Cryptocurrency has always enticed the world in more ways than one. This new form of currency created a buzz the moment it was invented in 2009, with Bitcoin being the pioneer. For a long time, only coders were interested in it provided some excitement to them. They would use different algorithms to mine these coins. However, things rapidly changed when in the year 2017, bitcoin escalated from $1,000 in January to $19,000 in December but the real star of the show was Ether. The second-largest cryptocurrency that was started in the same year at $7 reached $750 by the end of the year, the spike was commendable and attracted many traders and investors. This spike meant a meteoric gain of 10,000% over a period of just 12 months. This article is all about Ethereum and 5 Ethereum trading tips that you should know about.
What is the difference between Ethereum and Ether?
Ethereum is an independent decentralized network and Ether is its currency. You can equate Ethereum and Ether with a real economy and its currency for better understanding. For example, in the US economy, we use USD to make the payments. Similarly, in the Ethereum economy, we use Ether to make the payments. In addition o being a cryptocurrency, you can also use Ether to pay for software services in the Ethereum platform.
Ethereum Trading Tips
First, you need to understand that you don’t trade Ethereum as it is a network, you trade its currency – Ether. Now that we are sorted, let’s see how you can optimize your trading strategies:
- Understand risk-management: Cryptocurrencies involve a lot of risks and it is important to manage them properly. Risk Management is the first and foremost thing to consider before dealing in cryptocurrency. To start with, invest a small amount. You can increase your capital amount once you start understanding the concept of it and have gained more experience. It is always suggested that you start with minimum or no leverage. The most important thing in trading risk management is your thought process and approach. Experts have said that you will gain confidence in your approach once you have experience in this field.
- Technical analysis will help: If you are a new crypto trader, then you must resort to technical analysis for predicting the price trends. There are many technical analysis tools that are available on different trading platforms, one of the famous platforms is MT5. These markets are volatile and technical analysis will help you in making an informed decision about when to enter the market or exit.
- Do not underestimate fundamental analysis: Fundamental forces can affect prices in the trading market and with their help, you can make your moves by factoring various forces that can affect the value of Ether. The fundamental factors include software applications, decisions by the development team, public response, etc.
- Control your Emotions: Trading has no place for emotions. You need to have a practical approach but it is easier said than done. Before you begin trading, train yourself to accept the fact that cryptocurrency is a volatile asset and things probably won’t go as expected. One time the rise can be as good as 50% in a day and the next day it can be as low as 30%. It is always observed that high volatility increases the chances of entry as well as exits. Experts say, never make your emotions like fear, excitement, or anger take over your mind in trading. You should always use a demo account to test the waters and make a well-planned move. Your target should not be making big profits, but to make small profits.
- Don’t forget to create a balanced portfolio: Once you enter the Ether market, the urge of exploring other currencies will be deemed natural. This is not a bad idea to venture out but you need to be extra cautious and careful while picking up the coins. Make sure that you do not invest all of your capital in a single coin. People who have been trading for a long time use cryptocurrency to hedge their Forex portfolio. This is because digital coins never get impacted by inflation.
Crypto trading is equally exciting and confusing. It can be rewarding if your strategy is right. If you are still unsure about what to do next, it is always a better option to consult an expert, especially when you are trading a highly volatile asset. Keep your emotions in check, understand the network and its currency, and be cautious while investing money; we are sure that you would be able to get the best of Ethereum trading.