When looking at places to buy Ethereum online, you’ll notice several types of platforms to invest on. One of the most popular choices is a contract for difference (CFD) broker.
If you’ve decided you want to use a CFD platform for your Ethereum investments, you’re in the right place. In this guide, you’ll cover everything you need to know before you invest, along with some important considerations going forward.
Here’s Our List of Top Ethereum CFDs in 2023
There are many different brokers to choose from in the market today. As such, picking the right one may be a daunting task. To save you the time and effort, we’ve listed the top platforms to get you started below.
|Partner Name Label||Label||CTA||Customer Support||Launch Date||Security Features||Security Features||Disclaimer|
|1. Pepperstone||4.5||Visit Websitepepperstone.com||Email, Live Chat, Telephone, Whatsapp||2010||2FA, Biometrics, Pin||2FA, Biometrics, Pin||Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.9% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.|
|2. Eightcap||4.4||Visit Websiteeightcap.com||Live Chat, Email, Telephone||2009||2FA, Pin||2FA, Pin||CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.04% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.|
|3. Coinbase||4.2||Visit Websitecoinbase.com||2012||2FA, Pin , Biometrics||2FA, Pin , Biometrics|
|4. Changelly||3.7||Visit WebsiteChangelly.com||Email, Live Chat||2015||2FA, Biometrics||2FA, Biometrics|
What Are Ethereum CFD Trading Brokers?
A CFD broker allows you to speculate on the price of Ethereum without owning the underlying asset. Of course, this is also offered for many other cryptocurrencies as well, including Bitcoin and Litecoin.
What Is CFD Trading?
CFD, which stands for “contract for difference” means precisely what it says on the tin.
You pay a specific amount for the asset and get paid depending on the asset’s price when you sell the contract — as long as the market has gone your way, you earn a profit. Otherwise, you lose the difference.
This means that you can “short” if you think the price will go down, and you can “long” when vice versa.
In essence, you can make money when the market moves in both directions.
How Do Ethereum CFD Brokers Work?
When you buy Ethereum on a cryptocurrency exchange, you own the underlying asset: ETH
With a CFD broker, however, this is not the case as you’re dealing with a derivative product.
Instead, you’ll take out a contract with the CFD platform at a set rate. When you decide to sell, they’ll pay out the difference. Example: If you buy a CFD worth £2,000 of Ethereum and its price increases by 25%, you can sell your asset for £2,500.
Do I Own the Assets on CFD Platforms?
In a technical sense, no — you do not own the assets. You might see this as a problem, but it’s often quite the opposite. For starters, not owning the assets means that you don’t have to deal with the hassle of security and worrying about keeping your assets safe in a cryptocurrency wallet.
However, some would argue that it’s better to own the asset itself, because that way you can withdraw it from an exchange and store it in your own wallet.
What Should I Look for in an Ethereum Broker Service?
Before you choose an Ethereum CFD broker, it’s essential to consider a variety of factors. To help you make a better decision, we’ve made a list of these below.
Find a Regulated Platform:
If you live in the UK, CFD trading is regulated by the Financial Conduct Authority (FCA). Before you sign up to a platform, make sure it’s regulated and has a good reputation.
Look at the Payment Methods They Offer:
Generally speaking, CFD brokers offer a more comprehensive selection of payment options than cryptocurrency exchanges. As a result, you’re more likely to find a payment method that suits your needs. It may be worth double checking what’s available before you sign up.
Look for Suitable Deposit and Withdrawal Limits:
CFD brokers will often impose deposit and withdrawal limits, and these will vary depending on the company. Consider how much you expect to trade, and pick a platform that fits these needs.
Design and Ease of Use:
When looking for a CFD broker, make sure it has a user-friendly interface with tools that can help you make more informed trading decisions.
Variety of Coins Available:
It’s worth checking what other assets are supported by the platform in case you want to try trading other assets as well.
Will I Have to Verify My Ethereum CFD Broker Account?
Yes, you will. As CFD trading is a regulated industry, platforms must verify your account before letting you trade for compliance reasons. Verification will usually involve providing proof of identity, such as a passport or driving licence, and proof of your address — such as a utility bill.
Can I Trade Multiple Assets With a CFD Broker Platform?
Yes. Many platforms these days offer a wide variety of assets. You can usually find which ones are supported by clicking the crypto tab found at the top of the page or by using the search bar.
Do CFD Trading Platforms Charge Fees for Trades?
This depends on the platform you choose. Pepperstone for example only charges users a spread and this varies depending on the asset.
Many CFD platforms will not charge a commission fee either. Oftentimes, only a small withdrawal fee is applied.
What Are the Advantages of Using a CFD Platform?
CFD platforms are the best tool if you’re looking to make money on the fluctuating price of digital assets, including Ethereum. Using these services come with several advantages, and we’ve outlined the most important of these below.
More Payment Options
One pitfall for many cryptocurrency exchanges is that they offer a limited selection of payment methods. You shouldn’t have problems funding your account with a bank transfer or your credit or debit card, but if you want something else, you need to dig a little deeper.
When you use a CFD broker, you can often use a wider variety of payment options — helping you fund your account more conveniently.
No Need to Store Your ETH in a Wallet
If you buy ETH on a cryptocurrency exchange, storing them in a wallet is a good idea for security purposes. When you use a CFD broker, you don’t need to worry about storage as you’re dealing with a derivative product that allows you to speculate on price of the asset alone.
This is perhaps beneficial to newcomers who may find the technicalities of crypto to be a bit overwhelming.
Low(er) Transaction Costs
Cryptocurrency exchanges often charge users maker and taker fees when buying or selling. There are also fees associated with depositing money into your account.
If you’re transferring crypto assets across the blockchain, you will have to pay for the blockchain fees as well.
However, since CFDs are derivative products, these fees are not involved.
And What Are the Drawbacks?
Despite the many advantages of using CFD brokers, these platforms also have their drawbacks. We’ve listed the main ones to keep in mind below.
CFD Trading Can Be Complicated
CFD trading can be quite technical so it’s good to read up on some of the basics
is a little more complex than other ways to buy and sell cryptocurrency. You need to have a solid enough level of technical financial knowledge to take full advantage of the tools at your disposal.
You Don’t Own Your Ethereum Coins Outright
CFD trading means that you can’t use Ethereum to buy things or send to others. If you want to use ETH for these reasons, you’re better off buying them outright from a cryptocurrency exchange.
Not Universally Available
The laws on CFD trading depend on where you’re from. For example, it is banned in the US but permitted for UK users. Check the laws in your country before you create an account with these brokers.
Should I Use a CFD Trading Platform?
Ultimately, the choice is yours. If you want to trade Ethereum, without having to worry about wallets and security measures associated with crypto assets, then yes this may be a viable option for you.
At the same time, CFD trading isn’t for everyone, if you want to delve deeper into the crypto world, then you’d need to buy ETH to play around with all the different protocols.
Likewise, if you live in a country where it’s banned, you’ll naturally need to look for alternatives.