In this article, we will provide information about Ethereum and Ether, which is a type of system and its virtual currency, that managed to garner the second place in terms of importance and capitalization after bitcoins. After discussing the section that deals with general analysis, we will then talk about how it will be possible to trade with Ethereum and then with Ether through the trading platforms provided by online brokers.
What is Ethereum?
If Bitcoin can cause some headaches because of the way it works, even more so with Ethereum. In fact, this is a platform used to create and publish peer-to-peer intelligent contracts (so-called smart contracts) that are made with a particular programming language (Turing Complete or Turing Equivalent) based on specific calculation models.
Don’t worry. We leave the explanation of the mathematical models to other mathematical and computer sites.
What matters is that Ethereum’s intelligent contracts, in order to run on the peer-to-peer network, have to pay for the use of computational power with an Ether, a unit of account, a virtual or cryptocurrency. Ether, therefore, represents both a cryptocurrency and what moves the entire computational power. A sort of fuel in the Ethereum system.
But what exactly are intelligent contracts?
That’s a good question that the most attentive of you could ask. Well, it’s surprising because the wealth of Ethereum has been made and continues to be made by contracts that cover many operations that include financial markets, crowdfunding, electoral systems, registration of domain names (names of websites), intellectual property (the famous Copyright) and much more. Therefore, these are contracts of a certain importance and above all,”intelligent”, hence smart contracts, since it is not a simple transaction between two parties.
As with Bitcoin, Ethereum also relies on a “community” of users who support it. In March 2017, this community was joined by the creation of the EEA (Enterprise Ethereum Alliance), a non-profit organization with over 116 members represented by large companies including Microsoft, Intel, J.P. Morgan, Banco Santander, and the National Bank of Canada. The purpose of this organization is to coordinate the programming and updating of the open-source standard and “managed” version of the Ethereum blockchain (its platform) based on the common interests of the banking, management, consulting, automotive, pharmaceutical, technology industries and other sectors along with the developers of the Ethereum ecosystem.
In short, Ethereum is anything but a “simple” cryptocurrency and huge companies and even institutions have noticed it. And it is destined to become even “bigger” than it is. It’s a mature system, as is the platform and its objectives.
Trading with Etherium’s Ether
In recent times, several opportunities have been developed for those who aim to achieve economic results that resulted in price changes in Ethereum’s cryptocurrency. In this article, we will focus on what we specialize in: online CFD trading.
To sum it up and in case you wish to refer to our complete guide to using CFDs, we can say that CFDs are financial instruments that have the characteristic of replicating the performance of another financial instrument, which is referred to as an asset or underlying asset. In the case of Ether CFDs, CFDs replicate the performance of Ether prices.
Note: CFD trading on Ethereum does not buy Ether, but rather, it trades securities based on their value. This means that if you buy an Ethereum CFD, you will not own any Ether. Furthermore, trading with Ethereum CFDs is intended as a short-term transaction, unlike a traditional investment.
With CFDs, you can open up or down trading positions based on the value of Ethereum’s cryptocurrency. This position can then be closed at a time when you think it is most appropriate in order to make a profit from the price change. Of course, in addition to the possibility of profit, there is also the possibility of loss if the market moves unfavorably compared to its forecasts.
The profits and losses deriving from the trading with Ethereum, therefore, will be proportional to the variations that have occurred on its quotation.
How to Buy Ethereum
In addition to trading with Ethereum, you can also buy it and then receive it in your personal electronic wallet. There are various alternatives today that are widely explained in the article in cryptovalute.io regarding the topic of buying Ethereum.
How to trade with Ethereum on Plus500
To open an Etherium trading position on Plus500, start by selecting Ethereum on the “Crypto” category.
Once you have selected the type of position, you can click Buy if you decide to open a bullish position (which is used to bet on a rise in price), or Sell, to open a bearish position (which is used to bet on a fall in price).
Once you have decided on the type of position to open and selected the corresponding Buy or Sell button, you can set the details of the open position.
These details include:
- The amount of Ethereum to be traded (using the “-” button you can reduce the amount and thus trade with a smaller budget). At the same time, you can always see the amount of the initial margin, which is the amount for which you are actually using. In this regard, it should be noted that CFDs are leveraged instruments, so the user uses a share that is smaller than a traditional investment. In the case of trading with Ethereum on Plus500, the leverage is 1:30, so with €100, you can trade with a total value of €3000. The amount on which to trade is the only factor that must necessarily be set, while all other orders below are optional, so you may or may not apply them.
- Stop Loss: is an order in which you set the maximum limit for losses that you are willing to incur for trade. When this limit is reached, the position will be closed automatically.
- Stop Limit: is an order with which you set the desired level of profit. When this is reached and you are already willing to settle, the position will be automatically closed.
- Guaranteed Closing: is an order that is not available for all instruments, which consists of ordering the platform to automatically close a position in the event of sudden and drastic changes in prices.
- Operational Stop: this type of order can be accessed by clicking “advanced”. It is, in fact, a type of advanced order which allows the platform to automatically vary the bar of the stop loss if the market moves in its favor.
- Buy only when the rate is: this order allows you to set the buy or sell (sell only when the rate is) option only if the rate or the quote reaches a certain level. In the case when this option already appears ticked and not modifiable, it means that the market is momentarily closed (during those hours when no trading is done) and as such, things cannot be immediately done. The only thing you can do is to issue an order of purchase (or sale).
After entering the desired values, just click the “Buy” or “Sell” button in order to open an up or down position.
Once opened, the position will immediately begin to affect the available capital.
The profit/loss account (prof/per) will start with a negative value due to the initial spread deduction done by the broker. It is a small percentage that the broker retains as compensation for its CFD provision service.
Once closed, however, the position will no longer affect the capital. By the time the trading position is closed, the maintenance margin will be returned to the trader along with the initial net margin of profits and losses.
Ethereum on IQ Option (CFD)
To trade with Ethereum, you can also consider the approach proposed by IQ Option. This broker, which in addition to binary, classic, and digital options, now also offers the possibility to trade with Ethereum, albeit in a slightly different way than Plus500.
But what makes IQ Option’s Ethereum CFDs different from those of Plus500?
It’s mainly the lack of leverage.
To trade with Ethereum on IQ Option, just click the “+” button at the top to choose Ethereum from the cryptocurrencies in the Krypto category as shown in the following figure.
After selecting “Ethereum”, it proceeds to set the amount to invest in the operation and you would have to click “buy” or “sell”. From the moment in which the position opens, the variations of the quotation will have an effect on the invested sum. You can close the position at any time and recover the amount based on the new exchange rate between the dollar and Ether for IQ Option CFDs.
Note: There is no leverage on IQ Option.
Quotes are based on those reported by the primary broker, Thomson Reuters.
But is it better to buy Ether from Ethereum or is it wise to just trade? These are two different things.
It is necessary to consider that trading is a typology of financial activity in which it is possible to negotiate figures that are regarded as much lower (as we have seen on Plus500, these are 30 times lower because of the leverage of 1:30 ) but at the same time, you can produce an economic result based on the effects of the variations intervened on the asset, which in this case, is the cryptocurrency of Ethereum.
Also, take into account that buying CFDs does not mean buying Ethereum’s Ether, which is available only from the official Ethereum platform instead.