2020 Guide on how to buy Ethereum ETH with CFD Broker or an Exchange

We have written a very easy to follow and understand guide on how you can buy and sell Ehereum and other cryptocurrencies, using different platforms and methods currently available for cryptocurrencies buyers and traders.

  • Buy/Sell Ethereum with CFD Brokers  – eToro or Plus500
  • Buy/Sell Ethereum on Cryptocurrency Exchange
  • Buy/Sell Ethereum on Peer2Peer Platforms

1. What is CFD Broker and how you can buy Ethereum with CFD Brokers?

A Contract for Difference (CFD) is a popular form of derivative trading. CFD trading enables you to speculate on the rising or falling prices of fast-moving global financial markets (or instruments) such as indices, shares, commodities, cryptocurrencies, and currencies.

CFD trade is an agreement between two parties – seller and buyer, to exchange the difference between opening price and the closing price of a contract. Which means that you do not buy the asset itself, but only trade (or bet) against falling or rising prices of the asset or can benefit from movements in the price without having to buy the physical product. This is a particularly interesting proposition as at times the underlying asset may be way too expensive to buy, as in most recent times when 1 bitcoin was going for $10,000. So imagine you think the price of the bitcoin will go up, with an Exchange you would need to have a substantial amount of funds to buy the asset to realise a profit, whereas with a CFD trading you could enter into a trade and make a way better return on your investment*.

CFD trading is suitable for speculating on short-term changes in the value of an asset. You can open and close a position in a matter of hours or even minutes, so you can make gains from even short-term market changes.

CFD Trading – Go Long or Short when you buy Ethereum

The objective of trading CFDs is to speculate on price movements (generally over the short term) in an underlying asset. Your return depends on movements in the price of the underlying asset and the size of your position. For example, if you believe the value of a cryptocurrency is going to increase, you would buy a CFD (also known as “going long”) with the intention to sell it at a higher value. The difference between the price at which you buy and the price at which you sell equates to your profit, minus the broker fees. If you think the value of a cryptocurrency is going to decrease, you would sell a CFD (or “going short”) at a specific value, expecting to buy it back at a lower price, resulting in the Broker paying you the difference minus any relevant costs. However, in either circumstance, if the cryptocurrency moves in the opposite direction and your position is closed, either by you or as a result of a margin call, you would owe the Broker the amount of any loss you have incurred. To open a position, you are required to deposit a minimum deposit into your account then you can choose to use leverage or a margin. Trading on margin can magnify any losses or gains you make.

Margins and Leverage

By investing directly in an asset such as a company share, or cryptocurrency, Ethereum in our case, allows you to enjoy the full benefit of any rise in the asset value. It’s the same with CFDs but you don’t have to make a large investment to access this potential benefit. Using CFD brokers and trading platforms you can make the same profit as a cryptocurrency/asset owner with much lower capital investment, compared with buying the actual asset or in our case – when you buy Ethereum.

This can be achieved by taking advantage of the margin, which CFD Broker offers to the trader. A Margin is a loan or credit extended by your broker, that allows you to leverage the funds in your account to enter larger trades. Leverage is expressed as a ratio, for example, 2:1 leverage means that you would be able to hold a position that is twice the value of your trading account.

Advantages of Trading with CFDs:

  • 24-hour Forex and cryptocurrency trading
  • Trade when prices are rising or falling
  • Manage your risk easily
  • Trade using leverage
  • Low Fees and No hidden charges
  • Access global markets

Disadvantages of Trading with CFDs:

  • Market volatility
  • High-Risk Product
  • The potential for big losses if traded irresponsibly

In the case of unfavorable market movements in the traditional trading one would lose only the invested money, with CFDs one can lose much more than their initial investment was. The loss will be determined by the leverage or margin they have chosen. For this reason, it is recommended not to exceed the amount of full trade together with the leverage above the figure which you can afford to lose and always implement stop losses at the reasonable levels when you buy Ethereum CFDs.

There are two CFD Brokers we recommend if you are based in Europe and are interested in CFD type of trading, both are well recognised and respected Brokers – eToro and Plus500.

Buy/Sell Ethereum with eToro

Established in 2007 eToro has been piling up one success after the other with new cutting-edge technology and great overall service. eToro is a CFD Broker, however, due to very high volatility on the cryptocurrency markets, eToro acts partially as exchange and partially as a CFD Broker in cryptocurrency trading. eToro is great for novice traders, offers a copy-trading platform and the newly joined members can start trading in minutes without prior knowledge by simply coping knowledgeable and successful traders. Below are a few questions a novice cryptocurrency trader usually has when joining eToro:

Do I own my cryptos?

Users who have invested in a BUY crypto position since 3 September 2017 own the underlying asset rather than a CFD. While eToro does offer real cryptocurrency trading, they will only be offering the option to transfer cryptocurrencies to a digital wallet later in 2018.

If I want to copy a Popular Investor who is trading cryptocurrencies, what type of position do I open?

When copying Popular Investors or investing in CopyFunds strategies, all positions will remain as CFDs and not the underlying asset.

Will eToro offer leverage on cryptocurrencies?

eToro will not be offering leverage on cryptocurrencies for the foreseeable future.

Can I still Short cryptocurrencies?

Clients are still able to open short (SELL) positions on the platform, however, these will be CFD positions.

Can I withdraw cryptocurrencies from the platform?

Clients will not be able to move cryptocurrencies on or off the eToro platform, without converting into fiat currencies. Later in 2018, eToro will be launching the eToro digital wallet, which will enable you to transfer your cryptos out of the platform.

