5 powerful ways Ethereum is going to rule the investing and financial world

by , 15 April 2021

Q. "I've started trading crypto-currencies and am a bit lost.

My portfolio is R100,000 and I want to buy Ethereum.

Could you give me a quick step by step calculation on how to work out how many CFDs I must buy and not risk more than 2% of my portfolio in the trade?

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A. Hi Jerry,

It’s always the easiest to convert to US dollars instead of rands when dealing with crypto.

To calculate how many CFDs you'd want to buy and risk only 2%, let's start off with some trade specifics.

Portfolio value: R100,000
Risk percentage per trade: 2% (R2,000)

Entry price: \$2,000
Stop loss: \$1,500

Step #1: Convert the portfolio risk in US dollars

This is the amount of money you’re willing to risk in your trade, but converted to US dollars.

The current exchange of USD/ZAR is 1 / R14.62.

Portfolio risk in \$ = (2% Risk ÷ USD/ZAR rate)
= (R2,000 ÷ R14.62)
= \$136.79

Step #2: Calculate risk in trade

The risk in trade is the price difference (in US dollars) between the entry and stop loss prices.

Risk in trade = (Entry - Stop loss)
= (\$2,000 - \$1,500)
= \$500

Step #2: Calculate the No. Of CFDs to buy

No. Of CFDS = (Portfolio risk in \$ ÷ Risk in trade)
= (\$136.79 ÷ \$500)
= 0.27

This means you'll need to buy 0.27 CFDs in this example, in order to not risk more than 2% of your portfolio.

Note: Some brokers only offer a minimum of 0.2 CFDs, so make sure you check with them or re-adjust your stop loss level.

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Q. "You mentioned in last week's Ethereum article that the crypto has more uses than just a currency. Can you provide some examples of what else Ethereum is used for?"

I've been a major optimist with the potential of what Ethereum has to offer the world.

Unlike Bitcoin which only has its purpose in buying, selling and exchanging the coin, goods and services – Ethereum has a plethora of other features and uses.

Here are five incredible uses on how Ethereum will change the world

Use #1: You can buy/sell exchange and invest Ethereum as a currency

The first use is the obvious. Ethereum is used as a digital currency to buy, sell and exchange Ether for traders and investors.

Ethereum also offers a platform where you can use smart contracts for  developers to build software and businesses using the Ethereum blockchain (Eth 2.0).

Use #3: Create and profit from dApps

You can also use the Ethereum block-chain as a decentralised feature to create dApps (decentralised apps) for your phone and computer.

You can build games, online stores, programmes and so on.

Use #4: Streamline your finance operations

With Ethereum you'll be offered options to create DeFi applications (Decentralised Finance) to create financial services. This will be done via different smart contracts and programmes.

And with DeFi you'll bypass many banks, brokerages, intermediaries, cut out the middle man and remove human error from these operations.

Use #5: Profit and make commissions from crypto art and digital assets

Already people have become multi-millionaires through the new technology called NFTs (Non Fungible Tokens).

You'll use your Ethereum to create, buy and sell NFTs. This is where you can literally sell your photos, images, videos, GIFs and any other digital property for a profit and earn commission at the same time.

And with all these options to get involved with Ethereum, there's a huge demand for this crypto coin.

Which could send the price to the moon!

That's why I'm super bullish for Ethereum. To learn more about Ethereum and other alt coins that are super-hot, go here.

Timon Rossolimos,