Cryptocurrency Trading eToroeToro is one of the worlds largest brokers.  They offer forex, stock and commodity trading, and more recently they’ve added cryptocurrency trading.   In this post i’m going to explain how cryptocurrency trading works on eToro and how you can use it to make money.  You can read my full eToro review here.

What Cryptocurrencies does eToro offer

eToro currently offers nine different cryptocurrencies on their platform.  You can trade:

  • Bitcoin
  • Ethereum
  • BCash
  • Ripple
  • Dash
  • Litecoin
  • Ethereum Classic
  • Stellar
  • Neo

As you can see, eToro has focused on the most popular cryptocurrencies based on marketcap.  As eToro is a traditional broker, they would need to ensure that a crypto has enough liquidity to support trading on their platform.

How Cryptocurrency Trading Works on eToro

On eToro you can open both long and short positions.  I.e buy and sell.  When you open a long position with 1x leverage (no leverage), you’re purchasing the actual cryptocurrency.  eToro acts as the custodian.  So you don’t need to worry about having to store the Bitcoin or other currency yourself.  When you close your position you’ll receive your profit in fiat.  This makes it easy to profit from the price movement of cryptocurrency without having to pay exchange fees.

When you open a short position in Cryptocurrency on eToro you are trading a CFD.  A CFD is a derivative and is basically just a contract between you and the broker to pay the difference in price.

Being able to “short” cryptos allows you to profit when the price of a cryptocurrency falls.  While short trading introduces more risk, it can be a great way to make money for experienced traders.

Trading Cryptocurrency with Fiat

One of the best advantages of trading cryptocurrency on eToro is that you’ll be trading using fiat currency.  In the past, if you wanted to trade a crypto such as NEO, you would first need to buy bitcoin, transfer it to an exchange, and then buy NEO.  On eToro this process is simplified.  You can deposit using Credit Card or Paypal and trade a crypto almost instantly.

The other advantage is that eToro is a fully regulated broker.  This means your funds are securely stored in a third party bank account and traders have access to actual market prices, free of manipulation.  Trading cryptocurrency has always been risky because the exchanges and brokers aren’t regulated.  eToro is changing the game and adding a layer of trust to the world of crypto.

Copy Trading Cryptocurrency

eToro is the worlds largest copy trading platform.  Copy trading is where you automatically copy the trades of other more experienced traders.  On eToro you can browse through the profiles of traders, see their past trades and the gains they’ve made.  And you can copy these traders automatically so that in the future, everytime they make a trade you do too.

Trading cryptocurrency on your own can be really difficult.  And due to the volatile nature of the crypto markets, it takes real skill to be a successful trader.  That’s why copy trading can be so powerful.  You can tap into the skills and knowledge of experienced traders with proven track records.

If you’re looking to copytrade crypto traders, just use the filter tool to find traders who primarily trade in cryptocurrency.

Crypto CopyFund

If you’re looking to invest in the entire cryptocurrency space, then the Crypto Copyfund might be for you.  This fund on eToro is made up of the most popular cryptocurrencies and is automatically rebalanced monthly by eToro’s expert advisors.  If you believe that cryptocurrency is the future, then this is a great way to gain exposure to this exciting space.

Unlike copy trading or manual trading on eToro, which lets you start with just $200.  The minimum investment eToro’s copyfunds are $5000.  These are designed to be more long term larger investments.

You can find out more about the CopyFund here

Practice Trading Cryptocurrency

If you’re not ready to drop actual cash on cryptocurrency right now, then you can still use eToro.  When you register (which is free), you’re given $100k in virtual money to trade with.  Practice trading is a great way to learn about trading and investing under real world conditions.  If you’ve never trader cryptocurrency before, then I recommend you start with virtual/practice trading, just so you can see how the mechanics of it all works.

Alternatives to eToro

If you’re looking to trade Bitcoin (and other crypto) CFDs then you can also trade them on Plus500.  They offer a number of cryptocurrencies and leveraged trading.  I don’t recommend Plus500 for anyone other than experienced traders as you can’t trade without using leverage.

If you’re looking to just buy some Bitcoin or other cryptocurrency and store it in a wallet.  Then I would recommend Coinbase.  In my opinion they offer the easiest way to buy Bitcoin online.  If you’re in Australia, then my pick is CoinSpot.  The fees are slightly less than CoinBase and you can make instant purchases using your bank account.

Find out more about Cryptocurrency on eToro here