Transactions using the cryptocurrency rely on a consensus protocol, which helps to prevent double-spending. Like Bitcoin, Ripple (XRP) is decentralised and offers users anonymity.
Additionally, the transaction speed is fast, usually within 5 seconds, and it is highly secure. In this article, our experts will advise how you can get started trading the cryptocurrency. You’ll also learn about the different styles and strategies you can use.
What is Ripple trading and is it safe?
Ripple trading is simply the act of buying and selling Ripple with the intention to make a profit. You can trade Ripple the same way as every other cryptocurrency. This means that it is a safe transaction.
However, there are some risks that you need to be aware of. Aside from buying, storing and re-selling Ripple for profit, you can also trade it against another crypto coin.
The rules that govern Ripple transactions are not that different from those of Bitcoin.
Since compliance and risk management are essential aspects of banking and trading, Ripple has different solutions which offer greater control over cross-border settlement. This way, it ensures that transactions comply with the relevant laws.
Additionally, every Ripple trading platform is required to be registered and to obtain necessary licences from appropriate authorities. Ripple offers seamless integration with banking systems such as fraud detection, anti-money laundering control, regulatory reporting, and sanction screening.
There are several brokers that offer Ripple online trading. Before you choose a broker, however, you need to ensure that it is licensed.
Good brokers protect traders from falling victim to trading fraud. Brokers should also support several payment methods that make it easy to buy cryptocurrencies and make withdrawals.
When you trade with a licensed Ripple trading platform, your investment is separated from the broker’s capital. This means that you are open to less risk should the broker go bankrupt.
How to do Ripple trading online
In this section, we’ll explain the various ways in which you can trade Ripple online. At the moment, there are two main Ripple trading alternatives available: 1) buying the actual cryptocurrency in the hope of making a profit due to the XRP’s fluctuations when you sell it, or 2) trading Ripple CFDs.
Choose an exchange platform & open a crypto trading account
Once you’ve followed the suggestions above and you’ve chosen your Ripple trading platform, you can create an account with the platform. Creating an account is pretty simple and straightforward.
On the website of the exchange trading platform, click on the register/sign up button. You’ll then be taken to the registration page of the broker, where you’ll need to provide details such as:
- Email address
- Date of birth
You’ll also need to verify your identity by uploading some documents.
Ripple trading in UK
Once you’ve set up your Ripple trading account and it is fully verified, you can go ahead to buy some Ripple.
To make the buying process easy, it’s advisable that you choose an exchange platform that allows fiat to cryptocurrency conversion.
To buy Ripple, you’ll need to add a payment method into your trading account. You can buy it as a limit order or market order.
As a limit order, you can specify the price you prefer to buy the coin. As a market order, you’ll buy it at the current market price.
Trading Ripple is not as difficult as some people think. You can buy the cryptocurrency, store it, and sell it when the value is increased in order to make a profit.
If you’re trading the Ripple as a currency pair, it means that you are buying or selling the cryptocurrency against another currency such as Bitcoin or US Dollars.
You should take note that trading Ripple or any kind of cryptocurrency requires some analysis. We’ll highlight some trading styles and strategies that you can use to trade Ripple in later sections of this article.
Trading Ripple CFDs
Several online brokers give you the opportunity to trade Ripple CFDs (Contracts for Difference). In this case, you don’t buy the actual cryptocurrency – instead, you speculate on the rise or fall of the XRP price.
CFDs are financial contracts between a broker and the investor, where one of the parties agrees to pay the difference in value between the opening and closing of a trade. This allows you to either hold a long position (and speculate that the Ripple price will rise), or a short position, thus speculating that the price will fall.
CFDs are excellent for those looking for short term investments, but carry a lot of risk.
To profit by trading Ripple means that you have more Ripple or value than what you initially started with when you entered the trade.
Simply put, it is the difference between the opening position and the closing position.
