If you’re new to investing on eToro or trying to understand what exactly you’re buying, you’re in the right place. Let’s break it down step by step because, depending on how you invest, you could be purchasing different types of assets.
Step 1: What Exactly Am I Buying?
When you make a BUY trade on eToro, what you get depends on the type of asset and how you’re buying it. Here’s how it works:
- Non-leveraged BUY trades on stocks or cryptocurrencies: You’re purchasing the underlying asset. This means you directly own that stock or crypto and can hold onto it for as long as you like.
- Leveraged BUY trades, or trades on indices, commodities, or currencies: You’re not buying the actual asset but a Contract for Difference (CFD). A CFD allows you to speculate on the price movements of these assets without owning them.
In summary:
- If you’re buying stocks or cryptos without leverage, you’re getting the real deal—ownership of the asset itself.
- If you’re using leverage or investing in indices, commodities, or currencies, you’re dealing with CFDs, where you’re trading on the price movement, not the actual asset.
Step 2: Benefits of Holding the Underlying Asset
When you hold the underlying asset, there are perks! Here’s why some investors prefer to go for stocks and cryptos without leverage:
- No overnight or weekend charges: Unlike CFDs, holding the underlying asset doesn’t incur fees for keeping your position open over longer periods.
- Voting rights for US stocks: If you own actual shares in US companies, you get the same rights as any other shareholder, including the ability to vote on important company matters.
Step 3: Unsure What You’re Holding? Check Your Portfolio
Not sure whether you’re holding the underlying asset or a CFD? It’s easy to find out. Simply check your portfolio or account statement on eToro. They clearly indicate which type of asset you’re holding, so there’s no need to guess.
Whether you’re looking to hold onto actual stocks or speculate on market movements with CFDs, eToro gives you flexible options for trading. Just make sure you know what you’re holding and the benefits (or costs) that come with it!
Ready to invest? Join eToro now!
Make Me Better Thrive 
Leave a comment