When to start selling your Altcoins
January 16, 2021
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Altcoins the power

Just image that this is mid-2021. Bitcoin has just hit its all-time high and is showing no signs of slowing down. Some altcoins have 10xed or more and you happen to be holding a substantial amount of one or more of these old coins.

The destination is clear: the moon is clearly in sight. Now that you’re so close you start to realize that you never took the time to seriously think about the most important question in cryptocurrency investing. When should i sell you fly past the moon? You panic as you find yourself being pulled back down to earth and watch in horror as all your games get burned up in the atmosphere of fudd and funny money.

Today I’m going to go over a few metrics you can use to help you plan your own ultimate altcoin exit strategy regardless of what altcoin you’re holding. As your fellow astronaut, it’s my mission to help you land on the moon when the day comes before we enter the moon simulator. I need to set some ground rules.

I am not a financial advisor and nothing i say during this simulation should be considered financial or investment advice.

It is up to you to complete your training on your own time and that means doing your own research now if this is your first time here welcome to the bureau we do much more than run simulations for aspiring crypto notes. We investigate cryptocurrencies, take you through exchange platforms, deconstruct DeFi protocols and much more. If this is the sort of stuff that gets your blood flowing, that’s good!

Getting started

Today I do recommend you sit tight and watch this one through. All right comrades, that’s enough paperwork suit up it’s simulation time to build a bulletproof exit strategy. It is crucial to first understand the asset we’re dealing with this.

Understanding starts with putting everything into context the world economy consists of multiple financial markets,  housing markets, foreign exchange markets, stock markets and thousands of others. Almost all these markets follow some kind of visible cycle. It can be a one year cycle, a four-year cycle or even a 12-year cycle.

In some cases, these longer cycles contain even smaller cycles that last a few months or even a few weeks. These cycles can also change over time. Usually becoming longer as a given market matures. The cryptocurrency market is very young and that makes it very volatile. This is simply because nobody knows for sure what the actual value of the market is?

Older and more established investors like Warren Buffett hold much of the wealth in financial markets worldwide. These investors are generally more conservative and less prone to taking risks with their investments especially when it comes to new markets which consist of technologies they don’t understand. This was actually the reason why Mastercard pulled out of Facebook’s libra project. CEO Aj Bangor said in quote “when you don’t understand how money gets, made it gets in ways you don’t like.”

In contrast, younger investors like me and you are a bit more tech savvy. We know how bitcoin works as well as many of the promising altcoins in the space. We’re also more prone to taking risks and many of us have serious “opium” addictions when it comes to our favourite altcoins. Not only that, but cryptocurrency markets are not restricted to suit all traders. All you need to participate is an internet connection. That means a lot of inexperienced investors. This makes the cryptocurrency market even more volatile and irrational on a day-to-day basis.

About cycles

Despite all the daily chaos in the crypto market, when you step back, you can see a pretty clear market cycle. This cycle seems to last around four years and consists of a two to three year bull market followed by a one to two year bear market depending on how you draw your indicators. The cryptocurrency market cycle seems to be caused by the bitcoin halving in case you didn’t already know. The bitcoin block rewards for miners are cut in half every four years assuming demand stays the same. The sudden decrease in supply eventually leads to a spike in bitcoin’s price.

investment cycle

Since most altcoins are highly correlated to bitcoin, they also see a massive swing to the upside around that time. This explosion in value makes it to the media which brings even more money from both experienced and inexperienced investors into cryptocurrency markets. The most recent halving took place in May of this year leading many to believe that we are on the heels of another big move in the crypto market.

Some would say we are already in it and I can see why. In contrast to the two previous cycles, there is more smart money from financial institutions and experienced retail investors in the crypto space than ever before. This is in part due to governmental regulators around the world who have started doing their homework and realize that there is much more to cryptocurrency than twitter hacks or ransomware attacks. The cryptocurrency market currently consists of anywhere between six thousand to over seven and a half thousand coins and tokens.

Being realistic buy token marketcap

The total market cap of all these assets combined currently stands at around 400 billion dollars. Of course, bitcoin takes the lion’s share of this with a market cap of around 240 billion dollars at the time of shooting. As such, the cryptocurrency market is quite small compared to other financial markets and markets for similar assets such as gold. For context, the foreign exchange market is worth roughly 6.6 trillion dollars. While the market cap of gold currently stands around 9 trillion.

Many have interpreted this contrast in markets to be proof that the cryptocurrency market still has a lot of room to grow. Now that we have a solid grasp of the cryptocurrency market, it’s time to take a closer look at the individual assets inside of it. As we all know, bitcoin is the first cryptocurrency and remains the largest and most popular by a wide margin. Every other cryptocurrency is consequently referred to as an altcoin. While this dichotomy is debatable, it is a very important one to keep in mind nonetheless.

Here’s why the likelihood that the market cap of any altcoin will be larger than bitcoins anytime soon is very, very low even during the next bull run. This is for one simple reason bitcoin is where most of the smart money from institutional investors and experienced retail investors is going. You won’t see companies like Microstrategy or Square buying the dips on old coins like chainlink or v chain any time soon even ethereum is having a hard time getting into the hands of serious investors. This seems to be partially due to the upcoming release of ethereum 2.0 which has some large investors like greyscale which do hold ethereum

calling eth 2.0 a material risk to investment compared to altcoins.

Bitcoin is much less volatile and its volatility has been gradually decreasing over the years. What’s more is that its price action has a significant influence on old coins. When bitcoin goes up, Altcoins go up and if bitcoin goes up too quickly, many altcoins tend to see losses in the short term especially those with a smaller market cap.

The reason why you are losing money

Why??  It is because most of the money invested in altcoins is coming from crypto astronauts like you and me who are looking for the quickest path to the moon. When we see bitcoin taking off, many of us ditch our alts and rush to the bitcoin spaceship. When bitcoin loses steam and the price drops, everything comes crashing down to earth.

Altcoins tend to see their best gains when bitcoin is gradually increasing in price or when it’s trading sideways. This is partly because opportunistic investors get bored with the price action from bitcoin and the other large alts and start inching closer and closer to the deeper and more chaotic waters of what lies beyond the top 10 or 20 altcoins.

bitcoin money

These dynamics between bitcoin and altcoins are absolutely critical to understand because your ultimate altcoin exit strategy starts with the awareness that it will be heavily influenced by what bitcoin is doing and the upper limit of where your altcoin could go is effectively set by bitcoin’s own market cap.

While it’s true that bitcoin’s market cap will likely continue to grow as the bull market marches on, planning to sell your xrp when it hits one thousand dollars is not a realistic exit strategy because that would give xrp a market cap of over 50 trillion dollars. That’s more than double the size of the entire US economy.

