How to trade on Ether
A major contender in cryptocurrency markets, the Ethereum platform boasts one of the largest cryptocurrencies - Ether. Read on to learn the basics of trading on Ether using CFDs.
Start trading today. Call +44 (20) 7633 5430, or email firstname.lastname@example.org to talk about opening a trading account. We’re here 24/5.
Start trading today. Call +44 (20) 7633 5430, or email email@example.com to talk about opening a trading account. We’re here 24/5.
Are you ready to trade on Ether? Follow these four steps
Decide how you want to trade on Ether
Trading on Ether follows the same method as other major cryptocurrencies, which are traditionally traded on an exchange – involving buying and selling the selected currency.
However, you can also trade on Ether by speculating on its price movements by using CFDs. This financial product is a leveraged derivative, meaning you can take a position on the market without having to own the underlying cryptocurrency.
It also means that while your profits may be amplified, your losses can exceed your initial deposit. Make sure to manage your risk before opening your position.
With us, you won’t sell or buy Ether on an exchange, but instead you will be trading on Ether prices through our CFD offering.
You can trade CFDs on our award-winning platform,1 or you can trade on Ether CFDs via MetaTrader 4 and ProRealTime . Plus, you’re more likely to have your orders filled at your desired price due to our large client base and liquid cryptocurrency markets.
Alternatively, you could take a position on our Crypto 10 index – an index tracking the price of the top ten cryptocurrencies, including Ether, weighted by market capitalisation.
Trading on Ether with CFDs
A CFD is an agreement to exchange the difference in price of Ether from when you opened your position to when you close it.
When you trade CFDs, you’ll open your position with an initial deposit that is a fraction of your total market exposure – also known as margin. If you think the price of Ether is going to fall, you’d ‘sell’, or ‘buy’, depending on whether you think the price will rise.
But, because the margin deposit is less than your exposure, your potential losses may exceed your deposit. It’s important to employ a risk management strategy to control your exposure.
Trading on Ether through an exchange
You can trade on Ether by buying it directly through the cryptocurrency exchange. To do this, you’ll need to create an exchange account and put up the full value of the asset to open a position. This will enable you to store Ether in your virtual wallet – until you sell it. Unfortunately, we don’t offer these services.
Here’s how trading on Ether with CFDs compare with buying the crypto through an exchange.
|Trading on Ether with CFDs||Buying Ether through an exchange|
|Cost to get exposure to Ether||Margin for retail clients is 50% of the total value of the coin (Your profit or loss will still be calculated on the full size of your position.)||Full cost of the coin|
|Short selling||Yes – select ‘sell’ to open your CFD position||No – unless there’s a willing counterparty|
|Execution||0.0107 second execution speed and access our unique deep liquidity2||Dependent on exchange liquidity levels|
|Restrictions on funding and withdrawing||Fees are charged for some deposit and withdrawal methods. More documents could also be requested before withdrawals||You may be charged fees and encounter restrictions on adding or withdrawing funds|
|Overnight funding charge||Yes||No|
Note: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail client accounts lose money when trading CFDs, with this investment provider
What moves the price of Ether?
Ether may have less exposure to many of the economic and political factors that affect traditional currencies, but its value is influenced by a host of unique dynamics:
- Market manipulation
A lack of regulation means traders may be able to influence the market by buying and selling in significant quantities
Unlike Bitcoin, there’s no limit on the supply of Ether. Even so, many Ether units will continue to be added and lost over time, causing its availability to fluctuate
- Wider acceptance
The Ether ecosystem is constantly changing as adoption of the cryptocurrency grows, both among independent investors and those in industry
- Government regulation
Governments are still adapting to cryptocurrencies, with considerations for supervision mechanisms and other new guidelines
- Media coverage
Negative press, particularly surrounding security lapses and hacks, can impact public perception of Ether’s value
- Technological advances
Ether’s integration into payment systems, crowdfunding platforms and more could raise its profile, while confidence in traditional systems may begin to erode.
Ether trading strategies
Make the most of daily volatility in Ether’s prices. Day trading CFDs means you’ll open and close a position within a single day – ensuring you don’t have overnight market exposure. If you don’t hold any positions at the cut off time, then you'll avoid any overnight funding charges. If you’re looking to profit from Ether’s short-term price movements, this strategy could be for you.
Swing trading relies on taking advantage of short-term price patterns, based on the assumption that prices never go in just one direction in a trend. When swing trading on Ether, you’ll try to make money from both the up and down price movements occurring in a narrow timeframe.
Ether swing traders tend to be more interested in small reversals in Ether prices. If you decide to follow this strategy, you’ll try to spot these reversals in advance, and trade to make profits from smaller market movements instead of a broad trend.
Scalping is a short-term trading strategy that seeks to make small, frequent profits by focusing on a high-win rate. This is based on the theory that you can easily build a large trading account by focusing on small profits through frequent trades than placing fewer trades and letting profits run. Scalping requires a strict exit strategy, as quick market movements can result in losses that counteract your profits – especially in volatile markets like cryptocurrency.
Most scalpers close their positions before the end of the day to avoid overnight funding charges eating into their profits.
- Ether day trading
- Ether swing trading
- Ether scalping
- Ether hedging strategy
By hedging Ether, you’re attempting to reduce your risk by balancing out your exposure on an existing position with a second, opposite position. This is to protect you from unfavourable Ether market movements.
For example, if you hold Ether but are worried about short-term cryptocurrency depreciation, you would open a short position. If the market price for Ether falls, all the profits from the second position would offset the losses on the first.
