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Top 5 Tips When Trading Ethereum

ethereum security computer encryption concept symbol for online banking and secure payment technology

While bitcoin went from $1,000 in January 2017 to $19,000 in December 2017, ether’s performance through the year was far more impressive. The second largest cryptocurrency started 2017 at around $7 and ended the year around $750. This translates to a meteoric gain of 10,000% in the span of just 12-months, during which bitcoin grew around 1,500%. As of May 8, 2018, ether had a market capitalisation of over $25 billion.

What’s Ethereum Anyway?

Before you begin trading ether, it’s important to understand the difference between ether and ethereum. Ethereum is a decentralised network and ether is the currency used for payment on this network. So, you’d be trading ether, rather than ethereum. Apart from being a cryptocurrency, ether can be used to pay for software services on the ethereum network.

If you’ve never traded ether, here are some tips to get started:

Tip #1: Risk Management is Key

While ether may have excellent prospects, cryptocurrencies are a highly volatile asset class. So, it’s important to manage risk as much as possible.

To do this, begin trading with small amounts of capital. You can increase your capital outlay once you gain more trading experience. You may also want to begin with low leverage – or no leverage at all. Your approach may change as you gain in confidence. Don’t forget to set a stop-loss too! This is an excellent risk management tool that’s designed to minimise losses.

Tip #2: Use Technical Analysis

When it comes to predicting the price trends of the ether market, why not make the most of technical analysis tools which are available on popular trading platforms such as MT5? FX markets are extremely fast-moving and volatile and therefore technical analysis can help you to identify when to enter or exit a trade. Remember; don’t make any moves without a tried and tested strategy – that’s what demo accounts are for!

Tip #3: Use Fundamental Analysis

Ether is backed by revolutionary blockchain-based technology. Ethereum’s success depends on many factors such as software applications, decisions made by the development team, public perception of the coins launched and such like. So, keep an eye on the fundamental forces that could affect ether price movements – and your future trading positions. Follow ethereum’s official Twitter account, blog and Reddit page to stay updated.

Tip #4: Control Your Emotions When Trading

If you’ve ever traded commodities or currencies, you’re already familiar with volatility. Or so you may think, till you enter the crypto space. It is normal for a cryptocurrency to rise as much as 50% in a day and then fall 30% the next day. In fact, it is this high volatility that offers extremely attractive entry and exit opportunities, making the market very exciting for traders.

That said; don’t let your emotions – be it greed, excitement, frustration or anger – control your trading decisions. Instead, use analysis and a well-defined strategy to trade ether. Test your strategy using a demo account before beginning live trading. Define all your entry and exit points and trade in a highly disciplined way, avoiding any random moves. And don’t forget those stop-losses!

When trading ether, the aim is not to make huge profits on a few trades, but to make small profits on several traders. And, be prepared for some trades to move against you, as with trading any other asset class.

Tip #5: Create a Balanced Portfolio

Once you’ve started trading ether, you might also want to dabble in other currencies too – that’s fine but be sure to select coins carefully and avoid putting all your capital into trading a single coin. You can also diversify your portfolio with other asset classes like Forex. In fact, experienced traders use cryptocurrencies to hedge their Forex portfolio, since these digital coins are not impacted by inflation, the decisions of a central bank or any country’s monetary policy.

Ethereum has retained its second spot after bitcoin as the most popularly traded crypto, but if you’re entering the trading world, be sure to do so with caution and restraint.


If you liked this educational article, please consult our Risk Disclosure Notice before starting to trade. Trading leveraged products involves a high level of risk. You may lose more than your invested capital.