How to Short Ethereum for Beginners

How to Short Ethereum for Beginners

How to Short Ethereum

Ethereum is the second best-performing cryptocurrency in the digital tender world. It’s in the second spot because of the notable advancements in technology that Ethereum is making right now. Some of these advancements such as tokens are now used to launch ICOs – a new way of raising capital – that end up raising millions. These tokens have also opened up a new dimension of companies called decentralised organizations which can function independently. These decentralised organizations can be programmed to budget for all costs, pay individuals and carry out essential tasks independently. In this article, we’re going to discuss a new way to short Ethereum. This should help answer your question for how to short Ethereum.

What is Shorting Ethereum?

Firstly before we jump into this guide for how to short Ethereum, we should address exactly what shorting an asset is. Shorting an asset then you sell an asset and buy it later on for profit. Let’s take the example of a new car. Imagine you take your friend’s new car and sell it to someone, on the condition that you will buy it back at a later time. During the time that the car is in under the ownership of that person, the value of the car decreases because the company releases the new model. Since you have a contract with the person you sold the car to, you buy the car back at a much lower price. You then return the car to your friend and you’ve just made a nice profit. Now, think of the same thing but in terms of an asset. In order to short Ethereum, you need to already have Ethereum on your account. However, on a CFD trading platform, you can short assets directly.

How to Short Ethereum on a CFD Trading Platform: The Advantages

On a CFD trading platform, you can also make use of their leverage or margin trading services. Essentially, when you short Ethereum, you could have about $100 in your deposit account. If you want to make a higher trade, you can choose a high leverage and you will be able to borrow some money from the platform to carry out one trade. If this trade is profitable, you just need to return the exact amount borrowed but you keep the profit. This is pretty profitable and can be extremely helpful if you don’t have access to a large deposit from the first day. However, one needs to be extremely careful with using leverage because sometimes losses may exceed deposits. Thus, you might need to reimburse the platform.

Step 1: Open eToro

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When you open eToro, you will be taken to your favourite instruments page where you can monitor individual instruments. This is a great feature of eToro, you can monitor what is going on in your favourite coin or stock live.

Step 2: Search for “Ethereum”

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In the search bar, search for “Ethereum” and you will have some choices from the drop down menu.

Step 3: Click on “Trade”

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On the right of the screen, click on “Trade” and a menu should open up. This menu will have around three columns for the following things: equity, stop loss and leverage.

Step 4: Choose Amount and Set Stop-Loss

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Here, you choose the amount of Ethereum you want to short and then you set your stop loss. Setting your stop loss is very important since you need to protect your investment from excessive losses.

Step 5: Choose Leverage

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Choose your leverage but be sure that you understand that your losses can exceed your deposits. Also, trading with leverage increases the risk associated with your short.

Step 6: Confirm Trade

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The next step is to confirm the trade and the order will go through in a few seconds. And that’s it, you’ve learnt how to short Ethereum without much risk!

Step 7: Monitor it in your Portfolio

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Now, click on your portfolio on the left of the screen so that you can monitor the profit and loss of all of your recent trades. You can choose to close the trade when you make a substantial profit or you can close it at a loss to prevent further losses.

Now, you wait for the price of Ethereum to decrease. And that’s it. You’ve now learnt how to short Ethereum and make a good profit. Hopefully, this guide has been helpful and you now know how to short Ethereum.

If you’re interested by Bitcoin as well, check out our guide for the best Ether Broker in 2017.

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About Article Author

Michael Serrano
Michael Serrano

Michael is an engineer and a bitcoin evangelist. He has been involved in cryptocurrencies since 2013. His biggest wish? 1 billion users of bitcoin, ether and litecoin by 2020. In the last 10 years he has worked for various early-stage start-up as a back-end developer.

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