Traders around the globe consider Ethereum to be the second-most marketable cryptocurrency in the world. If you are a trader who is fascinated about this profitable cryptocurrency platform, this is the right place to be. In this write-up, we shall be looking at everything Ethereum CFD (Contract for Difference), and how to trade its token Ether profitably.
Ethereum is a decentralized open-source blockchain platform with brilliant contract functionality based on a protocol encryption network autonomous from any central authority. Its developers looked to create an ultimate platform for fast, secure transactions stored on a massive ledger called the blockchain that is open to all.
Ethereum plays second fiddle to the Gold of cryptocurrencies, Bitcoin, with many of its applications yet to be unveiled. It has only lasted less than a decade (created in 2015) and has taken the financial market by storm with over 1000%. Without any doubt, Ethereum has proven to be one of the most profitable digital platforms to invest your money.
Ethereum CFDs allow traders to speculate on a change in the price of Ethereum. CFDs is a term in trading which stands for Contract for Difference. Just as it is with many other cryptocurrencies, one can trade Ether with a CFDs account. As a trader, you get CFDs with leverage implying you only need a share of the investment’s total value to deal. You can earn higher with CFDs; the same goes in the case of losses because the leverage that comes with CFDs multiplies the impact of price changes on both profits and losses. In 2017, technology start-ups raised over $5 billion in funding on the Ethereum platform to prove that it is the best platform for initial coin offerings (ICOs). As you may know, cryptocurrencies are decentralized virtual currencies that are not controlled by a central bank or government.
These currencies have witnessed years of high volatility in the financial market. When combined with leverage in the case of CFDs, their volatility generates a high-risk trading atmosphere.
How to Calculate the Ethereum CFDs Margin
Opening a CFDs position on your account requires a deposit —an amount of money known as margin. This margin reflects a percentage of the full value of the position. CFDs margins vary depending on your platform of choice. You can find out the specific margin of Ethereum in the market information sheet on the platform use.
For example, if you are trading on $20,000 of Ether via CFDs and the CFDs provider has set a margin of 10%, you need a margin of $2,000 in your trading account.
To calculate your initial margin: Price × quantity = Full Notional value.
Margin required = Margin percentage x Full Notional value.
Consequently, if the trader intends to trade an asset of 15000 standing at $10 each then,
Full Notional value equals 15000 × $10 = $150,000.
If the margin percentage is 5%, then the initial margin needed will be 5% × $150,000 = $7500
CFDs accounts make more capital available to the trader than the initial amount deposited due to leverage. It is the reason the broker requires collateral (margin) to ensure that all losses are covered.
Ethereum CFDs Trading
In CFDs (contracts for difference) trading, you buy a specific number of contracts (Ethereum) on a market if you think it’s the price to rise and sell them if you assume it to fall. Trading CFDs is different from other forms of trading. We’ll walk you through how you would be able to do so profitably. For starters, you’d want to grow your confidence with the aid of a demo account.
Trading in the financial market requires a formidable strategy (especially when dealing with a volatile product like the Ethereum) to meet your goals. Your trading plan is what makes you unique from every other trader out there. It defines your trade, time to trade, your response to loss, and the ability to make the right decisions when under pressure.
While there are countless CFDs brokers out there, you’d want to look out for a credible broker with the features and services that meet your needs. With the right technical analysis tools at your disposal, you should be able to identify the market moves at a glimpse with essential charts and understand what they suggest and what moves to make.
CFDs brokers today employs a wide range of trading platforms to meet all clients’ needs. Some of the platforms on offer include web-based platform MetaTrader 5 and MT 5 mobile trading apps (the previous version was MetaTrader 4). Remember to set up a good risk management profile in case of a potential loss.
Ethereum Contract For Difference
There are just two ways of trading the Ethereum cryptocurrency. You either buy and own the coin itself or speculate on its price without ever owning the token. There are several benefits to purchasing Ethereum CFDs over buying and selling the actual currency. When dealing with Ethereum CFDs, you don’t own the currency. However, an Ethereum CFDs allows investors to earn and also face the risks affiliated with owning Ethereum itself. CFDs have become a preferred alternative for investors to obtain exposure across multiple asset classes for quite some time now. The CFDs market for cryptocurrencies growing at a speedy pace is an indication it is here to stay. One of its primary selling points is it gives traders the chance to go either long or short. This feature allows investors to earn from Ethereum’s uphill and downward moves by entering buy orders to go long or sell orders to go short on Ethereum.
When purchasing Ethereum, numerous exchanges demand investors to buy Bitcoin before they can procure Ethereum, conversely, investors can trade Ethereum CFDs.
Ethereum’s success for distributed applications is its low cost. It’s been able to outdo bitcoin in some very vital areas in the financial market. As an Ethereum CFDs investor, you don’t have to download wallets to store Ethereum coins or risk loss of investment due to unwarranted discrepancies. Join the moving train, get a chance to earn big by investing in the world’s second most profitable cryptocurrency.