Trading Ethereum CFDs

Important notice:
Cryptocurrencies are not legal tender or securities. Cryptocurrencies and Cryptocurrency Contracts For Differences (CFDs), which are derivatives of cryptocurrency, are not regulated by the Monetary Authority of Singapore (MAS). Investors should be aware that they are not entitled to any legislative protection when they deal with Cryptocurrencies CFDs. If you choose to invest in unregulated products, you will not be protected under MAS regulations. Other risks associated with the trading of Cryptocurrency CFDs include high price volatility, lack of price transparency, cybersecurity risks, unregulated status of payment token spot trading market. Please ensure that you are fully aware of the risks involving cryptocurrencies and if in doubt, you should consult an independent financial adviser. To find out more information about cryptocurrencies and risks, you can go to the MoneySense website here.

What is Ethereum?

The Ethereum project is an effort to democratise the internet by creating a ‘world computer’. It seeks to replace the old model of servers or clouds hosting data with a new approach – ‘nodes’ provided by volunteers. The creators of Ethereum are seeking to introduce an alternative model for data and apps that is not dependent on big technology companies.

Ether, the currency that powers Ethereum, is used to pay for the transactions that occur on the Ethereum network. Its primary purpose is reward the miners who are processing the data transactions on the Ethereum network.

Most people not actively involved with the Ethereum network refer to Ether as Ethereum. Ether was issued as part of the crowd funding campaign that launched Ethereum but millions of new coins are created every year.

How to trade Ethereum?

To trade Ethereum you don’t need to be working on the Ethereum network. It is possible to trade the price of this crypto using CFDs, for example. Ethereum has a real world value in currency, which will go up and down over time. This is the amount of another currency one Ether can be exchanged for. Some advantages of trading Ethereum via CFDs are:

Go long or short: take advantage of both the rises and the falls in the Ethereum price

Volatility: react more quickly to changes in price without owning Ethereum

Leverage: trade Ethereum with only a small initial investment

Ethereum can be traded around the clock, as it does not depend on a particular market being open.

Be aware, however, that using leverage to trade Ethereum means you will be more exposed to changes in the price. Make sure that you keep stop losses in place to protect yourself against sudden price reversals and you are aware of what your total exposure to the Ethereum price is.

Buying vs trading Ethereum CFDs

Buying Ethereum requires the use of specialist cryptocurrency platforms. This can be both a cumbersome and time consuming practice and will make it difficult to react to short term changes in price.

Trading Ethereum using a CFD allows you to react quickly to price changes and take advantage of short term volatility. You don’t need to own Ethereum to be able to trade its price.

Is Ethereum risky?

Ethereum is a volatile market and although this presents opportunities for traders it can also represent risks. Both buying and trading Ethereum involves risk.

• Ethereum has high volatility and sharp price fluctuations are very likely
• Leveraged trading can magnify both your profits and losses

Factors impacting Ethereum

There is technically an unlimited supply of Ethereum. While 60 million Ethereum ‘coins’ were issued as part of the Ethereum crowd funding campaign in 2014, approximately 18 million new coins are mined every year.

As with other cryptos, it is important to understand that the ‘rules’ affecting the way Ethereum is mined and processed can be changed suddenly, and this can have a big impact on the price, for better or for worse.