrencies.
eToro allows you to trade with all of these things on its platform, and you can even trade fiat currencies for cryptocurrencies and vice versa.
Margin trading is a particular way of trading which allows you to borrow funds from the broker or a peer and then use it, along with your funds to make a trade.
It means you can invest more than the capital you have with a leverage of 1:2 or 1:3 for example.
This means that if you trade successfully you can get more of a return than if you just traded the capital that you have. Of course, you have to then pay the loan back with a small fee, but you will still make a bigger profit.
With this kind of trading, there are much higher risks as making the wrong decision could saddle you with rather large risks and therefore it has earnt its reputation as something of a double-edged sword.
The word “margin” refers to the value of the funds that the trader must put up from their own capital, and the general rule is that the more volatile the asset being traded, the higher the amount that they need to put up from their own pocket.
On eToro, the leverage ranges between 1:2 and 1:400, all depending on the asset that you are trading.
For example, if you invest $50 with a leverage of 1:400 then the size of your actual trade will be $20,000 or if you were investing in Samsung at a leverage of 1:10 then the margin would be 10% which means you would need to invest $100.
If the current Samsung stock price is $136 then you would receive the equivalent of 7.35 Samsung Shares.
Margin trading is pretty complicated stuff and if you do it wrong or make some rookie mistakes then it can be completely disastrous.
It is best to leave this more complex way of trading to the experts or professional investors, or at least wait until you have got the hang of trading a bit more.
The eToro Wallet And Exchange
Mid-last year, eToro accounted their plans to launch a pilot blockchain wallet for users that would allow them for the first time to both store and exchange multiple cryptocurrencies and assets in the same wallet.
At the moment, this level of convenience is completely unavailable with blockchain wallets only allowing a single denomination of cryptocurrency in them at one time.
The plans for eToro’s wallet were announced at the St Petersburg Economic Forum 2017, a yearly Russian business event with a focus on the economic sector.
This wallet will be useful for eToro users as it will allow the individual to see all of their cryptocurrency assets on the blockchain, as well as exchange them across the applicable blockchains.
Being able to purchase different assets through the same wallet is also a big bonus for eToro users.
CEO of eToro, Yoni Assia said that
“Blockchain is the biggest innovation in financial services since the introduction of computers into finance and has the potential to disrupt how all financial services companies will work in the next 20 years. We want to make it easy for people to own, manage, and exchange assets on blockchain, that’s what the Blockchain Wallet is all about.”
This news follows on from last year’s announcement that eToro would now support the trading of Ethereum as an instrument.
This means that users are able to trade based to trade on the ETH/USD exchange rate and since then, the cryptocurrency has been one of the fastest growing instrument, not just in terms of adoption, but also in its value.
To date, we are still awaiting the launch of the wallet but like with all good things, we are prepared to wait.
With a dramatic increase in the value of blockchain-based currencies, as well as their soaring values, let us hope that it comes sooner rather than later!
Social Trading On eToro
One of eToro’s most unique features is its social trading feature.
As the platform has millions of users in over 140 countries, they have been able to condense this knowledge and experience into some specially designed trading tools.
A good example of this is their CopyTrader technology which allows clients to create “copycat” traders based on another, more experienced trader’s portfolio and trading decisions.
This is done automatically and allows less experienced traders to be in with more of a chance to get a better outcome on their trading activity, by tapping into the knowledge and experience of someone else.
This social trading platform means that anyone can become a leader or a follower– even if you want to trade on your own, you can do that also, but it is always nice to have a helping hand if needs be.
CopyTrader is very simple to use and it is both intuitive and easily accessible for both new, and experienced investors.
It lowers the risk when it comes to trading and allows users to spread out their invested capital on various markets by copying a range of different traders.
An interesting statistic from eToro is that since the feature was launched in 2010, approximately 78% of all copied trades were then closed in a profit. Whilst there is always a risk of loss with trading, this is a pretty good statistic.
The platform also allows you to view data about the investor such as their portfolio, their track record, and risk score which means the user can make an informed decision before deciding to copy their trades.
There is also a social trading newsfeed available on the interface which means that you can stay up to date with news and information from other traders.
By following successful traders on the newsfeed, the user can educate themselves further on the ins and outs of the trading world.
Why Should You Trade On eToro?
When it comes to why you should trade on eToro, there are lots of good reasons.
First of all, if you are not a professional trader and don’t know much about it, then eToro are on hand with lots of information to help you get to grips with it.
They provide a demo account meaning you can try out trades with “pretend money” so you don’t have to worry about making a dent in your actual capital.
They also provide a whole host of helpful, educational materials such as videos and webinars, step by steps, guides, and general information to teach you the ways of the markets.
But by far, the best part of the eToro platform is its social trading features.
The social newsfeed is a wealth of information for the rookie trader and being able to learn about and follow the trades of professionals is really helpful to the learning process.
Then, of course, the feature that allows you to actually replicate the trades of big-time investors means that although there is still a risk present, you can definitely increase your chances of making a successful and lucrative trade.
There has never been a better time to get involved with trading in cryptocurrency and for those that are just starting out in this exciting world, eToro is one of the best platforms that you could choose.
With all of the tools and functions that you could possibly need to ease you into the sector, the only thing that is really missing is the multi-asset wallet.
The introduction of this would make it much easier for traders to hold and trade with, multiple blockchain-base cryptocurrencies.
Let us hope that 2018 is the year that they will finally make good on their promise, and hopefully, by the end of the year, we will see it become a reality.
Until then, be sure to enjoy all of the other features that eToro has to offer, as well as taking part in trading in cryptocurrencies and more.