If you still insist that this will happen, allow me to insist that you are high on opium, haha. Feel free to watch more video which explains why. All right now, you have a sense of how bitcoin’s price action seems to influence altcoins and have also hopefully come to the realization that the market cap of your favourite coin is

probably not going to be larger than bitcoins anytime soon. The next step is to factor in the tokenomics.

About US dollar

If the US dollar was a cryptocurrency, it would have some of the worst tokenomics in the crypto space. It has an inflation rate of around three percent per year. It has no supply cap and can be created at will by a centralized authority and most of its circulating supply is held by a very small amount of people. This makes it a very poor choice as a long-term investment and this has prompted one of the largest collective exit plans in financial history called cryptocurrency.

It is quite amazing that almost every single crypto coin has its own unique tokenomics. What’s more is that the open source nature of many of the blockchains. These cryptocurrencies are built on make it easy for anyone to see exactly what is going on with their favourite tokens. This sort of transparency is refreshing as it’s quite rare in legacy finance. However, it also shows us that the cryptocurrency space is not immune to the same sort of corruption and greed found in our current monetary systems.

I’ve lost count of the number of times I’ve come across a crypto project that was promising in every way only to be let down by its tokenomics. So many cryptocurrencies have solid development teams with functioning products and platforms that have clearly defined and valuable use cases. Even boast partnerships with numerous internationally recognized institutions. Then you pop open that block explorer and it’s worse than going through your ex’s phone….

Key tokenomic factors for exit strategy

Now I’m not going to go through all the elements that make a good altcoin. We are just going to zoom in on the key tokenomic factors which you need to keep in mind when it comes to planning your ultimate altcoin exit strategy:

The first is token allocation. Every cryptocurrency has its own unique token allocation and a select few had no token allocation. Instead, a genesis block was mined by one or more parties at the beginning without any sort of special token distribution. This is known as a fair launch and is unfortunately quite rare in the crypto space.

Most cryptocurrencies we see today had something called a pre-mine. This usually involves allocating a fixed amount of the initial or total supply of a token to select parties. Or causes some of these tokens go to the founders. Others go to early investors of the project and usually the largest chunks go towards the ICO and mining or staking rewards.

For those who will participate in that cryptocurrency’s ecosystem, when you look at the altcoin you’re holding, take note of how these tokens have been allocated

in the crypto project’s ICO documentation. Then check to see if those tokens have actually been allocated in the way that was initially outlined.

You can do this by using a block explorer which you can usually find on your altcoins website if the altcoin you have is an erc20 token. You can use etherscan to easily check what’s going on behind the scenes.

Your mission is to figure out which wallets are holding a large number of tokens and whether those could be suddenly sold if the price were to increase significantly. hint: it’s safe to assume that tokens allocated to opportunistic venture capitalist firms or angel investors will be some of the first to go.

If you see a single wallet holding more than 10 of a token’s total supply, you might want to reconsider your altcoin pick. That said, some cryptocurrency projects have vesting schedules for allocated tokens. These mean that those tokens given to investors or founders will not be available right away but over time. Or just at a later date.

A bad example to take note of

The worst example of this is solana’s vesting schedule which is still the spookiest thing I’ve seen this month. If you see a vesting schedule like that, you might want to consider selling your tokens sooner rather than later.

The second thing to watch out for when it comes to tokenomics is inflation and total supply inflation. It is not necessarily an issue so long as it’s low and so long as you aren’t planning on waiting to sell when you retire. it’s also important to mention that inflation is used by many projects to incentivize network participation. This means you can sometimes avoid this inflation by staking or delegating your tokens if you plan on holding onto your tokens for some time.

However, the sort of aggressive token inflation that’s used to pay liquidity providers in many DeFi protocols will probably choke the engines on your spaceship before you even get it off the ground. With these tokens, it is best to follow the wise words of yearn finance’s creator Andre Cronier: “do not buy it, earn it”. Speaking of yearn, the wi-fi token might just be the best example of how important the supply metrics of a token is.

In regard to its price wi-fi, it is also sometimes called waifu, is one of the few cryptocurrencies that have a higher price tag than bitcoin. The simple explanation for this is that the demand for the token is exponentially greater than its maximum supply of thirty thousand. I mean, who wouldn’t want to own a token that gives them a say in how one of the best DeFi protocols is run?

Why small supply matters

This small supply is also why DeFi market cap is just 400 million USD, not only that but all wi-fi tokens are in play. There are no additional wi-fi tokens waiting to be mined or minted. Wi-fi also had a pretty fair launch with no pre-mine. All tokens were earned by liquidity providers on yearn.finance.

These characteristics have led some to label wi-fi the bitcoin of DeFi and it’s also why i hold some wi-fi myself in sum. Check that your altcoin had a fair launch or at least an equitable pre-mine with a vesting schedule that doesn’t make you run for the hills. Make sure that inflation isn’t too high and see if there are ways you can mitigate against it until you decide to sell.

Be sure to take note of the circulating supply compared to the maximum supply assuming there is a maximum supply. Otherwise, you might find your tokens suddenly losing value as additional coins start to flood the market to drown out demand.

There is one last thing you need to take into account to finish planning your ultimate altcoin exit strategy and it’s what the technicals are saying: If you’ve ever watched an exit strategy video before you’ll know that most of them rely on technical indicators now.

While technical indicators can be very useful, their utility declines in the absence of other critical factors such as the ones we’ve outlined here so far. What’s more is that technical analysis can suggest different trends depending on the time frames you’re using.

Bitcoin dominance factor

The way you decide to draw your trend lines that said there are two technical indicators you need to pay attention to when it comes to deciding when to pull out. The first is bitcoin dominance. Bitcoin dominance is how much of a cryptocurrency’s total market cap is accounted for by bitcoin right now.

It’s around 60 and seems to have been declining steadily since September 2019 when it was just over 70 percent during the last crypto bull run in 2017. And 2018 bitcoin dominance fell to just 37. This is important because the large amount of money moving into altcoins is part of why many alts saw their all-time highs during that period.

Assuming this downward trend in bitcoin dominance continues, we may just see another sudden drop in bitcoin dominance in the next year or two. If this happens, it will once again bring a flood of money into the altcoin space and take many alts to new all-time highs historically.

Big drops in bitcoin dominance have lasted around one to two weeks meaning you would have plenty of time to exit during that window.

If that’s part of your ultimate altcoin exit strategy, the second technical indicator to keep in mind is your altcoins value against bitcoin. Most of us are focused on the dollar value of our favourite altcoin and prefer to trade against a stable coin like USDT.

While this may make it easier to keep track of our portfolios, it is the value of your altcoin in satoshi’s that gives you the best indication of whether your cryptocurrency is rising in value relative to other assets in the crypto space.

