Everyone is investing in cryptocurrency these days. All you have to do is read the news, meet some friends, or eavesdrop at the office and you will find that crypto trading is the buzz of the moment.
With more and more cryptocurrencies coming out every day, it doesn’t seem like it is a fad that will disappear anytime soon. In fact, quite the opposite.
Investing in cryptocurrency and learning how to trade can offer you a pretty hefty return.
Ethereum is one of the leading cryptocurrencies in the world, second only to Bitcoin, and as its popularity continues to grow and grow, so do the opportunities to invest in it.
If you are interested in trading, then this guide will give you all the information you need on how to trade Ethereum and hopefully make yourself a decent profit.
Brief Introduction to Ethereum
These two concepts are what Ethereum and various other cryptocurrencies are run on and are changing the way that we do business.
Ethereum and its Ether tokens are quite a complicated concept but without entering the technological abyss, here is the necessary information on what it is, what it does, and how.
In simple terms, Ethereum is an open source software platform which is based on blockchain technology. It allows developers to build and deploy a range of decentralised applications, as well as acting as a digital asset that can be bought, sold, and traded.
It works on the distributed public blockchain network, and while it is sort of similar to Bitcoin, there are many differences regarding purpose and capability.
One of the main differences is that while Bitcoin and its blockchain focus on tracking ownership of digital currency, the Ethereum blockchain focuses on running the programming codes of any decentralised applications that use it as a platform.
With the Ethereum blockchain, users don’t mine for Ether. Instead, you must work to earn the tokens. These tokens can then be used to trade and also by app developers to cover transaction fees and services that function on the Ethereum network.
Another key feature of the Ethereum network is the idea of smart contracts. A smart contract is a computer code that facilitates the exchange of money, property, information, shares, or anything of value.
When used on the Ethereum blockchain, the smart contract acts as a sort of self-operating computer programme that is capable of executing pre-defined actions, as soon as specific, also pre-defined conditions are met.
These smart contracts are entirely immune to downtime, fraud, or interference from any third parties and they are perfect for using in freelance contracts, property sales, or other transactions that require several steps being satisfied before completion.
What Is Ethereum Trading?
While Ethereum is multi-purpose, it can be bought, sold, invested in and traded in the same way as any other fiat currency or cryptocurrency.
First of all, you need to find an exchange where you can purchase the Ether tokens. Once you have done that and depending on which exchange you have opted for, you can either buy your Ethereum with fiat or another cryptocurrency such as Bitcoin.
Then the next step is to decide what you want to trade it with – be it another crypto, or a fiat currency such as dollars or euros. You can then choose how you want to trade– whether you will do regular trading, or if you will opt for margin trading with leverage.
If you need more information, check our guide on how to buy Ethereum.
Ethereum Trading vs Bitcoin Trading
When it comes to deciding whether Bitcoin trading is better than Ethereum trading, or vice versa, a lot comes down to personal preference.
If we look at the markets at the moment, Bitcoin is suffering a bit of a dip as its price recently dropped below $10,000 for the first time in months.
It seems that Bitcoin volatility is a concern for many, which is good news for those that are already or are considering in investing in Ethereum. As Bitcoins value fell by 19%, Ethereum has also experienced a drop of 15% with it settling at around $885 per Ether.
It is the opinion of many that Ethereum is a safer option than Bitcoin and that it could become more stable because it is multipurpose, and its usage is not just that of a cryptocurrency.
Because it is tied into the creation and use of applications that use the Ethereum platform, deciding to trade in Ether, could be a more stable option.
When it comes to ease of trading, it can be said that it is easier to trade Bitcoin because you can often buy it much easier than Ethereum. Depending on your payment method and the exchange you are using, you may have first to purchase Bitcoin and then exchange it for Ethereum which can be a bit of a hassle or annoyance for some.
The last point to make is that Ethereum is considered better as a long-term investment that you would purchase, and hold until the time is right to trade.
Bitcoin is regarded as a coin that you can buy and then trade with more frequently. Ultimately, the choice is yours.
You can find more information in the article on Bitcoin vs Ethereum (The Difference).
Ethereum Leverage Margin Trading
One option you have when trading in Ethereum is margin trading. Several of the large exchanges allow margin trading with Ethereum, and it is a great way to be in with a chance of increasing your profits.
First of all, you can deposit your Ethereum into one of these exchanges and then allow other users to borrow it for margin trading; you will then earn daily interest on it.
As an ether margin trading funder, you can choose your rate of interest and earn passive revenue which is returned to you in the form of Ether.
