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How to Trade Ethereum

How to Trade Ethereum
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Ethereum, the world’s second-largest cryptocurrency, has gained enormous popularity since its launch in 2015. And this popularity has made it a most appealing asset for modern investors.

As most crypto investors have already started to make profits with this digital currency, there are still some people who don’t even know how to trade Ethereum?

Let us tell you that trading Ethereum or any other cryptocurrency is not rocket science; in reality, today it has become so convenient with the emergence of crypto exchanges and the evolution of the Internet.

So, if you’re still wondering how to trade ethereum, read this article till the end. So, let’s start with a short introduction to Ethereum.

What Is Ethereum? 

Ethereum is a blockchain-based decentralized platform that offers smart contract functionality. Ether (ETH) is the native crypto token of this platform.

These smart contracts enable crypto traders to trade with each other without any central authority.

The users can have full access and visibility into transaction data as these transaction records are irreversible and securely distributed across the network.

The Ethereum network provides a flexible platform for developers to build decentralized applications (dApp), which work exactly like smart contracts, but they don’t add any information to the blockchain.

These dApp developers use smart contracts on the ethereum blockchain to get the advantage of extensive developer tooling and established best practices, which makes it more than just a payment network.

That’s all in this section! Let’s move forward to our main topic – How to Trade Ethereum.

How to Trade Ethereum? A Step-By-Step Guide

How to Trade Ethereum A Step-By-Step Guide

With the emergence of cryptocurrency exchanges, the process of trading Ethereum has become so easy that a newbie trader can do in minutes.

However, if you’re still unsure where to start, read this step-by-step guide on how to trade Ethereum:

Choose A Trading Platform: 

The first step to trading ethereum is to choose a trading platform. You can choose between a crypto exchange or a brokerage platform.

Consider all the features and services of both platforms to choose the one that suits you best. The major difference between the both is that a crypto exchange lets you trade in cryptocurrencies only.

On the other hand, brokerage platforms allow you to diversify your portfolio by trading other market instruments, including Forex, Commodities, Stocks, Indices, etc.

Open An Account: 

After choosing a reliable trading platform, now open an account with them. Before opting for a particular account type, it is important to consider a few factors, such as the available leverage ratio, availability of crypto pairs, and margin trading.

Develop A Trading Strategy: 

As the crypto market is full of volatility, it is important to have a good trading strategy in handy to minimize the chances of loss.

These crypto trading strategies will help you take your emotions out and aids you in determining the best time to trade Ethereum.

It helps traders in deciding when to open and close positions. Some of the popular crypto trading strategies include Day Trading, Scalping, Swing Trading, etc.

Research The Crypto Market: 

Before opening the first position, it is important to stay updated with the latest development surrounding the Ethereum network.

Take a look at all the latest news about Ether. On the other hand, to determine the best time to open a position, you can make use of technical analysis.

It involves predicting the current prices based on the past performance of an asset and using a variety of technical analysis indicators—additionally, research for best Ethereum trading hours.

Place A Trade: 

To open your first position, search for Ether on the search bar of the cryptocurrency exchange platform.

Now, open the deal ticket, choose your trade size, set stop or limit loss order, and click on Buy Ethereum to open a long position. Alternatively, you can click on Sell Ethereum to open a short position.

After understanding the topic – How to trade ethereum, let’s discuss all the ways to trade ethereum.

What Are The Ways To Trade Ethereum? 

There are two most popular and convenient ways to trade Ethereum: CFD Trading and Spot Trading. So, let’s take a closer look at both.

CFD Trading: 

A contract for difference (CFD) is a financial derivative that serves as a contract between the trader and the brokerage firm.

In simple words, the trader does not hold Ethereum while trading CFDs. Instead, they seek to profit from price fluctuations by speculating whether the value of Ether will rise or decline.

As a result, they will profit if their predictions are correct. However, they have to pay for the losses in case their predictions go wrong.

The profit or loss is calculated by multiplying the change in the asset’s value by the quantity, with a tiny fraction going to the broker as a charge for his services.

