Cryptocurrency is one of the newest areas of opportunity for modern investors. The very concept of crypto is a bit complex. Plus, there are hundreds of different currencies you can trade even though just a few tend to dominate the market. Unlike trading stocks, bonds, precious metals or other instruments, making a profit in the crypto market takes study, patience and determination. Even those new to cryptocurrency trading know that Bitcoin currently is the most active and popular currency. With just under half of the world’s cryptocurrency value held in Bitcoin, that leaves about 60% for the other top currencies like Ethereum, Monero and Litecoin.
If you want to trade Ethereum, you’re already in an elite group of cryptocurrency enthusiasts. That’s because it’s not exactly identical to other cryptos in the way it was created or the way it’s traded. In fact, you use the Ethereum platform to trade the currency itself, which is called Ether. Here are the key facts you need to know if you want to begin trading Ether:
How to Take the First Step
The initial step for Ether traders is setting up an account on a platform that allows you to either trade Ether directly or through a contract for difference (CFD). Either way, you’ll need to fill out a short form and disclose how you intend to fund the account. Keep in mind that some exchanges will force you to purchase Bitcoin first and then trade it for Ethereum currency. Other exchanges allow you to buy Ether straightaway and begin trading immediately. Be sure to double-check on the account set-up methods with your chosen exchange.
Transfer Funds into Your Account
The vast majority of exchanges will let you fund your account with either a direct bank transfer or a credit card. If you want to start trading quickly, use a credit card. Bank transfers take more than five business days in most cases. Credit card funding usually goes through in a matter of minutes.
Earn Profits Two Ways
Most people who use Ether as a means of earning money choose from two options: they either buy the currency and hold it for a long-term profit or speculate on price changes just as they would on stocks or bonds. If you don’t want to even bother with owning the currency outright, then you can simply trade Ethereum prices via CFD (contract for difference) contracts. When you use CFDs, you aren’t tied to the underlying asset (in this case, Ether) at all. You purchase a CFD and wait for the price of Ether to move in the direction you predicted. If it does, you then sell at the higher price and pocket the difference, less any fees.
Keep Your Ether Safe
It is highly advisable to keep your Ether currency in either a hardware wallet or a paper wallet. There are advantages and disadvantages of both. Paper wallets are tamper-proof and 100 percent secure. You’re actually dealing with printed notes that contain all the data on them, including barcodes and security numbers. The downside of paper wallets is the risk of loss by theft or misplacement. Hardware wallets are like offline thumb drives and are the preferred way to store Ether currency, but they, too, can be lost or stolen.