It seems that day by day, more and more people are being bitten by the Bitcoin bug.
After its value soared to around $20,000 per coin at the end of 2017, it became headline news, attracting both professional and casual investors’ interest around the world.
Granted, its value then plummeted by over 50%, but most analysts agree that it will recover its value and we could even see it reach the dizzying heights of $100,000 by the end of 2018.
But what about buying Bitcoin to trade?
In this article, we will take a look at one of our favourite trading platforms – eToro and answer a few important questions such as how to trade Bitcoin on eToro and if you can actually buy Bitcoin on eToro”.
At the moment, eToro does not support the purchase of Bitcoin directly on the platform, although this could change in the coming months, so we will investigate ways around this and alternative means of buying the coins, different types of trading, and how to sign up and get verified.
What Is eToro?
eToro is what is known as a “social-trading platform”.
For those that aren’t in the know, that means that not only can you trade a variety of assets, currencies, and commodities on the platform, but you can also interact with other traders and members of the eToro community.
Users can trade in traditional fiat currencies, a range of cryptocurrencies, CFDs, and assets and commodities such as gold, silver, and oil.
It offers a range of great features that mean it is suited to a variety of users from beginners, right up to professional, full-time traders, and is, in our opinion, one of the most forward-thinking exchange platforms out there.
eToro was initially launched as RetailFX back in 2006 in Tel Aviv, Israel. Now they have offices in Cyprus and the UK, are registered with CySec, the FCA and various US authorities.
They boast millions of active users and a whole host of exciting and unique features that make it stand out from the crowd.
Read more in our eToro Review.
What Makes eToro Special?
First up, if you have never traded before, or you have but are not particularly sure what you are doing, then do not worry as eToro has a range of features that can help you get started, learn, and develop into a trading professional.
This gives you an excellent opportunity to learn how to trade without losing any of your capital, meaning you can build up your confidence and learn the ins and outs of the trading world before you put your money where your mouth is.
Activating the practice mode is pretty straightforward as all you have to is sign up, and then toggle between the “Trade For Real” and “Practice Trading” buttons on your dashboard.
eToro gives you $100,000 of imaginary (unfortunately) money to allow you to experiment with different kinds of trades, as well as to find the niche that suits you and your experience best.
When you feel that you are up to speed and are ready to have a go for real, all you need to do is switch back to your Live Account, and you can put to practice your newly learned skill set.
Another great feature that makes eToro unique is the vast number of educational materials on offer.
When you sign up to the site, you can access a vast range of videos, webinars, FAQs, tutorials, step-by-step and more that will give you plenty of information and tips on not just how to navigate the platform itself, but instead, how to understand the ins and outs of the trading world.
You can also join in discussions and ask questions in the eToro forums, so you can interact with and get information from other traders of different backgrounds and different levels of trading capabilities.
This is an invaluable source of knowledge for those traders that are just starting out and goes hand in hand with its demo account function.
The best feature of eToro is so good that it deserves its section.
The eToro Crypto CopyFund is the first of its type and allows users to “copy” other traders and investors and to follow their trading patterns.
There are two types of CopyFunds that you can choose from:
- Top Trader CopyFunds – includes all of the best performing and most experienced traders on the platform
- Market CopyFunds – combines all of the CFD stocks, ETFs, commodities, and others in one particular market strategy
The idea behind the concept is to allow investors to minimise both long-term and short-term risk, while encouraging opportunities for growth by taking copy trading to the next level and diversifying investments.
Here’s How To Use eToro Crypto CopyFund:
#1 First of all, you need to sign up to eToro and then choose the particular CopyFund that fits the strategy you have in mind.
#2 Then you input the amount you wish to invest and click on the “Invest” button.
#3 You will then see that you have a fully allocated portfolio that is professionally managed by the eToro investment committee. Each CopyFund had its performance analysed and rebalanced periodically and with considerable attention to detail, to ensure that it is always maximising its full potential.
While every kind of trading carries a risk, and there is absolutely no way of guaranteeing success, but using these features and functions, you can certainly improve your chances of making a profit through making smart and lucrative trades.
Trading Bitcoin On eToro
First of all, it is essential to understand that you cannot buy Bitcoin on eToro.
When you sign up, and you top up your account with $100 and then “buy” Bitcoin, you are not buying it; you are just opening a “buy trade”.