However, by hedging, you’ll incur fees on both positions – which should be accounted for in your calculations.
Automated Ether trading uses autonomous algorithms to open and close trades according to set rules, like points of price movements. Once the market conditions match the predetermined criteria, the trading algorithms (algos) can execute a buy or sell order for you.
You’ll be able to algorithmically trade on Ether with us through partnerships we have established with respected platforms, including MetaTrader 4 and ProRealTime , as well as our native application programming interfaces (APIs).
Make your first Ether trade
By trading on Ether CFDs, you’re using a leveraged derivative to speculate on the crypto’s price movements without ever taking ownership of the currency itself. This enables you to go long or short on the cryptocurrency, with the accuracy of your prediction and the size of the market movement determining your loss or profit.
Ready to start trading on Ether? Follow these steps:
- Open a trading account or log in
- Build a trading plan
- Do your research
- Manage your risk and place your trade
- Monitor and close your position
Open trading account or log in
Opening a CFD trading account takes just a few minutes. More importantly, there’s no obligation to fund your account until you’re ready to trade.
To practise your Ether trading without risking any capital, you can open a demo account. With $20,000 in virtual funds, you can learn more about trading on Ether markets on our award-winning platform1 for free.
Here’s how to trade on Ether CFDs with us:
|Main advantage||Trade rising and falling markets on margin without owning Ether
Set up risk management tools like stop-loss orders
|Main risk||Losses can exceed your margin deposit, so it’s important to manage your risk|
|Available to||All clients|
|Traded in||Over-the-counter contracts|
|Commission||There will be no commission charge for Ether CFDs, and we charge spread instead*|
|Trading platforms||Web platform, mobile app, third-party crypto trading platforms like MT4 and ProRealTime|
*Other fees and charges may apply.
Build a trading plan
A trading plan is a unique, comprehensive decision-making tool for your trading activity. It helps you decide when and how much to trade, and is tailored for specific assets like Ether. Your trading plan should consist of the following:
- Your motivation for trading
- The time commitment you want to make
- Your trading goals
- Your attitude to risk
- Your available capital for trading
- Personal risk management rules
- The markets you want to trade
- Your strategies
- Steps for record keeping
Do your research
If you want to trade on Ether, it’s necessary to stay up to date with important news events that could impact the Ether markets. Cryptocurrency markets can be quite volatile, which means it is crucial to stay abreast of developing stories and news. To help with this, our platform features expert analysis from our in-house team, and a live news feed.
Manage your risk and place your trade
Since you’ll be opening your position on margin, your losses could exceed the margin deposit if the market moves against you. To help manage this risk, you can set a stop-loss level in the deal ticket. If triggered, the stop-loss will automatically close your position and cap your risk.3
To lock in any profits if the market moves in your favour, you can also enter a limit level. Here, your trade will be automatically closed to secure positive returns as soon as the market reaches the price you’ve set.
Remember that, when trading CFDs, each contract will specify an amount per point of market movement. If the CFD is for $10 per point, and the underlying cryptocurrency price moves 10 points, your profit or loss – excluding costs – will be $100 per contract.
Once you’ve set the number of CFDs you want to trade, your stop-loss and limit levels, you’d open your position by clicking on ‘Place trade’.
Monitor and close your position
If you’d like to close your CFD position, click on the ‘positions’ tab on the left menu. Select ‘close position’ and choose the number of CFDs you’d like to close.
Alternatively, open the market’s deal ticket and take the opposite position of the one you have opened – buying if you sold, or selling if you bought. This is on the basis that the client has selected net off instead of force open.
Ethereum is currently one of the world’s top three cryptocurrency rivals, second to Bitcoin, and followed by Tether.
Ethereum consists of a network of permissionless, non-hierarchical nodes (computers). These nodes build – and consolidate on – a series of ‘blocks’ (batches of transactions), which make up the ‘blockchain’.
Each block contains a specific identifier, which needs to follow in its respective chain for it to be considered valid – the block is then spread through the network of nodes. The transactions represented by the block are then reflected in the Ether balances of the accounts affected.
Ethereum is a ledger technology creating the network of nodes that the Ether is traded on.
Ether is the cryptocurrency itself, and Ethereum is the method used to trade on Ether.
Bitcoin is the currency itself, whereas Ethereum is the ledger technology companies use to build new programs (with Ether being the currency used on Ethereum).
However, both bitcoin and Ether operate on ‘blockchain’ technology – and are similar in this respect.
DApps (sometimes written ‘dApps’), are decentralised applications that run on the Ethereum network. They function in a similar way to smart contracts, but they don’t add any information to the blockchain. That means that there are a couple of key differences between the two:
- Where smart contracts require a fixed number of parties to be involved, dApps have no limits on how many can participate at any given time
- dApps aren’t confined to purely financial uses as smart contracts are, a App can essentially have any purpose that comes to mind
Ethereum Classic operates via the same ledger, blockchain network technology that Ethereum uses. Ethereum Classic exists as a split version of Ethereum’s blockchain after it was hacked, creating a need for the newer version, simply called Ethereum.
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1 Best Finance App, Best Multi-Platform Provider and Best Platform for the Active Trader as awarded at the ADVFN International Financial Awards 2022.
2 Correct as of 1 February 2022. Average speed calculated from 1 to 28 February 2022.
3 Stop-loss orders close your position automatically if the market moves against you. Normal stop-loss orders are free, but there’s no guarantee of protection against slippage. Guaranteed stops will close your position exactly at the price you specified, but incur a premium if triggered. Losses for both products can occur rapidly.