In comparison to bitcoin’s rise from $1,000 in January 2017 to $19,000 at the end of the year, Ether’s performance was significantly superior. In 2017, the second-largest cryptocurrency had a starting price of roughly $7 and a closing price of about $750. Bitcoin has grown by about 1,500% in the last year, while this represents a sharp increase of 10,000%.
What is Ethereum?
Powered by blockchain technology, Ethereum is a decentralized global software platform. For native cryptocurrency, Ether (ETH) is one of the most widely recognized names. It features a coin specifically built for use in the network.
Ethereum has been designed to be scalable. Those who are producing new technologies based on the blockchain, such as developers and businesses, are using it.
The platform also supports smart contracts, which are programs that allow electronic agreements to take place, making them a key component of decentralized apps. Smart contracts and blockchain technologies are used in a variety of DeFi and other applications.
Here are some ideas to get you started in Ethereum trading:
- Create an Account on Any Exchange
Make sure to do your research because there are many decent exchanges available. Your choice of exchange will be influenced by your location, local regulations, and preferences. Luckily, you can buy Ether directly on numerous exchanges. Make sure to read the charts before you trade it for your preferred currency. For example, if you plan on converting Ethereum into Euro, check the ETH/EUR charts to know the rates.
- A Comprehensive Research
Once you have a trading strategy in place, you should start your research. Open the Ethereum price chart and look for beneficial trade opportunities. Are significant support and resistance levels being traded by the price? Has the price established a pattern on the chart, such as a triangle or rising wedge? Is there any recent information that might affect the price of Ethereum? Trading without first doing market research is similar to gambling and will hurt your results.
- Trading Plan
It is not a smart idea to trade Ethereum without a comprehensive trading strategy. Because of how unpredictable cryptocurrencies may be at times, you may be more likely to engage in emotional trading if you don’t have a trading strategy that serves as a road map. A sound trading strategy should contain your preferred risk-to-reward ratio, trading hours, traded markets, maximum loss per trade, and any other metrics you may find relevant.
- Fundamental Analysis
Innovating blockchain-based technology is what allows Ether to function. Some of the many factors that play towards the success or failure of Ethereum include its underlying software programs, development decisions, and how users react to freshly created coins. Be on the lookout for elements that have the potential to have an impact on the price of Ether and your next trades. Twitter, blogs, and Reddit are all good places to stay up-to-date on Ethereum.
- Technical Analysis
Why not make the most of the technical analysis tools that are accessible on well-known trading platforms when it comes to forecasting the price movements of the ether market? Because FX markets move very quickly and are very volatile, technical analysis can assist you in deciding when to enter or exit a trade. Keep in mind that demo accounts are for testing out strategies before making any moves.
- Risk Management
Ethereum may have bright futures, but cryptocurrencies are a very risky asset class. Therefore, it’s critical to manage risk as effectively as possible. Initially, begin trading in small amounts of money. Once you have enough trading experience, you can increase your capital investment. You could also want to start with very little or no leverage. As you grow confident, your strategy must evolve. Remember to also set a stop-loss! This is a great risk management tool that’s made to cut losses.
- Remain Patient
Those who have traded commodities or currencies are already familiar with volatility. The cryptocurrency market can rise by up to 50% in a single day before falling by 30% the following day. Due to its great volatility, the market attracts investors due to the numerous methods in which they might enter and exit the trade.
Your emotions should not influence trading decisions in light of the aforesaid. The best strategy for ether trading is to conduct thorough research and devise a well-defined plan. Preparing for real trading requires practice on a demo account. Don’t do anything hastily. Make a detailed plan for every step of the deal. Stop-loss orders should also be used.
Rather than making significant profits on a few trades, the goal of trading Ether is to produce a steady stream of tiny profits across many trades. Just like with any other asset class, some trades will go against you. Keep going forward and draw lessons from experience.
- Design a Balanced Portfolio
Once you’ve gotten the hang of trading Ether, there are plenty of other cryptocurrencies to explore. That’s great, but don’t throw all of your money into a single trade; instead, choose your coins carefully. Adding other asset classes, such as foreign exchange, can help you broaden your investment horizons. Smart traders use cryptocurrencies to safeguard their Forex portfolios since they are impervious to inflation, central bank policies, and national monetary policy decisions.
Even though Ethereum is currently the second most traded cryptocurrency behind bitcoin, you should proceed with caution and discipline when making your trading decisions.
Conclusion
So that’s everything you need to know about trading Ethereum. Ether will see a great deal of volatility, so choose a trading strategy that fits your personality and enter trades as cheaply as you can. Trading cryptocurrencies is not for the weak. Before you decide to invest, keep in mind that Ether has declined by nearly 70% from its highs. But that should not let you stop yourself from staying vigilant and taking risks; good luck!