How can I transfer funds?

You can deposit funds using the following methods – Credit Card, Wire Transfer, Giropay or E-wallet (PayPal, Skrill, Neteller, Webmoney)

Are the cryptocurrencies regulated?

Cryptocurrencies are not regulated and so users will not be insured by the Investor compensation schemes in Cyprus or the UK for these instruments when they own the underlying asset. Also, you will not be able to file a complaint with the Financial Ombudsman Service if you are not satisfied with our service, although we will do the utmost to resolve any questions or issues you may have.

eToro Platform Interface | EthereumTrading.pro

Buy/Sell Ethereum with Plus500

Plus500 is a robust CFD trading platform and is one of the most reputable CFD Brokers in Europe.  The trading platform very sophisticated and is seemingly geared towards seasoned traders. So if you are serious about trading and want to learn nuts and bolts of trading this is the platform for you.

Please make a note: CFDs generally have no minimum holding period or maturity date. You decide when to open and close your position(s). CFDs on Cryptocurrencies, however, may have an expiry date. Therefore, any open positions on CFDs on Cryptocurrencies will close upon the expiry date set for the instrument at the last available price, if you do not close it earlier. You can find out the expiry date of an instrument by clicking on the “Details” link on Plus500 main trading platform screen by the instrument’s name. Plus500 may close your position(s) without notifying you if you do not maintain sufficient funds in your account. Here you can find the full review on Plus500.

Plus500 Review | EthereumTrading.pro
Plus500 Review | EthereumTrading.pro
Cryptocurrency Exchanges

2. Buy/Sell Ethereum with Cryptocurrency Exchanges

If you are not into trading but more into “buy and hold” type of investment* opportunity then you can look into Exchanges, where buying Ethereum will be very straightforward. You register on the exchange you trust/like the most and start buying cryptocurrencies at the offered price. Of course with some of the most famous cryptocurrencies are super expensive you can buy Ethereum and other cryptos in smaller units.  Once you bought Ethereum at the offered price, the asset (no leverage or margins are offered) is 100% owned by you and can be transferred to your own wallet or wallet provided by the Exchange. Exchanges are usually valued by the trustworthiness, low commission fees, and the trading volume.

However, it worth mentioning, that despite traders putting tremendous trust into centralised exchanges, these are sadly notorious for losing or misplacing customer deposits. To name only a few examples: MtGox famously lost $460 million in 2014, BitStamp misplaced $5 million in 2015, BitFinex lost $72 million last year, and QuadrigaCX accidentally burnt $13 million of ether in 2017. If you wish to buy your Ethereum at an Exchange, which is now counting hundred of different ones, below are just a few:

 Buy Ethereum on eToro

(although known as CFD Broker acts as Exchange too and offers the underlying asset purchase for most major cryptos)

eToro Copy Trading | EthereumTrading.pro
eToro Copy Trading

Read Review – eToro

Buy Ethereum on Exmo

EXMO Exchange Trading Platform | EthereumTrading.pro
EXMO Exchange Trading Platform | EthereumTrading.pro

Read Review – Exmo

Buy Ethereum on Bianance

Binance Exchange Basic Screen | EthereumTrading.pro

Read Review – Binance

Buy Ethereum on CEX.io

CEX.io Trading Platform | EthereumTrading.pro

Read Review – Cex.io

Buy Ethereum on Coinbase

Coinbase Review | EthereumTrading.pro

Read Review – Coinbase

3. Buy Ethereum on P2P or Peer2Peer Platforms

There is another way of buying or selling Ethereum and it is through the so-called “Peer2Peer Platforms”.

These are places, where you can find people to trade with — these could be individuals like you on the other end of the market, or established businesses and brokers.

Buyers and sellers connect on P2P platforms to bypass the hassles of centralised exchanges. They claim that over-the-counter trading is simple, quick, safe and private. However, we are not convinced and one can read a lot of negative reviews showing that there is still a lot of fraud happening which is quite hard to control or trace. If you ever decide to go this route, we strongly recommend dealing face-to-face with your buyer/seller, what is possible if you are based in the close proximity of your dealer. You can ask your dealer to meet up with you and exchange Ethereum for a cash. Try LocalEthereum for buying Ethereum directly from one of your peers.

Buy Ethereum with PayPal at Local Ethereum
Ethereum Wallet

Ethereum Wallets

A cryptocurrency wallet is a software program that stores private and public keys and interacts with various blockchains to enable users to monitor their balance, send and receive digital currency. Worth to mention, though, that cryptocurrency itself (or Ethereum) is not actually “stored” in a wallet. Instead, a private key (secure digital code known only to you and your wallet) is stored that shows ownership of a public key (a public digital code connected to a certain amount of currency). So your wallet stores your private and public keys, allows you to send and receive coins, and also acts as a personal ledger of transactions. You can choose from five different types of wallets – Hardware Wallet, Online or Cloud Wallet, Desktop Wallet, Paper Wallet, and Mobile Wallet.

American Flag

Buying Ethereum and trading CFDs in the USA

Currently, US clients have no access to OTC (Over The Counter) derivatives, such as CFDs (Contracts For Differences). US citizens or residents are embargoed from trading CFD instruments. CFD providers or Brokers cannot open or hold CFD accounts for American citizens as it stands now. However, one Broker has announced that they may launch CFD trading soon in late 2018 in the USA too. So if you wish to keep up-to-date with this information just sign up for our newsletter.

If you are an American citizen your only option at this moment for buying Ethereum, is via a reputable cryptocurrency exchange.

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