Ethereum is known as the second most valuable cryptocurrency after Bitcoin. Unlike Bitcoin, Ethereum is designed to pay for particular actions using blockchain technology, allowing people to transfer payments or transact across the globe anonymously. For this reason, many physical and online stores have adopted this digital currency as a form of payment.
Like other digital currencies, Ethereum is highly volatile. But it has many potentials, making it an excellent asset to trade. If you’re planning to trade Ethereum, there are various things you should know first. To get started, make sure to keep the following tips in mind:
1. Choose The Right Platform
If you want to get the best results when trading Ethereum, it’s essential to choose the right platform or Ethereum wallet. Fortunately, websites like SWYFTX are there so you can conveniently compare and contrast famous Ethereum wallets.
Take note that exchange platforms vary from broker platforms. The former provides a better variety of digital currencies, and you can take higher risks using leverage trading. On the contrary, broker platforms enable more significant trading volumes and feature a trading-oriented interface.
Depending on your preferred platform, always opt for a regulated and registered one. Unregistered platforms don’t adhere to regulations and tend to be scams or frauds, risking your investment.
2. Learn Risk Management
While Ethereum has excellent prospects, crypto assets are highly volatile. That’s why it’s crucial to learn how to manage risks effectively.
To achieve this, start trading with a small amount of capital first. You may increase your capital outlay when you gain more trading experience. You might also want to start with little or no leverage at all.
Once you gain confidence, you can change your approach. You should also set a stop-loss on your cryptocurrency trading platform since it’s an excellent risk management tool designed to reduce losses.
3. Capitalize On Volatility
Generally, volatility measures the price difference of Ethereum and other digital currencies within a particular period. Although it’s known for its high volatility and brings more risks, Ethereum may also provide traders with greater opportunities to turn profits. To capitalize on volatility, make sure to check the data and patterns for signals that show volatility.
4. Use Technical Analysis
In terms of predicting Ethereum’s price trends, you can use technical analysis. Doing so can help you determine whether to enter or exit a trade. However, avoid making moves without a tried and tested strategy and take advantage of demo accounts. If you’re unsure how to make the most out of the technical analysis, it’s wise to ask for advice from professional traders.
5. Do Your Research
Ethereum is like any digital currency that demands research before investing. Even if you stay updated on the current news, it’ll never be enough. So, make sure to read different Ethereum-related materials from several perspectives to know more about this digital asset.
To help you sell and buy Ethereum successfully, you can join online forums and follow crypto blogs. Moreover, you may also opt for chat platforms where traders can teach you everything you should know. In this way, you’ll make well-informed decisions, helping you avoid potential losses when trading Ethereum, which is important if you’re still a beginner.
6. Control Your Emotions
In the crypto market, it’s normal for a digital currency to fall 50% the next day and rise as much as 40% in a day. Trading Ethereum is still an attractive investment for traders despite this volatility because it offers attractive exit and entry opportunities. However, never let your emotions control your trading decisions. Instead, consider using a well-defined strategy and analysis to trade Ethereum.
You can test your strategy using demo accounts before you start live trading. Also, define your exit and entry points and trade in highly disciplined ways to prevent random moves. When trading Ethereum, your goal shouldn’t be about making significant profits on a few trades but to gain small profits. You should also be prepared that some trades may move against you, like trading with any asset class.
7. Create Your Own Trading Plan
Having a trading plan can help you make a wise decision when trading Ethereum. Here are several things to note when creating your trading plan:
- Calculate the risk-reward ratio using your gathered data.
- Decide on the risk limit for every transaction and for your entire portfolio.
- Determine what platforms you’ll trade and educate yourself.
- Establish your targets and consider your objectives.
You can also research the different trading strategies on Ethereum. For instance, some traders use swing trading, which identifies the patterns. Other traders also use scalping, which allows them to take advantage of the small price fluctuations.
Ethereum is a volatile and risky investment type to trade. However, there are some opportunities to make significant profits or gains. If you do your research, understand the factors related to it, and create your own trading plan, you’ll be on your way to success when trading Ethereum. Just exercise caution or moderation if you’re new to trading.