Margin trading is where instead of trading in the traditional manner, you borrow money from a broker to allow you to trade more currency. If your trade pays off, you get a much higher return, even after you have paid the loan back.
If your trade is not paying off, the loan is repaid before it is lost, and you only lose your own money. It is a great way of multiplying the profits you can make, even if you don’t have the capital yourself to do it.
For more detailed explanation, visit our guide to Cryptocurrency Margin Trading.
The Best Places to Trade Ethreum
Now you have the lowdown on Ethereum; you need to pick a good platform to trade on. There are many out there and which one is the best for you depends on a lot of how you want to buy your Ether, and how you want to trade. These are some of the best:
Bitfinex is one of the largest and most advanced cryptocurrency exchanges in the world. It offers to trade between Bitcoin, Litecoin, and of course, Ethereum.
Based in Hong Kong, it also allows exchanges between USD and seven cryptocurrencies. You can trade with a leverage of 3:3 times, and it also offers low lending fees as well as a chance to fund other traders yourself.
Bitfinex is a great place to trade Ethereum, enjoying high liquidity and a sterling reputation it is a safe bet for beginners and trading pros.
You can more information in our Bitfinex Review.
Binance offers considerably more trading pairs and cryptocurrencies than Bitfinex, and it allows you to create your trading pairs which are a nice touch.
You can purchase your coins with cryptocurrency, and it will enable you to see how both currencies are trading without too much analysis.
It has a great mobile platform for iPhone and Android. It has a great and easy to use interface as well and is considerably less complicated than some of the other platforms.
You can find more information in our Binance Review.
CEX.io allows you to purchase Ethereum for both USD and EUR and offers a large selection of payment options such as credit card – something that many exchanges don’t let anymore.
The only drawback with CEX.io is that it is considered a little bit expensive as their fees for transactions and depositing are not exactly the cheapest around.
That said, it is a good, solid, and reliable platform with an excellent reputation and high liquidity.
eToro was one of the first exchanges to allow the purchase and trading of Ethereum. Registered in Cyprus, Israel and the UK it adheres to a high standard of professionalism and regulatory standards.
One of its great features is known as “Copy-Trading” which allows you to view, follow and automatically copy the trading carried out by the platforms top traders. It also has a great Android app so you can buy, sell, and trade on the go.
You can find more information in our eToro Review.
Tips for Ethereum Trading
If trading Ethereum is something that interests you, then here are some tips to consider before you dive in, and while you are trading.
Ethereum is great for holding in the long term. In a volatile market such as the cryptocurrency market, one great bit of advice is to hold the majority of your Ethereum coins for the long term. This way you can trade a bit, but retain the bulk for a point in the future when the market has stabilised in your favour.
The value of currencies can change so much, and so often, that it is often wise to hold on to them until a favourable opportunity to trade occurs.
As mentioned, the value of Ethereum is prone to going up and down quite often. Don’t be in a hurry to buy, instead wait for a dip to occur and seise the moment. Buying when it is at a high means you are less likely to make a profit on it, and you could end up losing.
Don’t panic- there are often flash crashes in the market, as well as charts and values fluctuating and beginning to look like a rollercoaster.
This is normal, and the key is not to panic if things aren’t entirely going your way. Remember you don’t have to trade just because you hold the currency, waiting for an opportune time is the smart way to manage your portfolio.
Last but not least, don’t ever borrow money to trade coins and never invest more than you can afford to lose. Putting the mortgage money, or borrowing from the kid’s university fund is never a good idea, and while you could end up making a fortune, what happens if you are not lucky?
Always invest and trade within your means because in the world of cryptocurrency, nothing is guaranteed, and nothing can truly be predicted.
For more advice, visit our article on the Top Tips for Cryptocurrency Trading.
Ethereum is an essential cryptocurrency if you are serious about creating a killer portfolio. It is a superb option for day trading, and unusually long-term investing and holding.
Many believe that the future is bright for Ethereum because it functions as more than just a cryptocurrency, which indicates it may have slightly more longevity than other cryptocurrencies on the market.
In my opinion, investing in Ethereum is well worth it. While it still experiences high levels of volatility, it is worth keeping some to hold for the long term and then using a small amount for day trading purposes.
It is easy to purchase, easy to trade and can offer some lucrative returns if you are savvy about the way you trade.
With many of the leading exchanges now offering Ethereum trading and Ethereum margin trading, it has never been easier to try your hand at trading the world’s number two cryptocurrency.
One of the best and easiest platforms to start trading is eToro. It not only offers a modern and straightforward user experience but also low fees.
What do you think of our guide on how to trade Ethereum? Do you have any tips? Let us know in the comments below!