Know what to compare with

Let me give you a simple anecdote we’re all familiar with. Suppose your favorite altcoin has been rising in dollar value. You’re feeling good and you start to feel the keys of that lamborghini materializing in your hands. Then you click over to the rankings and see that other altcoins are making even more impressive gains and your favourite

altcoin is barely keeping up. Maybe even lagging behind. So what gives well if you’d taken a closer look at the bitcoin pairing of your altcoin you would have noticed that even thoug your altcoin was rising in dollar value, it was actually losing value in satoshis. Whereas some of those other altcoins had been gaining value in satoshis.

Again the time frame you use to analyze this trend might influence whether it’s going to the upside or the downside. If you’re lucky, you’ll see a clear trend. You can spot on a short to medium term time frame that will tell you whether your altcoin is valuable in terms of real money or in terms of dirty fiat.

Keeping a close eye on bitcoin dominance and your altcoins trend against bitcoin will help you figure out when is the best time to sell now that we’ve covered all the metrics you need to build your very own ultimate altcoin exit strategy.

Running simulation for you

It’s time to run  simulation. Suppose there is a cryptocurrency called mountain coin coming soon. I promise mountain coin currently has a market cap of 100 million dollars

meaning it just barely cracks the top 100. Like other altcoins, it is highly correlated to bitcoin which currently has a market cap of 300 billion dollars.

Now I really love mountain coin but I know it’s not going to be bigger than bitcoin. I also have doubts that it’d be bigger than ethereum which currently has a market cap of 50 billion dollars. As such, if it were to go suddenly parabolic now, I know it would probably not be likely to pull off more than 50 times move in price since that would make it as big as ethereum.

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Mountain coin has an initial supply of 50 million and a maximum supply of 100 million. Each token is currently worth two dollars and the inflation rate is one million coins per year meaning. I can wait up to 50 years before mountain coin enters uncharted territory. 100 of mountain coin’s initial supply is currently on the market and 20 percent of this supply has been reserved for my friend Ah tai who was an angel investor of the project.

However, he’s not able to touch his tokens until January the 1st 2022 so i know it will probably be a good idea to sell before then. Because I know Ah tai is all about that dirty fiat and will dump as soon as he can now. Let’s fast forward it’s Christmas eve December 24th 2021, mountain coin has already 10xed in price over the last few months meaning each token is worth 20 and the market cap is just over 1 billion.

Because of inflation, bitcoin’s market cap is just under 1 trillion and ethereum’s is over 500 billion even though eth 2.0 still hasn’t been released.

And more…

Bitcoin dominance saw a sharp drop one week ago and money is flooding into altcoins meaning i have no more than a week before that trend starts reversing. Mountain coins pairing with bitcoin could be better but if i look carefully, i can see a slight uptrend on the one day time frame and mountain coin has jumped to almost 24 in the minute that it took me to tell you this.

I think that a 20x from my initial entry is possible but reason that a lot of traders are going to sell mountain coin at the psychologically comfortable level of forty dollars. To play it safe, i set a limit order to sell my guy coin at 33.33- a number that hurts to look at. I go to bed then i wake up. It’s christmas day and my christmas wish has come true.

Mountain coin has hit a high of over 45 dollars while I slept before crashing down to 22. It would have been nice to sell the top but that’s an impossible task. Price looks bearish now and all indicators suggest we’re headed for a huge correction across the board.

I kick back and sip my Christmas coffee while i hear Ah tai screaming at the top of his lungs from the other side of town. All it took was research a bit of strategy and a lot of luck now. I just have to figure out how the hell I’m going to buy that lambo without getting choked, slammed by taxes. Alright folks, that’s all for today!

I hope this article helps you plan your ultimate altcoin exit strategy in the upcoming bull market if you enjoyed today’s simulation. Click that “Share” button at the bottom of this website.

If you want to see exactly what I’ve got planned, check out for more articles at Coingoer next time. Have a blessed week!

 

NFT the power to DeFi
November 15, 2020
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NFT in DeFi

Smoking hot this year that’s meant that almost every DeFi project has seen mad gains. That’s good news if you jumped into DeFi early. However at current valuation levels you can’t be blamed for thinking twice when deciding to allocate funds to the sector. However here’s the big question what is the next hot sector in crypto.

We all know that to maximize those gains you need to identify that hot niche early learn everything you can about it and then find the best opportunities but don’t worry i have you covered my name is guy and in this video. i’ll tell you everything you need to know about non-fungible tokens and why i believe this sector might just be the next big thing in crypto. i’m also going to explain how nfts are already expanding the DeFi ecosystem and why they could be the key to bring tens or even hundreds of millions of people into crypto.

Before i get going there are a few quick things i need to say don’t let the t-shirt fool you i am no financial advisor sorry chaps and chappets that means that this video is for educational purposes only be sure to consult a real financial advisor before making any hasty moves also if you’ve come across my channel for the first time then welcome to this community. i’m constantly working in the trenches to put out top tip crypto content that covers everything.

Know NFTs in depth

I’m just going to give you a bit of an overview of what non-fungible tokens. Non-fungible tokens or nfts for short are essentially digital collectibles. These cryptographic tokens represent something unique and have these four properties: they cannot be replicated, they cannot be counterfeited, you can’t print them on demand and they have the same ownership right. Also, permanence guarantees as bitcoin. However the collectible can be personalized and unique so nfts are very different from something fungible that’s perfectly interchangeable.

An example of this is a US dollar. Now i don’t know about you but a crisp one dollar bill is the same to me as any other one dollar bill. That means they are perfectly interchangeable and are therefore fungible. However non-fungible is basically something that’s not easy to mix with other assets or goods. It also have an emotional attachment too like a collectible.

Porcelain bowl example

A great example of this is antiques. So if you’re the type of person who loves the orient and is insanely wealthy then you could go to sotheby’s and get yourself two Ming porcelain bowls for a cool 56 million hong kong dollars. For those not familiar with the hong kong dollar, that’s about seven million us dollars. The key thing here is that, these special bowls are not interchangeable with any other bowl. This makes it a non-fungible real-world asset.

I mean would you really want to swap those ming porcelain bowls for something from ikea? Well unless you’re a bit of a then. The answer would be a clear no. The bowls are not equal one. It is a mass-produced bowl and the other is a priceless chinese artifact with hundreds of years of history and masterful craftsmanship. So these bowls can be said to be non-fungible.

Crypto Kitties example

The most well-known example of an nft is probably a crypto kitty. Each crypto kitty looks different has different attributes and colors. It’s very much like those antique items. Another thing to know is that ethereum is home to the majority of non-fungible tokens in existence today. There are two main types. Firstly you have erc721 tokens which are non-fungible tokens. Here tokens are not the same. For example, a cryptokitty which has a different design and attribute to others. Then you have erc-1155 tokens.

This ethereum token standard isn’t talked about much. However it’s an improved version of erc721 and erc20 it combines the benefits of both fungible and non-fungible tokens together. What’s meant by that let’s take a computer game like fortnite where you can get mythic weapons that are pretty unique and non-fungible. Then you have v-bucks which is fungible in-game currency.

