Ethereum has been actively accumulating strength lately while maintaining its position as the second cryptocurrency on the market. Let’s consider the basic strategies for how to trade Ethereum, as well as study the factors that affect the movement of its price.
Exploring Ethereum Trading
Ethereum was launched six and a half years after Bitcoin, and since then, the quotes of this cryptocurrency have managed to demonstrate a series of bright ups and dramatic falls.
Putting aside that unpleasant moment when Ethereum was hard forked and two separate blockchains appeared: Ethereum and Ethereum Classic, the new blockchain was able to shake up and begin to strengthen its position as a base for the second cryptocurrency in the world in terms of market capitalization.
One of the most popular metrics for ETH is the strength of the coin relative to BTC. At the beginning of 2018, 28 Ethers had to be paid for one bitcoin, but at the time of this writing, this requires 40 ETH. This does mean that you would have to part with a lot of ETH to buy one bitcoin, but it might be good news if you were going to convert in the opposite direction in the hope that Ether would show further growth momentum.
Price drivers
Understanding the main drivers of ETH growth will help you choose the optimal strategy for how to trade Ethereum cryptocurrency. And the ability to interpret charts and data, and to see trends earlier than others will come in handy for increasing your potential profit.
How to trade Ethereum cryptocurrency on the exchange?
The decisive moment is the choice of a platform for cryptocurrency trading, i.e. search for a reliable exchange that provides an adequate level of security and can withstand hacker attacks.
Many sites offer various analytical tools that can help traders trade Ethereum cryptocurrency and make informed decisions, so it makes sense to familiarize yourself with them before starting trading. Mistakes made due to ignorance of such tools can be very costly.
Fortunately, many top exchanges offer to try their hand at demo accounts and simulators. This can be a rewarding experience in practicing Ethereum trading strategies before entering the real market.
ETH trading: popular strategies
There are many pairs of Ethereum with other cryptocurrencies and fiat money, which are traded around the clock. Therefore, the market never sleeps, and many traders make sure to use take profit and stop-loss orders so that their positions can be closed automatically when certain levels are reached.
Some people use robots to trade Ethereum cryptocurrency. These robots follow certain goals and do all the dirty work for the trader, but here you need to be sure of the reliability of such a tool and remember that no robot can replace a human.
Also, for trading ETH, there are contracts for difference (CFDs) and derivatives, which do not imply real ownership of the currency. Instead, you enter into an agreement with a broker based on your expectations of price movement. For example, if you go long and ETH rises, the broker agrees to pay you the difference. And if the price falls, you end up with a loss. Using CFDs, you can also open short positions and speculate on falling quotes.
Another strategy option could be investing in ETH to increase the price in the long term. ETH also offers futures and options to help protect the trader from volatility.
ETH trading: how to achieve success
After you’ve learned a little more about how to trade Ethereum cryptocurrency, let’s take a look at some simple tips to help you increase your chances of success:
- To read. It is necessary to study all the available analytics before making decisions on trading positions. You can subscribe to analysts’ Twitter accounts and track relevant news sites – this information will help you assess the direction of the market movement. You need to work with all sources. Otherwise, it is tempting to succumb to the admonitions of the ETH bulls, who expect the coin to skyrocket by 1000% overnight.
- Think ahead. Think over your strategy in advance, and determine the goals and the desired result, as well as the acceptable amount of loss. The biggest weakness of a trader is to allow emotions to take over: being greedy when prices rise and unwillingness to sell when prices start falling – all of this can lead to significant losses.
- Be careful. Now, many platforms offer leveraged trading in Ethereum cryptocurrency. In some cases, this may mean for a trader an increase in the opened position, for example, with a capital of $ 100, it will be possible to use $ 500. But you need to be on the lookout – here you can both increase your profit fivefold and get significant losses.