This means that each time you “buy” x amount of Bitcoin, you are creating a trade for that specific amount, not adding any amount of Bitcoin to your balance.
When it comes to trading with Bitcoin on eToro, the process couldn’t be simpler and with Bitcoin experiencing a high level of volatility it can be pretty exciting, and financially beneficial to give it a go.
Now as mentioned above, when you are trading Bitcoin on eToro, you don’t own the coin itself. Instead, you are trading a CFD.
A CFD is otherwise known as a Contract For Difference and is a very popular form of derivative trading. It allows the trader to speculate on the rising or falling or prices in fast moving or volatile financial markets such as cryptocurrencies, indices, and shares.
In other words, rather than owning or trading the asset, you are just speculating on the change in its value.
Signing Up, Security And Verification of eToro
Getting started on eToro is pretty straightforward.
To open a basic account, all you need to do is fill in your name, email and a password. From there you can then use the demo account as well as access all of the information that you need such as FAQs and educational content.
Should you want to start trading and make deposits and withdrawals, you are going to need to go through the verification procedure.
You will be required to produce a range of documents such as a copy of your government issued ID like a passport, a recent utility bill, and other information relating to your economic circumstances.
This not only allows eToro to be responsible with users, but it also means that they are compliant with AML, KYC and other due diligence requirements that are stipulated by CySec and the FCA.
While it might seem like a headache to have to provide all of this information, just to trade, it means that you are trading with a trusted and reliable provider and that you, your data, and your trading is in good and secure hands.
When it comes to general security, eToro takes their clients privacy very seriously.
All of your information is encrypted, and again they adhere to stringent standards set out by the various regulatory authorities that monitor them.
There have been no security or data breaches to date, and this is a record that eToro are very proud of as it means that you can trade in peace, knowing you are in good hands.
Different Types of eToro Trading
Regular trading is the easiest way of trading on the eToro platform. Simply put, you just trade what you have, and you do not need to borrow or leverage any margin (more about these words in a minute).
If you have $200 in your account, you can speculate $200 on the price of Bitcoin, the Euro, or Gold, and if you are successful, you will get that $200 back, plus any profit that you made.
It really is as simple as that.
If you have dabbled in Forex before, then you may have come across the term “leveraged trading”, but did you know that it can also be applied to trading with Bitcoin?
The concept of leverage is one that is used both by investors and companies alike.
Investors use leveraged trading to significantly increase the profits that they make on a single investment. Leveraged trading allows you to make a trade without putting up the full amount.
For example, if you have 1 Bitcoin, but you wish to make a trade with 2 Bitcoins, you could use leveraged trading to “borrow” the additional coin for your trade.
Of course, you would have to repay the coin, plus a small fee once the trade has been concluded, and should you lose, the platform will automatically stop before you lose the asset that you leveraged.
There are many different ratios of leveraging available on eToro, but we advise only giving it a go once you have learned about it a fully understood the risks involved.
The margin is the loan that you take from the broker, or a peer, to fulfil the leverage ratio of the trade.
You will usually pay between 5% and 10% interest on the money or margin that you use.
For more information, read our guide on to the Bitcoin Leverage Trading.
Long And Short Positions
When you trade on eToro, you can choose from opening with a long, or a short position.
What this means is that you can profit on price rises with a long position and you can also profit when the price falls with a short position.
As Bitcoin is rather volatile and its value jumps around quite considerably, this means there are several good times of day to open trades.
For example, if Bitcoin is in a trading range where the value keeps rising and falling within a specific range, you would move to open a long position when it reaches the bottom of that range and then close it when it reaches the top value.
You would then look at the possibility of opening a short trade to profit as the price falls again within the range- based on this scenario you would benefit when the price goes up, as well as down.
Trading Bitcoin on eToro does not have to a complicated process, and with features like the demo account, CopyTrading, and all of the assistance and help materials that are on hand to help you learn, it is very simple.
I find the interface very easy to use so even if you are a beginner and are just taking your first few steps into the world of Bitcoin trading; then I don’t think you will find a better platform to start off with than eToro.
Due to Bitcoins volatility, it is a rather exciting commodity to trade with, and if it is something you think you might enjoy, why not give it a go now as who knows where its value will take us in the coming months.