Fungible & non fungible

The erc-1155 standard basically allows for the issuance of both fungible and non-fungible tokens. Pretty damn useful for computer games. Now you know the ins and outs of nfts. I want to move on to the meat and potatoes of this thing.

That would be why i believe nfts could be the next big sector in crypto alrighty. So the nft market is projected to increase by 50 in 2020 and hit around 315 million dollars in value. Yep that’s pretty solid. However it certainly is not shooting out the lights when you consider that DeFi has rocketed from around 665 million dollars in locked value at the start of this year to 4.2 billion dollars today.

Reality of DeFi

That’s more than a six times increase. So why do i think that nfts could be the next hot crypto sector? Well the truth is that defy has absorbed billions of dollars in value this year by simply providing a few functions that would be giving crypto holders the opportunity to leverage their assets via over clash rise. Loans supplying crypto to earn interest and decentralized trading and derivatives.

That’s been enough to essentially push the entire DeFi market to over 4 billion in locked value. It’s also been enough to see some truly crazy returns from DeFi projects. I mean rv has done it 20 times this yet. While carver has done a more modest nine and a half times in case you didn’t know. Carver is all about providing cross-chain lending services and their platform has actually just launched with just bnb as collateral. I’ve recently done a video on that so be sure to check that out right here whatever way you slice and dice the numbers.

Why i think NFTs is big

There’s no denying that DeFi has been growing at an astonishing rate and that DeFi projects have been on a tear when it comes to valuation. However there is a point when people like you and me start thinking what is next or are mainstream? DeFi plays overvalued and it’s time to search out for alternative DeFi plays that segues me into my first reason. Why i think nfts could be the next big sector in crypto. Yes, the defy space has seen tremendous progress in 2020.

However right now DeFi is kind of contained within the current crypto ecosystem. After all we are essentially taking out over collateralized loans to get stable coins to either leverage our position in crypto by buying more cryptocurrency with that loan on an exchange. Or we’re using those stable coins to convert to fiat and buying that lambo.

DeFi loans

We’ve always wanted what that means is that almost all these DeFi loans are secured against cryptocurrency. However the question we should be asking ourselves is how can you take the current defy ecosystem to the next level. It is being able to lend against real-world assets and earn interest that would bring real-world assets into DeFi.

So to speak and open up the ecosystem to non-crypto businesses looking to tap into this new source of capital. That’s a completely new audience. That we can onboard into DeFi which can be leveraged to fuel even more growth. It just so happens that there’s a platform doing just that. They are using nfts to make it happen that mystery platform would be tin lake. These guys have actually got their platform up and running and it’s honestly gone under the radar of many in the crypto space.

Tinlake

So what is tinlake all about? Well it’s a securitization dap on ethereum which allows investors and borrowers to finance their own asset pools. All that is done via open source smart contracts. Which easily integrate into the current define ecosystem in a nutshell companies seeking finances or cash flow in the real world can offer up assets as collateral. Tinlake then tokenizes these assets and brings them on chain as non-fungible tokens on the other side of the market.

Investors can lend against the tokenized collateral assets and redeem their crypto. Plus an attractive yield for doing so seriously. People, this is the evolution of DeFi in my book and it’s happening right now. So what is really going on under the hood well tin lake is built upon the centrifuge protocol this allows for on-chain borrowing against these real world collateralized assets.

It’s all completely managed by smart contracts all that enables asset originators or borrowers to access the liquidity in the defi ecosystem. The borrower basically puts up assets like invoices mortgages auto loans or royalties and these are tokenized by issuing nfts.

 

pool

 

In real world with Tinlake

Investors like you and me bumble onto tin lake and we can lend against the nft tokenized real world asset by supplying stable coins. And earn high yield income in return. One cool thing about this is that, it actually opens up the door for stable coin providers to use these types of nfts banked by real world assets to back their stable coins with collateralized asset pools.

It create real savings rates for stablecoin holders that’s a pretty interesting offshoot of all this. Another thing to know about tin lake is that it will become a full decentralized financing protocol.

That is interoperable with different blockchains and can plug into a variety of funding sources and stable coins in a way it’s a little like carver taken to the next level after that brief overview of tin lake. I now want to get into the nitty gritty at a zoomed in level tin lakes set of smart contracts. Basically pool nfts that represent those non-fungible real-world assets and then use them as collateral to raise financing in the form of a stablecoin like dye.

How it is done

This is done by issuing fungible interest-bearing tokens that represent a claim on a fraction of the proceeds of the entire pool. Those fungible tokens can then be locked into crypto protocols. Or transferred to investors to draw funding. Oh yes, another thing to know is that asset pools on tin lake are ring fenced and can be configured individually. With different interest and collateralization rates.

Investors risk and yield is shared for each individual pool invested in and not across all pools on tin lake when liquidity is pumped into an asset pool. On tinlake, its risk and yield tokens drop and tin are minted accordingly when funding is paid out. These tokens are burned so what are these drop and tin tokens. Well, tin is the risk token that takes the risk of defaults first.

However holders receive a higher interest rate as compensation for this risk drop tokens are the yield token that is protected against defaults by the tin token.

In depth to this

It receives stable returns but they are usually lower. Now i need to be honest and let you know that last time i checked all the pools were full at tin lake. However you can check out examples like console freight which is using the platform to tokenize their invoices and bring those cash flows forward to today. With all that being said, it must be noted that tinlake is still at a very early stage. There are only three ongoing pools right now similarly the total outstanding volume is only 1.1 million die and the volume repaid sit at just 530 000 die.

However, i really do think that tinlake illustrates how DeFi can be further extended by using real world assets as collateral in the DeFi space. Indeed that potential market is numerous times bigger than the whole market cap of every single cryptocurrency combined. It also goes to show how nfts could play a key role in onboarding more people into DeFi. And how that explosive growth could be further fueled now before i move on from DeFi.

I should mention the likes of rocket nft which are offering loans of up to five thousand dollars in stable coins against nft collateral. That means if you own a plot of land in decentraland, you can use that to get a loan. Makes a lot of sense if you ask me and talking about decentraland that brings me on to the second reason. Why i think nfts could be the crypto sector to watch the truth is that the main use case of nfts right now is as collectibles within blockchain based games.

Rarity of NFTs projects

Indeed, seven of the top 10 nft projects are games currently so rare is the most popular blockchain game using nft. These guys have put global fantasy football cards on the blockchain now. I don’t know about you, but i used to collect football stickers when i was a kid honestly you could complete the collection or trade them and that was about it.

However, i personally loved that kids these days don’t know how lucky they have things. So rare cards can be traded can be used to play five aside football in a fantasy matchup and ranks of your cards are based on the performance of your players in real matches.

