Ethereum is the second-largest cryptocurrency after Bitcoin. It was created in 2015 and has grown rapidly since then. It’s one of the most popular digital currencies and its development is progressing steadily.
For this reason, more and more investors are looking for ways to profit from it. Ethereum trading can still be a profitable source of income. Today, we’re about to find how to trade ETH as well as some key information about the second-largest crypto. Let’s get started!
What is Ethereum: What Should You Know
Ethereum was able to secure a seat at the top primarily due to the use of smart contracts. This fact allows other developers to create their own dApps (decentralized apps) and various applications. In addition, automated payment processes are the basis for decentralized finance (DeFi).
As a result, many other projects are based on the Ethereum blockchain. This fact allows ETH to be the first choice when creating your own tokens for ICOs. The Ethereum 2.0 implementation and the use of sidechains also solved the problem of scalability.
The increasing interest of financial institutions also speaks to the continuing success of Ethereum. In 2020, a Grayscale wealth manager acquired a large part of the newly mined coins. Why should you invest in Ethereum?
In addition to the increasing interest from investors, the number of possible applications is also increasing rapidly. In the area of finance, in particular, smart contracts offer enormous potential and could replace tested methods.
When issuing instant loans, a blockchain can provide security and thus replace a middleman. This saves unnecessary costs and time while maintaining the security of a contract.
With the Ethereum 2.0 introduction and the associated proof of stake, currency holders can generate a passive income. However, this reduces the number of coins in circulation and makes them less common. As a result, a principle of supply and demand increases the price.
In addition, Ethereum is still a very young technology, which has a lot more potential to offer. This can make Ethereum a worthwhile long-term investment.
Ethereum Trading: The Best Way for Beginners
However, if you want to engage in successful Ethereum trading, you should pay attention to a few aspects. Even if the rate is very high over a long time horizon, ETH is still a volatile currency at short intervals.
Since nobody can predict the price of a currency, it’s important to limit the risk and develop your own strategy. Certain indicators can be helpful in chart analysis. They help to evaluate a rate and assess development. The Ethereum rate can be viewed on Tradingview, for example. Tradingview also offers the most important tools for creating a chart analysis.
In order to start trading with Ethereum, it’s necessary to choose a reputable exchange. If you want to trade Ethereum on a reliable exchange, you can think about the Switchere exchange. It’s considered as a trustworthy one. Registration is free and there are no withdrawal fees.
For beginners, it’s advisable to start with a small sum. An ability to successfully trade Ethereum requires some time and experience.
Ethereum Trading: The Best Way for Advanced Traders
Those who have mastered the basics of trading can develop their own strategies for Ethereum trading. Among other things, the chosen time horizon plays an important role. The relationship between risk and return is also one of the most important factors
Day Trading
If you want to trade with Ethereum, you can rely on a high level of liquidity. Since it’s one of the most popular currencies, the trading volume is also very high. This fact offers the best conditions for day traders.
The focus is particularly on the rate movement, i.e. short-term price changes. These ones can often be determined more precisely and used profitably. Even if profits themselves are usually smaller, a high return can be achieved via a number of positions.
Swing Trading
Swing trading depends on the right time of purchase. Just like traditional currencies and goods, the price of an asset can be overvalued or undervalued. In addition, the number of buyers and sellers fluctuates, as well as a trading volume. These are factors that can have a direct impact on rate development.
This gives traders an opportunity to better assess the current situation on the market. Likewise, positive or negative news can have a direct impact on the rate as well.
Long-Term Investment
The classic option for Ethereum trading is a long-term investment. Traders are looking for the best entry points. However, the position isn’t opened on a short investment horizon, but on the long one.
This option is particularly useful if you’re sure about a project and expect a strong increase in value in the next months and years. Here fundamental analysis plays an important role. Among other things, it analyzes a team, product, and market data.
Savings Plan
A savings plan is one of the simplest and most effective methods for investment. Traders rely on a cost average effect and thus benefit from the average price. Instead of waiting for the optimal time to invest, they invest a certain sum of money at equal intervals.
For example, a savings plan can be created over a month, and the same sum is invested every day. If the price falls gradually this month, you automatically buy at cheaper prices and thus reduce a loss. If the price rises constantly, you can expand your position until the end of a month and thus also achieve more profit.
A savings plan is one of the most popular methods for traders because it saves a lot of time and nerves, but is still efficient.
What do you guys think about Ethereum trading? What strategy do you prefer? Just share your opinion in the comments!
Leave a Reply