Trading Ethereum – How You Can Trade the Ethereum Cryptocurrency
The concept of trading Ethereum seeks to develop the idea of Bitcoin into something bigger. In fact, Ethereum is the platform for the development of distributed applications. The Ethereum developers decided to implement the undisclosed potential of the scripting language of Bitcoin at the protocol level. Thus, a tool was added to the network to create intelligent contracts.
A smart contract is an attempt to automate the execution of transactions that take into account all conditions and the outcome of transactions. This ensures security and reliability because the method does not involve third parties and the contractual terms cannot be changed.
Possibilities of Ethereum
Using such contracts can be a real revolution in microcredit. The terms and conditions of such a contract are numerous. They may include the transfer of ownership of certain digital assets in the event of defaulting on loans up to a specified period of time, repayments that take accrued interest into account, and much more. The possibilities of intelligent contracts allow you to create your own currency.
Theoretically, Ethereum should be able to completely remove Bitcoin from the market as it's the perfect alternative. This is made possible by the presence of a well-coordinated development team and an active development vector. However, the stability of the work of the Ethereum network is still in question.
Where Can You View the Cryptocurrency Chart?
The cryptocurrency chart can be accessed via the TradingView service directly from the online graphics section of the website, specifying the ETH/USD pair. You can choose which stock exchange you want to view. It is better to select the most popular exchanges (Kraken, BTC-e, Bitfinex) for analysis as prices can vary widely depending on the location. Of the known brokers, Ethereum is already available for trading on FXopen and AMarkets.
Trading Ethereum – How to Trade Ethereum
On AMarkets, the minimum trade quantity is 0.1, which equals 1 Ether. But be careful, as the opening of the position of a lot in the ETH/USD pair will immediately be minus $30-60. This is after consideration of the commission and the current spread. The leverage is 1:5, which means that the down payment is 20% of the full value of the contract.
FXOpen also offers the ability to trade contracts from 1 Ether but offers a leverage standard of 1:3 and a much smaller spread. With a leverage of 1:3 and a current price of $1080, the opening of 1 lot requires $360 of capital.
Main Features of the ETH/USD Pair via Trading Ethereum
The best way to start is to try trading in the demo before trading in real capital. First, make a few transactions on the demo account to get used to the trading terms. The specifications of demo contracts and real accounts do not differ.
Trading Strategies of Trading Ethereum
The cryptocurrency is traded 24 hours a day, 7 days a week, and is in constant motion. This is an asset where there are short-lived consolidations. Therefore, trend strategies work well. At the same time, global trends are on the rise, but growing volatility is also generating ever-increasing corrections.
Fortunately, Fibonacci retracements work well for measuring kickbacks. In this way, you can define the scope of the correction completion. Most of the time the price correction stops at 61.8%.
Arbitrage of Trading Ethereum
When you trade Ethereum, you can use the same strategies that have already proven viable with common currencies. The significant difference in quotes on the various exchanges, for example, indicates the suitability of this currency for classic arbitrage. The essence of arbitrage is very simple – buy it where it is cheap, sell it where it's expensive.
In real life, of course, transferring funds between stock exchanges and commissions imposed simultaneously can become a trap. With correct calculations, however, arbitrage may work well. On the other hand, nobody prohibits the use of statistical arbitrage trading.
Correlations within Trading Ethereum
In any case, cryptocurrency as a trading instrument is still very young and therefore has a large number of inefficiencies. Analyze the correlations of different cryptocurrencies so you can identify these hidden dependencies and try to trade them. Due to high overheads (spread + commission), attention should be paid to long-term dependencies.
Excessive Volatility of Trading Ethereum
Bitcoin is sometimes used as a buffer against excessive volatility. Given the volatility of Bitcoin itself, that sounds weird, but it's easily explained by political neutrality. A good solution is to create a neutral market portfolio that includes both traditional fiat and cryptocurrencies.
However, you should be prepared for landslides whenever you trade Ethereum. In less than two weeks, Ethereum lost 40% of its value for no apparent reason, and such volatility outbreaks are typical of developing cryptocurrencies.
Something similar has already happened Bitcoin with sufficient frequency. When dealing with Ethereum, it is usually more of a sharp correction than a slight descent. The asset is still too young for investors to properly assess its potential and its risks.
Conclusion on Trading Ethereum
The market for cryptocurrencies should definitely not be ignored. In some ways, it is easy to trade cryptocurrencies due to a large number of unprocessed inefficiencies and a lack of central aggregators. Despite unpredictable volatility spikes, high overheads and low liquidity, such trading is unlikely to be difficult for newcomers to the industry.
Brokers and exchanges trading in Ethereum:
- Forex Club