Then you have the sandbox which is a virtual world definitely check that out if you want to start your digital real estate empire and hoard those land nfts. Third is decentraland which is a very similar concept to the sandbox. Next we have a game called axi infinity which is a kind of hybrid between digimon and tamagotchis.

 

crypto in virtual world

All on digital pets

Basically you battle collect and raise digital pets that you own via nfts. Now i’m going to skip cryptokitties as i imagine most of you have heard of that another popular game is cryptovoxels. It is yet another virtual world and then finally to round off the last game in the top 10 we have league of kingdoms. I’m not going to lie it looks bloody awesome to me. The reason why is that i spent my childhood playing a little game called settlers. This game seems to be just an advanced version of that while combining it with blockchain. What’s not to love when it comes to those nfts.

You can buy in-game land. You can even monetize that land as more kingdoms flourish on it and raise your property level that translates into higher land value for you. So if you’re like me and have always wanted to be a landlord in the real world, then this is a pretty damn cool alternative.

Oh yes, you can form alliances in-game and vote for leaders using blockchain. Even get limited edition skins so that other players know just how bally you are. Yes i know many of these games look raw. However here’s the deal there are around 2.5 billion gamers out there in the world that’s a heck of a lot of people.

NFTs in games, what so unique?

What nfts allow you to do is to actually own items in games. It give you the power to trade them with other people. Even better many years down the line blockchain-based games would enable players to still access those items earned in-game. This means you don’t have to ask the permission of the owner of a walled garden to access those items. Something else that’s pretty sweet is that this opens the door for people to build applications and communities around these items. Then directly interface with them using apis.

And the blockchain so you can build whole systems outside of games like marketplaces or apps which show all the details of an item for any game on the blockchain for game developers. nfts open up new ways to fund game development. Monetize market design games and potentially unlock new in-game mechanics.

Blockchain game to go mainstream

So if blockchain gaming becomes even marginally successful then there’s the possibility of onboarding tens or even hundreds of millions of people into crypto through the use of nfts. All we need to achieve this is one blockchain game to go mainstream that brings me on to the third reason why i think nfts could be the next big thing in crypto.

Honestly i was shocked to discover that art on the blockchain has kind of take off in 2020. Basically what platforms like super rare and maker’s place allow you to do is to collect create and sell rare digital art from artists all around the world that artwork is represented by an nft. This allows artists to release limited edition artwork tracked on the blockchain making it rare and collectible.

This is a kind of cool way for artists to monetize and for those art aficionados to get some cool and unique art piece without running the risk of catching covid in some stuffy art gallery. My final reason why i think nfts could be the next hottest thing actually ties in with one of my favorite blockchain assets right now that would be blockchain domains. Right now there are two main things you can do with these domains.

Other uses in NFTs

Firstly, the domain name can be used as a payment gateway. That means you can attach all your cryptocurrency addresses to a single domain. This replaces complicated crypto addresses that you cannot easily convey to people with human readable names. So instead of trying to tell my mate to send ETH to a random string of letters and numbers. Much easier right?

The second use case is that you can use that domain to build censorship resistant websites. What that means is that no one apart from the domain owner can take a website down. Imagine how useful that is if you’re a journalist living under an authoritarian regime. Basically you can store these blockchain domains in your crypto wallet and that’s done by using nfts. So with all those use cases put to the side, people like me are actively buying up blockchain domains to use for their business. Or to sell them on for a profit later. There’s actually a very good track record for this.

let me briefly take you back to the early 1990s where a lot of top domains could be bought for a handful of dollars. So what are some of these domains worth today? Well let’s just say if you had managed to get your hands on carinsurance.com held and sold years later, you would have bagged yourself about 50 million dollars.

10 million plus domains are actually more common than you think. As many sales are private take crypto.com for example which reportedly sold for over 10 million. Blockchain domain extensions like dot eth already have proven value too with exchange.eth selling for around 6600 now.

An example of ETH

Last time i checked ETH was valued at around 390. So that means that this domain was sold for about two and a half million dollars at today’s. Ethereum prices, personally i think that the dot crypto domain extension is the most versatile out there. I frankly do own quite a lot of hot domains with this extension.

if you want to just get involved in this nft sub sector straight away then you’ll want to create an unstoppable domains account to get access to those hot dot crypto domains. You can find the link for that in the description below okay.

So it’s probably time to share my closing thoughts on nfts. Honestly i’m shocked no one is really talking about the potential of non-fungible tokens right now and the value they can bring to the wider crypto ecosystem. I’m particularly excited about how nfts have the potential to further fuel the growth of DeFi. i think it makes a ton of sense to bring real world assets into that ecosystem.

What’s incredible is that the tech to do that has already been built and that platforms like tin lake are already up and running.

Conclusion of this NFTs revolution

i have a feeling that this is the natural evolution of defy and can see how it could bring many new people and businesses into the crypto ecosystem. Gaming is yet another area that has the potential to onboard a huge number of people into crypto exceptionally quickly. It’s a massive market with players already having a firm grasp of digital currencies. The truth is that we all we need is one blockchain game to be popular in the mainstream. That could be enough to open the floodgates to millions of new crypto users.

Now i’m going to level with you i’m not the biggest fan of art on the blockchain. However what’s already been validated this year is that some people are willing to spend big money on limited edition artwork. So i’ll certainly be keeping close tabs on how this nft sub-niche evolves. Also finally blockchain domains have already proven value and are increasingly growing in popularity as a payment gateway.

Yes quite a few people are speculating on these domains with the intention of flipping them. However if our experience with dot com and more exotic domain extensions is anything to go by then that’s probably a fair bet.

Let us know..

Yes DeFi is the topic on everyone’s lips right now. However i’m sure you are like me and want to keep ahead of the curve and in my humble opinion, the nft sector is certainly one that all crypto fans should have on their radar. That’s it for today folks i’ve been jibber jabbering for long enough. So now it’s time to hear what you lot have to say what do you think about nfts any other crypto niches?

 

Discovering DeFi uses
August 28, 2020
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decentralised finance

DeFi stands for decentralised finance and majority of these are build on ethereum blockchain. So what is DeFi and why it is so powerful and how it affects ethereum price.

A lot of decentralization in crypto world is a buzz up actually. Many are not decentralized so one need to do research. There are now starting to have DeFi project base on other blockchain like Tron blockchain.

Looking at the deFi space, one of the website to go to is Defipulse.com where you can see the market size etc. If you are interested, one of the most popular DeFi coin is Maker. If you want to take up a loan, you can put into cdp and take some money out as a loan and take interest.

How much value locked on DeFi tokens

Anyone in DeFi community knows this site

 

One can borrow money, you can do it in the DeFi space. Most of the time it is over collaborated. You need to put money to take out money. You have to reach certain level of collaboration. If you go below that, you might have your loan liquidated. It is not like personal insecure loan. It is different from bank where they will see your credit check and ensure you are capable to pay back your loan.

