The first thing you should know about investing in Ethereum is that there are two distinct approaches. The first one entails purchasing and keeping Ethereum in a digital wallet to sell it for a profit after several months or even years.

The second tactic is day trading, in which you wager on the price of ETH using derivatives such as contracts for difference (CFDs). These are provided by brokers, and when you deal with them, you instead purchase a contract that speculates on the price rather than the actual coins.

ETH derivatives

Although there are many different ETH derivatives available, three are frequently utilized to trade Ethereum on brokerage and exchange platforms.

CFDs

Contract for Differences, or CFDs, are derivative financial products that depict the value of an underlying asset, in this case, Ethereum. You may anticipate the price of Ethereum using CFDs and profit from the difference rather than purchasing it. You are now able to trade more quickly and easily thanks to this.

Futures

This derivative calls for the trader to finish their transaction on a specific day. They gain money if their prediction comes true. If they do not, they will incur losses.

Options 

The only difference between options and futures contracts is that traders are not required to complete their positions on settlement day. If the trade goes in their favor, they can decide to cancel their order; if not, they can simply pay the contract’s fee to cut their losses. On derivatives markets like Deribit, these can be traded.

The ease with which you can purchase and sell derivatives without having to go through any elaborate hoops is its best feature. This is a far more convenient and rapid way to make money than purchasing and keeping ETH coins.

It is strongly advised that you select a broker who is both registered and in compliance with local laws while making your decision. Your risk is reduced when you trade on regulated brokerage platforms, and you are also guaranteed not to fall victim to any fraud or scams. The kind of derivatives and related features rely on the nation in which the broker is registered as well as the nation in which you now reside.

Where Can I Trade Ethereum

Here are the most popular trading platforms

Online brokers

Online brokers let you trade Ethereum rapidly. Remember that you do not own the bitcoin when using a brokerage service. Instead, you purchase a contract that gives you the right to your initial investment plus any gains or losses when the position is closed. Derivatives for cryptocurrencies including futures, options, and CFDs are available on almost every platform.

Benefits of trading Ethereum through a broker

• You don’t need to manage a cryptocurrency wallet or buy Ethereum
• You won’t need to worry about your tokens’ security
• In contrast to holding, you can generate money quickly
• By using leverage in your trade, you can boost your profitability
• The ability to start investing in cryptocurrencies with as little as $100

Derivative Exchanges 

Most initial cryptocurrency exchanges simply offered to buy and sell services for cryptocurrencies like Ethereum. That has lately changed, though, as an increasing number of exchanges are now providing their users with access to crypto derivatives for day trading. You generally don’t need to use a brokerage service if you’ve opened an account on a reputable exchange like Binance or Okex. You can leverage your trading on these exchanges to increase your profits during the ETH bull run. Having stated that, when opening leveraged positions, you need to limit your risk.

Benefits of trading Ethereum on an exchange

• Cryptocurrency exchanges offer greater flexibility and let you buy and sell specialized tokens
• You have the option to withdraw your Ethereum tokens at any time
• Exchanges often provide a far wider selection of digital assets and currencies for trading
• You have more alternatives for depositing and withdrawing money from the exchange account
• You can choose to start trading with a lot of leverage (manage your risk)