How to speculate with Bitcoins and other Criptodivisas with EToro?
Bitcoin and other criptodivisas like Ethereum and Litecoin have become the new fashion assets for many investors and traders around the world, who speculate every day with their fluctuations in price. This is because the Criptodivisas have experienced exponential growth in recent years (at the time of the writing of Ete article The price of Bitcoin was about 2800 USD) and some even consider that in a few years will revolutionize the economy at the global level.
Therefore, many major online brokers are beginning to include the criptodivisas between their operations for deposit and withdrawal of funds and financial instrument of speculation (Clik in each of the broker offering Bitcoin and Criptomonedas ETORO and IQOPTION).
One of these brokers is precisely EToro, an important network of social trading with millions of clients (between investors and traders) that also offers brokerage services and is regulated by the FCA of the United Kingdom. Now EToro offers its customers the possibility to speculate with the price of Bitcoin, Ethereum and Litecoin (the Criptodivisas with the greatest potential) against the USD through contracts by difference or CFD (see article on CfD to know the characteristics of these derivatives).
Due to the popularity of this broker, the simplicity of its trading platform and its associated social trading services (copytrading), in this article we will explain how to operate with Bitcoin and Ethereum on the EToro platform.
But before we begin, we will explain the characteristics of the CFD's used in EToro to speculate with Criptodivisas.
CFD on Bitcoin, Ethereum and Litecoin
A CFD is defined as an OTC (Over the counter) contract between two parties to exchange the difference between the purchase price and the selling price of any financial asset, including Criptodivisas such as Bitcoin and Ethereum for example. Since CFD's are derivatives, with these instruments the trader does not buy or sell directly the asset on which he is negotiating, what it does is to acquire a contract through which it receives the difference between the price of the asset in the market at the time of the acquisition of the CFD and the price on the market at the instant the contract is liquidated and the operation is closed. In other words, when trading with CFD, the trader does not buy or sell directly Bitcoin or Ethereum, it only speculates with the oscillations in its prices.
CFD on Bitcoin
The following are the characteristics of this Agreement:
Underlying asset: BTC/USD
Minimum transaction size: $25 (0.01 units).
Max Apalacamiento: 1 x
Spreads: EToro Loads a spread on the price of 0.70%.
Overnight position fee: A Rollover fee of-0116 per day (per 10000 units) is charged/credited at 17:00 time in new York.
Purchase operations (long) and sales operations (short) are accepted.
CFD on Ethereum
The following are the characteristics of this Agreement:
Underlying asset: ETH/USD
Minimum transaction size: $25 (0.01 units).
Max Apalacamiento: 1 x
Spreads: EToro Loads a spread over the price of 2%.
Overnight position fee: A Rollover fee of-0.001 per day (per every 10000 units) is charged/credited at 17:00 o'clock in new York.
Purchase operations (long) and sales operations (short) are accepted.
CFD on Litecoin
The following are the characteristics of this Agreement:
Underlying asset: LTC/USD
Minimum transaction size: $25 (0.01 units).
Max Apalacamiento: 1 x
Spreads: EToro Loads a spread over the price of 2%.
Overnight position fee: A Rollover fee of-0.001 per day (per every 10000 units) is charged/credited at 17:00 o'clock in new York.
Purchase operations (long) and sales operations (short) are accepted.
How to operate with CFD on Bitcoin, Ethereum and Litecoin of EToro?
EToro is characterized by offering a simple and easy to use service to its customers, characteristics that also apply to the negotiation process with the different financial instruments it offers. For new customers who are interested in speculating with Criptodivisas in this company the procedure is as follows:
Open an account with the broker EToro on the company's website.
Deposit the funds needed to start operating. In this case, the minimum deposit in EToro is $200, an amount that easily covers low-volume CFD operations over Bitcoin, Ethereum and Litecoin (the minimum transaction size for both contracts is $25).
Enter the online platform of EToro, which integrates the company's platform of operations with its services and functions of social trading. Once we enter the platform we choose if we want to operate with real money (real portfolio) or with virtual money (virtual portfolio). Remember that EToro offers a demo account with no time limit with $10000 virtuals.