There isn’t a universal credit score in the DeFi ecosystem yet. Rather than running somebody credit score, they made you put some money and if you didn’t pay loan back, they will take it away. You can borrow money, you can also supply money. If you want to earn interest, you can earn money using a pool and earn money back.

In addition, you can also trade on the DeFi space. Dydx allow you to do margin trading. This is among many others exchanges. Token sets is also getting hot. There is also with defi space is take a cool product that airswap bulid. A lot of different place to hop in to.

Loanscan.io is great which is an aggregator with different types of things you can do in the DeFi space. You can earn interest if you want to.

When comes to DeFi token, Yearn Finance is the one that sets the most pulse running. When it is officially launched on several main crypto-exchanges, the price ballooned from $32 per token in early August to $10,000 in late August 2020. At several instances, it got past $30,000 easily.

yield finance token

Andre Cronje

Yearn finance token is the brainchild of Andre Cronje, a South African who first created yEarn. Since then, the tokens he create has been gaining in popularity ever since with no slowing down.

Social trading with eToro
August 21, 2020
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Just to intro myself first. My name is Johnny Lim. I am 21 years old and still schooling.

I’ve always had an interest in the financial markets but, like most of us, I had no real idea how to break through the castle walls and actually trade. I used to walk around Raffles Place and Shenton Way, looking around aimlessly. I never thought i can trade, and definitely never even dream that i can do well in this…

That all changed about a year ago. I was a final year student and came across a platform called eToro which blew open the doors and allowed me to start trading online. eToro is up to 20 times cheaper than traditional stockbrokers, with 0% commission on real stocks.

etoro

Sound easy enough?

Well, actually it’s not all that straight-forward. It’s important for you to know that I have been on quite a learning curve. Whilst I’ve been enjoying the whole experience, I’ve also made some rookie mistakes.

For total beginners the eToro platform and the concept of trading itself can be a little daunting at first. So with the benefit of hindsight and my own personal trading experience on eToro, I wanted to put together a comprehensive no-nonsense guide to help others get the best results as quickly as possible. And here it is…

What’s in this guide:

  • What is eToro?
  • Getting started
  • Copying other traders
  • How to make money trading
  • Becoming a Popular Investor
  • Understanding (and reducing) the costs
  • Avoiding common mistakes
  • Useful investing resources

 

What is eToro?

eToro would describe themselves as an accessible trading platform that incorporates a social element into investing. I’d describe them as Facebook for trading. They first went live in 2006, and are now the world’s largest investment network with a community of 4.5 million users.

The platform and the wider phenomenon of social investing have been widely covered by mainstream media, including a recent BBC documentary called Traders: Millions by the Minute.

The most unique feature of eToro is probably ‘CopyTrader‘. This allows you to sort through other users and plainly see their trading history, including how much they have made or lost over any given period. If you find someone you like the look of, you can allocate some funds to automatically copy their trades.

Another big plus is the ‘Popular investors‘ program. This rewards users based on how many copiers they have in the form of monthly commission. The program also incentivises responsible trading, and we’ll discuss this in more depth towards the end of the guide.

So with the social and copying features, you’ll certainly learn a great deal relatively quickly! Most of the need-to-knows you’ll pick up by reading this guide or playing with a demo account.

chart risingTake it easy at the start and make sure you know what you’re doing before investing larger amounts of money. Trading on eToro can be very profitable but it’s important to note that, whenever you’re dealing with the markets, you can lose money too (“your capital is at risk”)!

 

General Pros & Cons about eToro

It is a great way to trade with eToro, whether you are trading in stocks, cryptocurrencies, forex among others. It act like a social trading broker. However, for benefits of audience, i like to share briefly the Pros & Cons with eToro as below:

etoro trading

 

Create your investing account

  1. Sign up for eToro.com

    No lengthy paperwork here, it’s free and really very straightforward! Simply enter your details and choose a username. They ask for a phone number to protect your account’s security.

    You’ve now opened up the world of real-time trading, but to actually make trades you’ll be prompted to complete your profile ?

    Disclaimer: eToro is a multi-asset platform which offers CFD and non-CFD products.

    75% of retail investor accounts lose money when trading ‘CFDs’ with this provider. You should consider whether you can afford to take the high risk of losing your money.

    This content is intended for information and educational purposes only and should not be considered investment advice or recommendation.

    CFDs are a type of leveraged product that we do not recommend in this guide, we are concentrating on buying and holding actual stocks you own.

  2. Complete profile

    This is an important step to protect your account and tailor the eToro platform to your needs.

    The first part covers basic personal information (you don’t need to enter an ‘Identification Number’ if you’re unsure).

    Next there are a couple of trading experience questions. It’s not a test so don’t worry too much about the answers, just try and be honest.

  3. Deposit

    Click ‘Continue to deposit’ (or ‘Deposit funds’ at the bottom left).

    The minimum you can deposit is $200, which is perfect for getting started.

    Note: eToro’s main currency is $USD but you can deposit in £GBP and other major currencies. It will be converted to $USD in your account.

  4. Familiarising yourself with the platform

    I’ll just give you a very quick overview of the main sections of eToro for now. We’ll delve more into each one later as I explain how to browse and trade in detail.

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Watchlist

Organise the people and markets you’re interested in copying or investing in. You can create multiple lists, such as ‘promising stocks’ or ‘people to copy’.

Portfolio

The nerve centre of your investment journey. View all your open trades with live tickers and values, and monitor your performance.

News Feed

This is just like your News Feed on Facebook, where you can see everything the traders you follow have been doing and saying recently.

Trade Markets

The place to research and trade in the markets available to you: stocks (eg. Apple), currencies (eg. GBP/USD), commodities (eg. gold) and indices (eg. UK100) and ETFs.

Copy People

The heart of the community. Search through other traders who you may want to copy or follow. There are loads of useful filters to help narrow down to the results you want, such as markets and performance.

Now that you’re a part of the community and have explored the site a little, I’m going to share the 3 main ways to invest on eToro with you.

 

Copying other good traders (Copy People)

This is the simplest way to invest on eToro. When you copy someone, every trade they execute is simultaneously opened in your account too and then closed when they close it.

It’s all proportional to what % of your total account’s funds you choose to allocate to them (more on this later), but ultimately you will achieve the same rate of return as they do.

Finding reliable traders to copy on eToro isn’t always as straightforward as it might appear. You need to know what to look for and what to stay clear of (more on this later on). Allow me to help you master the art of copy trading…

Avoid the most common mistakes!

do_not_signLet me point out the numero uno mistake beginners make right away: being a sheep. When you venture into the ‘ Copy People’ section looking for a trader to copy it’s intuitive to sort by ‘most copied’ and blindly copy the top results. You’d think that the most copied people have lots of copiers for a reason, right? The wisdom of the crowd perhaps.

