My top tips for trading Cryptocurrency on eToro

eToro is now one of the most popular places to trade cryptocurrency.  They were one of the very first traditional trading platforms (stocks and forex) who jumped into the crypto space.  On eToro you can trade and invest in cryptos such as Bitcoin, Ethereum, Ripple, EOS and many more.

Here are my top tips for having success trading crypto on eToro:

Don’t Use Leverage

You can trade Cryptocurrency with leverage on eToro.  This is also known as margin trading.  While some platforms let you trade with up to 100x leverage, eToro only allows 2x trades on crypto.  Which is a great thing for most traders!

I would recommend that most people should avoid using leverage.  You can trade without it.  Doing so will protect you in the long run.  Crypto is volatile.  When trading with leverage you’re at risk of getting stopped out of your position and losing everything.  With a non leveraged trade you can keep it open indefinitely.

When you open a trade on eToro you can select to open it with 1x or 2x:

When you open a 2x trade you run the risk of your position being stopped out.  And you also pay daily and weekly fees because you are essentially borrowing money to open the position and the fee is the interest payment.

The other advantage is that eToro doesn’t charge any fees on long 1x crypto positions.  Leveraged trades attract weekend and daily carry over fees.  These can add up.  Short positions on eToro do have fees.

CopyTrading

Trying to guess when to trade and what to trade on your own can be extremely risky.  Why not let someone more experienced trade for you!  eToro has a copy trading feature that lets you automatically copy the trades made by other traders.

When you copy trade a trader, all of their trades will be mirrored in your account.  When they open a trade, your account will too and when they close a trade, the same will happen in your account.  The trades are copied in proportion too.  So even if the trader has account capital of $100k+ you can still copy all their trades with just $200.  So if a trader opens a trade with 1% of their account capital, your account will open the same trade using 1% of the funds you allocated to copy a trader.

You can browse through the profiles of popular traders on eToro and pick the ones who have a good trading history and use low risk strategies.  You can see all the trades they’ve made in the past and how profitable they have been.

  • Copy Traders with a Low Risk Score – I like to copy crypto traders who have a risk score of 5 or less.  Any higher and the trader is probably using too much capital to open each trade.
  • Crypto Traders will have a higher drawdown – All traders have drawdown.  This is the difference between the top and bottom of their portfolio during a period of time.  Crypto traders on eToro will have a higher drawdown simply because crypto is more volatile.  This is just something to be aware of.
  • You can start with $200 – You need a minimum of $200 to copy a trader on eToro.  This is so the copied trades aren’t ridiculously small.

When copy trading I would recommend starting by only allocating a % of your account capital.  That way you can diversify by either opening crypto trades on your own or by copy trading more people.

Take a long term approach

If you believe that Bitcoin is going to be important in the future, then your best bet might not be to trade on short term time frames.  Instead look to capitalise on bigger moves.  It can pay to be patient and hold for the longer term.  I have positions on eToro that I’ve left open for many months as I’m riding up bigger moves rather than trying to guess the short term price action, which is fraught with danger.

Start with a Virtual Account

Signing up to eToro is free.  And when you register you are given a free virtual trading account.  This account has $100k of virtual funds that you can use to trade under real world conditions.  So if you want to learn how to trade, or even just get to grips with how copy trading works then I recommend using this virtual account.  You can easily switch back and forth between your real and virtual accounts.

Advantages of eToro

  • No commissions – You don’t pay any commissions.  Instead there is a spread.  On certain positions there are daily and weekend fees, just like on any other trading platform.  There are no daily or weekly fees on long crypto positions.
  • Short Positions – you can open both long and short positions on eToro.  This means you can profit when the price goes down as well as up.  Short trading is best suited to more experienced traders.
  • Easily Deposit Fiat (PayPal etc) – The big advantage of using eToro is you can deposit using a variety of methods including Credit Card and PayPal.  So if you’ve been looking to trade Bitcoin using PayPal then this is a good option.
  • CopyTrading – As mentioned above you can copy other traders on eToro.  This can help reduce your risk, especially if you know nothing about trading.
  • Trade multiple Cryptos – Trade all the popular coins like Bitcoin, Ethereum, Ripple etc.
  • Trade Alongside traditional assets – You can trade cryptos alongside traditional assets like stocks and forex.  This gives you the flexibility to trade in different markets depending on the conditions.

eToro Alternatives

  • PrimeXBT – Looking to trade crypto CFDs using leverage?  Looking to deposit using Bitcoin instead of fiat.  PrimeXBT is a  platform for CFD trading that accepts bitcoin deposits.  I recommend this platform only to advanced traders.
  • CoinSpot – Looking to just buy some Bitcoin?  Do it on CoinSpot.  It’s the exchange I recommend to Australians.  It’s easy to use and a trusted company.
  • Binance – Looking to trade using crypto.  Binance is now one of the most popular crypto platforms on the planet with a wealth of products including an exchange, futures, lending and more.
  • EasyMarkets – Looking for a platform that is similar to eToro?  Try EasyMarkets.  They are a forex, stock and crypto CFD platform.  They don’t have the nice copytrading features that eToro has, but still quite a good product that I’ve used before.

You can signup to eToro here

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