Now select the asset with which we want to operate, in this case Bitcoin, Ethereum or Litecoin. We can do this in three ways:
-Using the search box located at the top of the platform. Here we write the name or symbol of the instrument of our interest and once it appears, we select it with a single click, as we did in this case with Bitcoin:
-In the Platform tracking list (if we have the assets added in this section). Here we only have to select the asset, in this case any of the criptodivisas marked with the Red Arrows, with a single click.
-En la lista de instrumentos de negociación que ofrece eToro. Una vez que ingresamos a esta sección hacemos clic en “Divisas”, lo que nos muestra una lista con los pares de divisas que ofrece eToro, incluyendo los pares de criptodivisas.
En la lista de pares de divisas buscamos el par en que deseamos operar, en este caso BTC/USD (Bitcoin contra el Dólar estadounidense) y lo seleccionamos con un clic.
Once we have selected the Criptodivisa, we begin to operate what we will show below
Operating with Bitcoin
When we select Bitcoin the platform directs us to the page of this instrument where we can access the current quotes, the price graph, trading functions and comments of traders in EToro.
To start operating with Bitcoin we simply click on the "Invert" button, which brings us to the following screen:
As we can see, this is a fairly simple application with multiple trading applications in a single interface. It has the following characteristics:
buttons to buy and sell, which we use to indicate the type of operation we are going to perform, ie a purchase operation or a sales operation.
Current quotation of the instrument together with the daily change in absolute terms or in percentage terms.
In the "Invert" dropdown menu, the trader can decide whether to open a position at the current market price or to place an order for the opening of a purchase or sale position at a certain price (order pending).
In "Amount" we indicate the size of the operation that we want to open in terms of $. Below the platform indicates the size of the position in units, the percentage of that position with respect to the account capital and the level of exposure in terms of $.
The platform also allows us to determine a Stop loss and a take profit, either in monetary terms or by means of limit prices that will execute any of these orders if the price reaches one of these levels. We can also use a dynamic stop to follow the price and protect our earnings.
In that same section we can modify the leverage used to open the position. However, at the moment EToro only offers a leverage of X 1 to operate with Bitcoin and the other Criptodivisas.
Once we adjust all the parameters of the transaction according to our desires and we are ready to open the position, we click on the "Run the Operation" button, which immediately starts the operation. From this moment on, we have an open position in Bitcoin and we can only control its development.
Under the "Run the Operation" button, the platform indicates the daily rate or charge for keeping the position open overnight (surcharge position) and to keep it open on weekends. Although this charge is quite low, if the position is left open a long time can accumulate and be meaningful.
-Operation: In this example we decided to buy Bitcoin (BTC/USD) in the hope that the price of this criptodivisa is going to rise and end up by the time the position is closed. The purchase was made at the current market price of $2291.55 (spread included). The position size is $900, which is equivalent to a contract size of 0.38 units, according to the characteristics of EToro's CFD contracts (1 Bitcoin cfd unit = $2291.55, current price at the time the operation was performed). The value of this position represents a/% of the capital of the account and as the leverage for these contracts is X 1, all the value of the position must be contributed, ie the margin used to open the operation is $900. In addition to this initial margin, the account must have additional margin enough to withstand possible fluctuations in the Bitcoin price that may cause temporary loss to the position. Otherwise, we would fall into a margin call in a short time, especially because of the high volatility that Bitcoin currently has.
For this operation we define a stop loss and a take profit of $450, that is to say that the position will be closed with losses if the price drops and generates a loss of $450 or will be closed with profits if the price rises and generates a profit of $450. With this we minimize the losses if the market moves against or we ensure profits if the price goes up as we predict. The stop loss and take profit can also be defined by setting low-and upward-limit prices, as is usually done with these types of orders. The stop loss and the take profit are determined according to the market volatility conditions and our risk management strategy, trying to give the operation space enough to develop.
Now that the position is open, we only have to wait and watch the market to verify that they are behaving according to our prognosis.
Operating with Ethereum
When we select Ethereum the platform directs us to the page of this instrument where we can access the current quotes, the price graph, trading functions and comments of traders in EToro.