But the reality is that most people on eToro are complete beginners and don’t really know what they are doing. If a few people copy a trader for the wrong reasons, that trader can quickly ‘go viral’ with exponentially more copiers following suit without thinking for themselves. Let me give you an example.

etoro copytrading

A popular yet under-performing eToro trader

 

Even though this trader has extremely poor performance (he would have lost 98% of your money over the last five months if you’d copied him), he still has close to 2,000 people copying him! Bizarrely this happens quite a lot on eToro, so I’ll be explaining the process I follow when copy trading.

Having warned against consistently under-performing traders, the other big pitfall beginners fall into is over-trading. It’s incredibly tempting to keep checking how much you’ve made or lost every few hours, but emotions will cloud your better judgement and lead to tinkering.

No trader will EVER profit every single week or month, so I highly recommend you take a medium/long-term approach. This requires patience and discipline, but you’re more likely to see better gains over time.

 

Finding the best traders to copy

First off click on ‘Copy People’ on the eToro sidebar.

You can either simply scroll down the page to see promising and trending popular investors…

etoro best traders

Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision. This is not investment advice.

 

…or you can use the advanced search feature. Everything in blue you can change to meet the criteria you’re seeking in potential traders to copy.

etoro search

Hit ‘GO!’ for a list of matching traders, ordered by the number of copiers they have. To further drill down use the filters at the top.

5 attributes EVERY trader you copy should have:

  1. Really demonstrate their market knowledge and experience on their profile feed
  2. Have low weekly and daily drawdowns (basically how much they’ve been ‘down’ over a given period). Anything more than 10% should be a red flag
  3. Don’t have ridiculous returns. I know this may seem counter-intuitive, but if you see someone with 1,000%+ returns in a very short period of time, realise that this is unsustainable luck and can only be achieved by being reckless
  4. Don’t have a 100% win rate. It’s perfectly normal to close some trades in the red, this is a sign of discipline and experience. Beginners chase their losses, proper traders know when to cut loose
  5. Are communicative. You want to copy someone who can help you learn and is willing to share their trading methodology. If they don’t reply to your messages they either don’t care (likely to trade carelessly too) or they don’t know how to answer because they don’t have a clue what they’re doing!

Viewing a trader’s past performance

I’ll now walk you through assessing an individual trader before outlining the exact steps to copy a trader, so you can understand what to look for and how the process works.

etoro stats

Viewing a trader’s stats

 

By clicking on the ‘stats’ tab in a trader’s profile you can access some very useful information to help determine whether they are worth copying or not.

etoro history

My eToro performance. Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision. This is not investment advice.

 

There are two other key things to look at here. The risk score indicates how risky a trader is and the max drawdown shows the maximum a trader has ‘been down’ in a single week during this period. Same idea for daily and yearly.

etoro riskreward

Trader’s risk/reward stats

 

It’s interesting to compare current risk to past months to see how their strategy has evolved. Anything green shows a very safe, low-risk low-return attitude. The spectrum then moves through yellow, orange, red and black where the risk is highest.

I personally steer clear of anyone with more than a seven, but it can be good to have a mix of traders with different styles.

How to copy a trader

Copying itself is simple. Once you’ve found a trader who you feel is reliable, simply open their profile and click on the blue ‘Copy’ button.

You’ll then be prompted to enter an amount with which to copy that trader, and you’ll see some useful information appears.

etoro copy

Copying a trader

 

Let’s say you copy a trader with $200, then “Avg. copied trade size” leads us to how the copying actually works in real dollar terms. In the example above, each trade you copy would be (on average) $2.72. Proportionally this is just 2.72% of the total ($5.44 out of the $200) of your total investment in them. In this case, it’s a good sign as it shows a cautious and safe investment style.

You can also set a “stop loss”, which is a means of protecting against heavy losses, set at 40% by default. If the person you are copying loses 40% of your investment, your account automatically stops copying them. You can set this level to whatever you want, depending on how much risk you’re prepared to take. Personally I keep the number closer to 25%.

Monitoring your performance

Clicking on ‘Portfolio’ takes you to your open trades.

etoro webtrader

My Portfolio showing Open Trades

 

This is the actual trading area and your nerve-centre. Here you can monitor all of your current open positions and close them, and also access a record of your trading history.

All of your copied traders (and in fact any of your own investments) will be listed in your Portfolio. You can see your overall return on the investment in a trader, and also click on the person to see what positions they (and you) currently have open, and how these are performing individually. Usefully you’re able to close individual copied trades without uncopying a trader altogether.

Watchlist users

It’s worth noting that you can also just ‘follow’ traders (without copying or investing in them) so their updates show up in your Watchlist and News Feed, as with Twitter. It’s a good way to gauge whether you think they’re worth copying and tune into useful information.

 

Trading well yourself

hand_cardOnce you’ve familiarised yourself with the eToro platform and (hopefully) had some success copying other people, you can start thinking about placing your own trades.

You need to think a bit harder and do your research. Any shortcomings are squarely on you now!

Focusing your energies on the stock markets gets you used to the platform and the whole process of opening and closing positions without too much pressure. You probably have a fair amount of existing consumer knowledge here too.

Which stocks should you choose?

Well, that’s up to you, partner. I cannot offer specific investment advice. All I will say is that it pays dividends to do your homework, read the news frequently and listen to earning announcements. Only invest in stocks or companies that you believe are in a strong and healthy position to resist market shocks, and ultimately have room to grow.

If you’re really serious, you might also want to read up on the price/earnings ratio to identify undervalued/overpriced stock.

What I can do though is take you through the steps of placing a trade on eToro.

How to buy stocks and shares

Click on ‘Trade Markets’, then ‘Stocks’, then ‘Industry’. Choose an industry, for example ‘Consumer goods’.

You will then be presented with a list of all consumer goods stocks tradable on eToro, along with their respective prices and change over the past day.

etoro markets

eToro markets

 

Let’s pretend we want to buy some Apple stock, say $50 worth. Click on ‘AAPL’ (this is the ticker used for Apple on the stock exchange) and you will first see the ‘Feed’. This displays all the latest news and insightful discussions surrounding the Apple share price and the company’s activity in general.

etoro livefeed

Stock live feed

 

Click ‘Chart’ to display a chart showing the company’s stock prices over the last year. You’re able to change the period shown by zooming in and out.

etoro apple

Apple stock price information

 

If you want to invest in Apple (on the basis that you believe the share price will rise over the medium/long term), click on ‘Trade’ in the top right corner.

The minimum amount to trade is $50. Below this you can set the amounts at which you automatically want to close the trade, for both loss and profit.

Finally, take note of the “Leverage” figure. The number refers to how much you can multiply your gains (and losses) by. The higher the number equals higher risk.

X1 is essentially buying the real stock. If you traded at X2, any price movement is magnified by 2 (doubles). Usually it’s automatically on X5, so for beginners I’d suggest clicking on the number and reducing it to X1.