Risk Warning: CFDs are complex instruments and pose a high risk of losing money rapidly due to high leverage. Most new retail investor accounts lose money when trading CFDs.

Spot Trading: 

Trading Ethereum directly on a cryptocurrency exchange provides more advantages over trading it via CFDs.

Spot trading allows you to directly sell or buy Ethereum and profit from its volatility while also reducing risk owing to no leverage.

It may be used for both short and long-term trading. Additionally, there are no overnight fees for keeping long-term investments.

People who are unfamiliar with leverage may prefer spot trading. However, if you think you are better at predicting the prices, you can trade Ethereum financial derivatives via CFDs using a regulated broker.

Where To Trade Ethereum? 

Where To Trade Ethereum 

If you’re thinking of starting Ethereum trading but don’t know where to start. Don’t worry; we are here to your rescue.

You can trade, sell or buy Ethereum either on crypto exchanges or brokerage platforms. These platforms are the best places to trade Ethereum. So, let’s discuss them in brief!

Crypto Exchange: 

The most convenient and easiest way to trade Ethereum is through a reliable crypto exchange.

The advantages of trading with cryptocurrency exchanges include a reasonable fee structure, an extensive range of crypto coins, and offering a variety of ways to deposit fiat currency.

On the negative side, the regulatory compliance of these crypto exchanges may not meet the high standards of stock brokerage platforms.

Brokerage Platforms: 

As ethereum is a popular cryptocurrency, many brokerage platforms have started to offer to trade on this digital asset.

Additionally, these platforms offer other financial instruments such as Forex, Commodities, Stocks, Indices, etc., which makes it a good option for investors looking to diversify their investment portfolio.

Not just these, there are several other benefits of choosing a reliable brokerage platform such as InvestBy, InvestFW, Capitalix, and PrimeFin.

The one thing to keep in mind while trading with brokerage platforms is that most of them don’t provide an external crypto wallet to store your crypto exchange.

Cryptocurrency Apps: 

Apart from crypto exchanges and brokerage platforms, many crypto apps have started to offer their users to buy Ethereum.

These apps offer a user-friendly interface so that even a novice investor could also start investing in Ethereum. The popular platforms which allow Ethereum trading include Paypal and Venmo.

Should I Hold or Trade Ethereum? 

When you opt for Ethereum trading, it focuses on short-term fluctuations in the crypto market.

Conversely, investment strategies rely on buying cryptocurrencies when they are cheap, holding them for a long time, and selling them for a higher price.

Let us tell you that short-term trading is always risky as the cryptocurrency market is extremely volatile.

If you have a good understanding of the market, you can make a lot of money on short-term trades. But if you get it wrong, you suffer massive losses.

Overall, holding is the safer investment option. But this is only profitable if you think the value of Ethereum will increase over the long run.

Conclusion:

Today, Ethereum is one of the best assets for trading, with over 116 billion coins currently in circulation. However, just because it’s one of the more well-known cryptocurrencies doesn’t mean it’s right for you.

Before trading a volatile asset like Ether, you should first make sure you’ve done your research, and your finances are in good shape.

That’s it! Hope you have understood how to trade ethereum.

FAQs: 

How Do You Buy and Trade Ethereum? 

You can easily buy or trade ethereum on a crypto exchange or a brokerage platform. If you’re still unsure, read out our article – How to trade Ethereum.

Is Ethereum Good For Trading? 

Ethereum poses as a great trading asset because of its wide availability and ever-increasing value.

What Is The Minimum Ethereum I Can Buy? 

You can buy Ethereum in small portions. For instance, you can start with as low as $25.

Is It Better To Trade With Bitcoin or Ethereum? 

Transactions on the Ethereum network are faster than on bitcoin. But on the other hand, the value of Ether has kept rising since its inception. So, it is quite better to go with Ethereum.

Is ETH Good for Day Trading? 

ETH can be great for day trading if you’re looking for quick profits in the short run.

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