Ethereum Trading: 4 Must-Know Tips And Tricks
Cryptocurrency trading has successfully become the new big thing for many investors in the financial market. With Bitcoin’s popularity constantly growing, other cryptocurrencies such as Ethereum are gaining momentum as well. If you’re an investor who wants to get started on Ethereum trading, this article can be your guide.
What Is Ethereum?
At its core, Ethereum is a blockchain-based platform through which other decentralized applications can be run and deployed. It supports smart contracts, which are used for creating decentralized applications, allowing developers to create markets and store registries of debts, promises, and even their own tokens.
Ether (ETH) is the token used for all transactions made on the Ethereum platform. So, to use this platform, you need to buy Ether and spend it when operating on the network. That’s why traders always try to find the easiest way to buy and trade Ethereum with low fees to ensure maximum profits from every single Ether they own.
4 Tips and Tricks When Trading Ethereum
Although there are many ways to trade in the cryptocurrency market, you should focus on those that will give you an edge over other traders. Here are four tips and tricks to help you trade Ethereum efficiently:
- Use A Reliable Exchange Service
An excellent way to start trading Ethereum is to find a reliable exchange platform. No matter how good you are at trading, if the platform you’re using isn’t secure enough, it can cause you to lose all your assets in one go.
That’s why it’s essential to carefully read reviews and choose a platform that’s known for its stability and security.
- Use Limit Orders When Trading
Using limit orders is one of the best ways to ensure you’re buying or selling at your ideal price. By placing a limit order, you can set a price that’ll automatically be triggered once reached, allowing you to make a purchase or a sell order as soon as the price hits your target.Moreover, by using a limit order, you can avoid the hassle of having to keep a constant eye on the market price while ensuring that you won’t miss an opportunity to buy or sell at your desired price.
- Watch Out For Trading Fees
Each crypto exchange entails trading fees, but traders must check the fee structure before trading to maximize their returns. Trading fees usually include:
Deposit And Withdrawal Fees
Deposit fees are charged when you’re transferring cryptocurrencies or fiat money to your trading account. Though most crypto exchanges don’t charge deposit and withdrawal fees, some do. Study their fee structure so you won’t be surprised when you make withdrawals or deposits.
Also, it’s usually best to convert assets into cryptocurrency, which has lower gas fees (transaction fee paid to a miner that processes the transaction) for withdrawal. Doing so will reduce the expenses of transferring funds from an exchange to an external wallet.
Each trading platform sets different percentages for transaction fees, so be sure to check each fee structure to ensure you maximize your gains and minimize costs when making trades.Since each trade entails fees, traders should consider the number of trades they’ll be making in a day, whether you’re selling or buying. After all, the more trades you do, the more transaction fees you’ll pay for each completed trade.
- Always Keep An Eye On Ethereum’s Price Across Exchanges
The price of Ethereum, just like all other cryptocurrencies, may differ when you’re buying or selling it across different exchanges. Though there’s rarely a huge price difference, this can be an excellent opportunity to make arbitrage trading. Arbitrage trading is when you take advantage of the price differences across exchanges to buy cryptocurrencies for a low price and sell it for a higher price on another exchange. Just keep in mind the different fees when transferring cryptos from one exchange to another since it’ll also reduce your revenue.
Trading doesn’t just involve buying and selling. It requires discipline, research, and finding the right exchange. Before you start trading Ethereum, make sure you understand its price movements and constantly monitor it across various exchanges to find an opportunity that can help you maximize your earnings.