When you’re ready click ‘Set Order’.

etoro 50dollars

Placing a trade

 

That’s it! You’re now invested $50 in Apple ?

Monitoring your performance

Click ‘Portfolio’ to see your open positions.

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My Portfolio showing Open Trades

 

If you click on the Apple stock, you can see more info. In my case below, I bought $400 worth in September, and it shows I’m currently up 3.94% on this trade, which translates to +$15.75. This is the amount I would profit if I decided to sell these stocks (close my position) right now by clicking on the ‘Close’ button (red X).

etoro webtrader

Stock performance

 

As I warned earlier, do not fall into the trap of checking the real-time performance of your trades every hour! This just leads to over-trading which again, is very costly.

I’ve had to develop the discipline to let the markets take their course, and be confident that over the longer term the value of my portfolio will rise (which it has). It’s a strategy that has served me well and means I don’t make rash spontaneous decisions just because a company released some ‘bad’ news and the market overreacted in the short-term.

Advanced trading

Only once you really feel like you know what you’re doing on eToro (ie. been actively trading for a few months) should you even consider trading indices, currencies (forex) and commodities. There is much more risk involved in these markets compared to stocks, so I’m only going to briefly cover these to the extent that you know what you’re doing.

The steps:

Let’s work through an example of how to buy EUR/USD (currency market). First we click on ‘Trade Markets’ then ‘Currencies’, then scroll down to find EURUSD.

You can see the sell price and the buy price. We want to buy so are going to click on the ‘B’ box to launch the order window. Make sure the dropdown is set to ‘Order’ rather than ‘Trade’.

etoro place forex

Ordering a currency

 

Rate

The current buy price eToro is quoting you for EURUSD – in this case 1.0599.

Amount

Simply the amount of money you are investing in this trade. The equivalent amount of units will be shown. $90 in this case at X100 leverage = 9,000 units.

Leverage

This is a financial concept (see Wikipedia for an explanation). All you really need to know is that the number in the box tells you how much you are effectively able to multiply your gains (and losses) by. The higher the number equals higher risk.

You can change this from a minimum of X1 to a maximum of X400, and therefore adjust your risk level.

etoro leverage

Setting leverage level

 

If you were actually buying real ‘hard’ currency, this would effectively be X1 as any fluctuation in the exchange rate would equate almost exactly to your gains/losses. In this case however, if you made the same trade on eToro at X2, any movement in the exchange rate magnifies your gain/loss by 2 (doubles). I personally would recommend reducing your risk level as low as possible.

Stop loss

A bottom price limit you can set to avoid you being hit too heavily by a plummeting price on a position. If the price happens to get this low eToro will automatically sell/close your position to cut (rather than chase) your losses.

You can set this as $ amount or as the EURUSD price level at which you want the trade to close.

In our EURUSD example above, our position will be closed when the value has dropped the equivalent of $45. This stop loss is displayed as the red line in the EURUSD chart below.

Take profit

Conversely, you can also set a price which will also trigger eToro to sell/close your position but when you’ve made the return you were after.

In our EURUSD example above, our position will also be closed when the value has risen the equivalent of $45.

Once you’re happy with the parameters, simply click ‘Send order’ and your trade will be placed.

 

Becoming a ‘Popular Investor’

This program acts an incentive for users to trade responsibly and be an active part of the community. As soon as you start performing well on eToro you’ll notice other people will start copying you! This is a really rewarding and exciting moment, allowing you to earn monthly commission as your copiers increase.

etoro popular investor

It can take some time to build up your copier numbers, but it really isn’t that hard to achieve so long as you make consistent solid trades, following my advice in this guide.

It also pays to be active in the community. Posting regular updates, getting involved in discussions and answering other people’s questions all help get your name out there to attract interest.

 

Understanding (and reducing) the costs

percentageJust like any company, eToro exists to make money from providing a service. Primarily they do this by charging users a small spread fee on positions (outlined on the order windows). There is 0% commission though, so the costs of trading here are far less (up to 20x) than traditional stockbrokers and fund managers.

Trading stocks typically have the lowest fees on eToro, which is one reason why I recommend you stick to this market when starting out.

The ‘spread’ is the small difference between the buy and sell price that all brokers offer – this is how they make their money (same as a Bureau de Change) and similar in magnitude to the markup for stocks. You will be charged this when you close a position.

For all the latest fees click here. (you will be pleasantly surprised to find out. It looks so good !). Please read on below.

One way to minimise the spread fees is not to over-trade, and it’s also worth mentioning that if you become a Popular Investor (see above) you can get a partial or even total rebate on these fees.

It really comes down to individual trading strategies and preference. But to give you an idea, I tend to hold on to stocks for a minimum of 6 months and all other trades tend to have an average duration of about two-three weeks.

When copying another user you’ll be charged the same fees as they are on trades (which may not always be stocks), so it’s worth checking your portfolio to see what positions they have opened.

The only other fee you will encounter on eToro is the withdrawal fee (flat $5) if you want to transfer funds out of your account.

 

Recap: Avoiding the common mistakes

exclamation_markI’ve gone through A LOT over the course of this guide and covered up plenty of pitfalls along the way (high five for making it this far!).

Before we finish up I just wanted to summarise for you the main mistakes in one list:

  • Over-trading – this is a poor strategy for beginners and quickly racks up the fees
  • Allocating more than 25% of your total equity (funds) to one single trader (copy)
  • Blindly copying the most copied traders
  • Copying people with absurd rates of return (what goes up often comes down)
  • Copying people without properly researching their profile and activity
  • Not doing your homework on stocks before investing
  • Allocating more than 10% of your total equity to one of your own trades
  • Using too high a leverage (advanced trading)
  • Trying to close every single trade in the green (don’t chase losses!)

A final word on over-trading

This is a point that I want to expand on a little more, specifically in relation to copying other traders. Below is a screenshot of my equity chart over six months. The red line shows the number of people copying me.

etoro copiers chart

My equity vs copiers chart

 

As you can see, copiers tend to flood in when my total equity (blue line) peaks and leave when my gains fall. To the lay-person it seems like rational behavior, but actually it’s a clear sign of knee-jerk reactions without considering that the overall long-term trend is upward.

Even the best traders in the world will have some fluctuations, but most copiers lose money by copying at the peaks and stop copying shortly after because they’re down a few dollars.

In my case, if these people had stuck with me for the longer term (as I recommend throughout the guide), they would have been much better off!

The same holds true for the stock market in general.

ftse history chart

Long-term growth of UK stock market

 

Despite short-term market crashes, the trend over the long-term is UP. Why? Because all the companies in any stock market are constantly striving to create VALUE!

 

By signing up on eToro, it is a proactive step to explore and earn extra income. It’s free to sign up anyway. 

 

Thank you, good luck and happy trading!

Disclaimer: eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.

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