EToro is a platform that offers crypto assets, CFD, as well as stocks trading. As such, it is essential to note that CFDs come with very high risk and the possibility of losing money quickly. When trading CFDs using this platform, you need to know the statistics; 66% of those who have purchased using eToro app have experienced loss. Therefore, if you do not have sufficient knowledge of how CFDs work, you should avoid the eToro app altogether to avoid losing your investment.
Seek advice from an independent financial advisor
If you have the ability to invest in CFDs using eToro app, you should seek counsel from an experienced and licensed financial advisor. By so doing, you gain some understanding on how to navigate using the app to trade in CFDs.
You need to note the terms and conditions of the eToro app. They do not take on any liability about your investment once you incur any loss while trading using their app. Regardless of an entity or an individual, you should not expect any returns from eToro app after the loss of your said investment.
To get the best financial advisor for CFDs, you need a financial guru with a wealth of information on trading as well as playing the market.
With CFD trading, you have two options; you either go long or go short. You can choose to place your investment for a short while and risk gaining losing within the stipulated period, and the same is true if you decided to go long.
Advantage of CFD trading using eToro
The main advantage when trading CFD using this app is that you do not own the asset that you invest. Therefore, you will not have to pay stamp duty commission. CFD trading is a cheaper investment using eToro app. For instance, if Google stocks are at $1000 on eToro, investing $50 with a 1:10 average is allowed. By so doing, you own $500 worth of Google shares.
Furthermore, when trading using eToro, you manage to gain leverage in trading for prices either going up or down depending on your prediction. When you use copy trading, you can invest less than the individual whose trade you copy when you do CFD trading. Therefore, it is possible to copy a $500 deal using $100.
Nonetheless, the outcome is dependent on your skills in trading, as this determines how well your account will perform.
Types of CFD trading
When undertaking this type of trading using eToro app, you can do so using the following. You can trade using indices, shares, commodities, treasuries, foreign exchange, and cryptocurrency. The latter is the most favored when trading using eToro app.
How to trade
CFD trading using the eToro app requires that you use either transparent pricing on spread pricing.
With spread pricing, the CFD provider will give you a price within the range that you can work with as you trade. As such, you manage to gain some money before the provider charging you a commission. The only disadvantage to this method is that you will not know in advance the exact amount that may be charged for a particular trade.
When you use transparent pricing, you are provided with the actual price of the trade. The main disadvantage of this method is that you have to pay a commission for each trade.
Why amateurs need to avoid CFD trading
CFD trading is a preserve for trading gurus for one main reason. You either lose big or gain big. A CFD trade allows you to buy assets that can be placed 100 times above their actual value. As such, if the deal works out, you will win big; however, if it fails to work out, your loss is more than your original investment. If you are not a seasoned trader, using the eToro app for CFD trading could lead to considerable losses due to the high risk associated within.