Trade Markets on eToro
The stock market is dynamic and presents many options for traders. Stocks are usually considered suitable for medium to long-term investments. Each stock is affected by different market events and could go up or down in value following announcements such as earnings reports, new product launches, and changes in competitors’ stock prices.
For example, if a smartphone manufacturer gets negative press following a malfunction in one of its product series, it is possible that its direct competitors’ share-prices will rise.
Companies who make profits often allocate dividends with their shareholders at a fixed payment per-share.
Buying a stock on eToro by opening a “buy” (long), non-leveraged position means you are investing in the underlying asset, and the stock is purchased and held in your name.
In addiction, eToro also offers additional functions using CFD trading. With CFDs, you can open “sell” (short) positions, use leverage, and buy fractional shares. For example, on eToro you are able to invest as little as $50 in a stock that actually costs $1,000.
Trading commodities is one of the most ancient trading practices in the world, dating back thousands of years. Commodities are unique, given that they have a real-world physical representation. Whether it’s an energy source, such as oil, or a precious metal like gold or platinum, commodities exist in the real world and therefore are also affected by real-world events.
For example, if oil reservoirs are in surplus, it is likely that prices will drop accordingly. Additionally, some commodities are considered safe-haven assets, meaning they can add stability to a portfolio which consists of highly-volatile assets.
For example, many foreign currency traders turn to gold futures when the market becomes too volatile, as gold prices are more stable overall, while still relating to the foreign-exchange market.
Commodities are traded on eToro only as CFDs, meaning you don’t need to purchase the underlying asset to trade them.
eToro's CFD enables “sell” (short) positions, leveraged trades, and fractional ownership – even for assets that don’t offer the option in traditional trading.
The foreign currency exchange market is the biggest market in the world, with a trading-volume average of more than 5 trillion dollars a day. It is also an incredibly volatile market, with changes happening within a matter of seconds. Since it is such a dynamic market, currency traders are usually very active, sometimes opening and closing trades within minutes.
Movement in currency is measured in very small units, known as “pips” (0.0001), and require substantial capital to generate noticeable profits.
For this reason, most trading platforms offer leveraged transactions at a fixed ratio.
For example, if the ratio is set to 1:100, then for each $1 invested, the platform loans the trader an additional $99.
Leveraging is considered a double-edged sword, since losses are also leveraged, and can result in funds depleting rapidly.
Each currency is affected by various factors, including central banks’ interest rate decisions, a certain country’s export statistics, or other economic events.
Currencies are traded on eToro only as CFDs, meaning you don’t need to purchase the underlying asset to trade them. In addition, CFDs enable “sell” (short) positions and leveraged trades – even for assets that don’t offer the option in traditional trading.
An exchange-traded fund (ETF) is a financial instrument comprised of several assets grouped together to serve as one tradable asset. Each fund follows a certain market strategy or index and is designed to either suit the hedging needs of a specific financial institution, or to be a low-risk option for investors. ETFs are created by financial bodies using a team of experts who tailor each fund to meet its specific goal.
The assets within the fund are owned by its creators, and just like stocks, dividends can be distributed to investors from time to time.
ETFs are usually considered to be long-term investment tools, as they are oriented towards low-risk, and are designed to yield steady profits over time.
Investing in ETFs on eToro by opening a “buy” (long), non-leveraged position means you are investing in the underlying asset, and the ETF is purchased and held in your name*.
eToro also offers additional functions using CFD trading. With CFDs, you can open “sell” (short) positions, use leverage, and buy fractional shares. For example, on eToro you are able to invest as little as $200 in an ETF that actually costs $1,000.
*All ETF positions in the UK, under FCA regulation, are executed as CFDs.
For example, the NASDAQ index on Wall Street aggregates major companies from the tech sector, such as Apple and Google, and since it contains rival companies, if one falls, sometimes its competitor will rise, keeping the index’s overall balance.
Since companies vary in size and market cap, each stock has a different effect on the index, meaning some carry more weight.
For example, since Apple has more weight than smaller companies within the NASDAQ index, if Apple’s stock rises significantly, it could lift the entire index’s value.
Indices are traded on eToro as CFDs, as they are not financial assets that can be directly invested in. With a CFD, you can open “buy” (long) or “sell” (short) positions and open leveraged trades.
Growing incredibly in popularity in recent years, cryptocurrencies, such as Bitcoin, have become the unavoidable investment option for many traders. With an ever-growing selection of cryptocurrencies added to the platform, and a unique Crypto CopyFund, eToro presents many options for those who wish to trade and invest in the crypto market.
Cryptocurrencies display extremely high volatility, and it is quite common to see double-digit percentage fluctuations within a single day.
Bitcoin, which is the first and largest cryptocurrency, is considered to be the benchmark for this market, and other currencies charts’ often move in the same direction as Bitcoin.
Buying cryptocurrencies on eToro means you are investing in the underlying asset, and the crypto is purchased and held by eToro on your behalf. These trades are unleveraged. Buying and selling the underlying assets are unregulated and have no investor protection.
eToro also offer cryptocurrency CFDs, with which you can open “sell” (short) positions.
Please note: "Buy" (Long) cryptocurrency positions are unregulated products with no investor protection. However, "Sell" (Short) positions opened for cryptocurrencies on eToro are executed using CFDs, and therefore, operate under the regulations of CySec and the FCA.