To start operating with Ethereum we simply click on the "Invert" button, which brings us to the following screen:
-Operation: In this operation we decided to buy Ethereum (ETH/USD) in the hope that the price of this criptodivisa is going to rise and end up by the time the position is closed. The purchase was made at the current market price of $328.3194 (spread included). The position size is $900, which is equivalent to a contract size of 2.77 units, according to the characteristics of the CFD contracts of EToro (1 cfd unit of Ethereum = $328.3194, current price at the time the operation was performed). The value of this position represents a/% of the capital of the account and as the leverage for these contracts is X 1, all the value of the position must be contributed, ie the margin used to open the operation is $900. Along with this initial margin, the account must have additional margin enough to withstand possible fluctuations in the price of Ethereum that may cause temporary loss to the position. Otherwise, we would fall into a margin call in a short time, especially because of the high volatility that Bitcoin currently has.
For this operation we define a stop loss and a take profit of $450, that is to say that the position will be closed with losses if the price drops and generates a loss of $450 or will be closed with profits if the price rises and generates a profit of $450. With this we minimize the losses if the market moves against or we ensure profits if the price goes up as we predict. The stop loss and take profit can also be defined by setting low-and upward-limit prices, as is usually done with these types of orders.
Now that the position is open, we only have to wait and watch the market to verify that they are behaving according to our prognosis.
Operating with Litecoin
When we select Litecoin the platform directs us to the page of this instrument where we can access the current quotes, the price graph, trading functions and comments of traders in EToro.
To start operating with Litecoin we simply click on the "Invert" button, which brings us to an identical screen that allows you to operate with Bitcoin, Ethereum or other EToro instruments.
-Operation: In this operation we decided to buy Litecoin (LTC/USD) in the hope that the price of this digital currency will rise and end up by the time the position is closed. The purchase was made at the current market price of $30.82 (spread included). The position size is $900, which is equivalent to a contract size of 29.20 units, according to the characteristics of the CFD contracts of EToro (1 cfd unit of Litecoin = $30.82, current price at the time the operation was performed). The value of this position represents a/% of the capital of the account and as the leverage for these contracts is X 1, all the value of the position must be contributed, ie the margin used to open the operation is $900. Along with this initial margin, the account must have additional margin enough to withstand possible fluctuations in the price of Litecoin that may cause temporary loss to the position. Otherwise, we would fall into a margin call in a short time, especially because of the high volatility that Bitcoin currently has.
For this operation we define a stop loss and a take profit of $450, that is to say that the position will be closed with losses if the price drops and generates a loss of $450 or will be closed with profits if the price rises and generates a profit of $450. With this we minimize the losses if the market moves against or we ensure profits if the price goes up as we predict. The stop loss and take profit can also be defined by setting low-and upward-limit prices, as is usually done with these types of orders.
Now that the position is open, we only have to wait and watch the market to verify that they are behaving according to our prognosis.
Investing in Bitcoin and other criptodivisas using the EToro copytrading tools
As is well known, EToro is not only an online broker, but also one of the largest social trading networks and services currently available, with millions of investors using their copytrading tools. Therefore, an interesting option to speculate with Bitcoin and other digital currencies in EToro is by following and copying the operations of other traders that operate regularly with these assets.
The copying of traders operating with digital currencies is an excellent option for investors interested in earning money with fluctuations in the price of Criptodivisa as Bitcoin and Ethereum, but do not have the time and/or knowledge to operate on their own. Through EToro they can form an investment portfolio that includes successful traders who operate with digital currencies, which will provide them with the access they seek to these markets.
The clear secret is to select suitable traders to copy that are able to produce constant long-term gains. This requires a process of investigation, analysis and sometimes trial and error. In this art´culo we will not delve into the services of Copytrading de EToro and the selection of traders for the copying of their operations. For that you can consult the following article: Service of copytrading of EToro.
For example, among the traders trading signal providers of EToro, we can find TasPitsilis, who invests 21.92% of his portfolio in Ethereum and has earned more than 18% in his investments from Ethereum to the present day. Currently it has more than 34000 followers and 499 copiers, and has maintained a good performance during the 2017, with a total benefit of 134.98% over the last 12 months.
You can find more information about the services of the broker EToro and open an account to operate with CFD Criptodivisas and other assets by means of the following links: CLIK here
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