For instance, if you buy an amount of Ripple for $100 and you end up selling the same amount of Ripple for $150, then you have made $50 in the trade.
Do note that just the same way you can profit, you can also lose trading Ripple.
Close your position to take a profit or cut loss
When you trade Ripple, you should close your position to either take the profit you’ve made or avoid losing more money.
This is because the Ripple, like other cryptocurrencies, is volatile. The price fluctuates and there is no telling what can happen in the next minute.
If you’re making profit but you fail to close your position, you may end up losing all the profit and your money if the market turns around. Likewise, if you are losing already and you fail to close your position to cut losses, you may lose more money.
To close your position when trading cryptocurrencies, all you are required to do is perform exactly the opposite of what you did when you opened or entered the trade.
This means that if you opened a trade by buying Ripple against another currency, you will have to sell the Ripple in order to close your position in the trade.
You can also close your position automatically by using tools such as Stop Loss and Take Profit options.
You’ll learn more about these below.
Tips to trade Ripple trading
In this next section, we’ll share some tips that may help you when it comes to trading Ripple, no matter what kind of investment you embark on.
Learn what moves Ripple trading’s price
To become a successful Ripple trader, it is crucial that you understand the different factors that move Ripple trading’s price.
This way, you will be able to make informed decisions before you enter a trade.
Ripple is like every other crypto coin, and it follows the same laws of supply and demand. The higher the demand of the coin, the higher the price becomes.
However, if supply is higher than demand, then the price will fall. The number of competing cryptocurrencies, as well as regulations and legal matters, can also affect Ripple trading’s price.
Pick a Ripple trading style and strategy
There are numerous Ripple trading styles and strategies. You need to choose one if you want to begin trading the cryptocurrency.
When choosing a trading style, you need to consider what works best for you. You can test different styles to know the kind of trader you are.
Trading styles like day trading and scalping works best for short-term traders that enter and close trades within a day. However, styles like swing reading and position trading are preferred by long-term traders that can take weeks or months before they close their position.
Just as it is essential to have a trading style, you do also need to have strategies when trading Ripple.
Unlike trading with fiat currency that can sometimes be affected by political news, cryptocurrency trading is less susceptible to such fluctuations.
Strategies used in Ripple trading are usually based on technical analysis. Be sure to pay attention to cryptocurrency news and always make sure that you minimize your trading costs.
Additionally, you need to be familiar with indicators like the OBV indicator in order to carry out a good technical analysis.
Decide whether to go long or short
Among the first few things you have to consider prior to entering a crypto trade is whether you should sell (go short) or buy (go long) based on your trading strategy and analysis.
Going long or short comes with advantages and disadvantages. It is simple to go long when you trade cryptocurrencies, and there is no need for a special broker.
However, going short is not that simple and you need to use a lot of discipline. You can make a huge profit or loss whether you go short or long.
Set your stops and limits
As we’ve pointed out earlier, you can set your trade to close automatically by using stops and limits. Good crypto traders use these tools to help take profit and minimize loss automatically.
When you set a take profit, it means that you want the trade to close at the profit value that you have indicated. If you set a stop loss, then you are simply indicating what the maximum loss you can take for that trade is.
It’s advisable to always set stops and limits (and be sure that they are realistic).
Trading crypto coins, including Ripple, comes with certain risks. The obvious risk is that you can lose your money.
Apart from that, Ripple is relatively new, created in 2012, so there is not enough historical valuation range. This makes it difficult to assess what the coin value is.
Besides that, the fact that the cryptocurrency is not regulated makes it a risk for some people.
Finally, cryptocurrencies are not recognized or accepted by all countries and markets. There may also be future changes to laws governing the use and trading of cryptocurrencies.
Conclusion on Ripple Trading
As you see, getting started with Ripple trading is easy. Registering and purchasing your first coins is a snap.
There are also options you can set to automatically sell at certain rates. This is a way to “program in” some smart moves.
Cryptocurrencies move at a rate that is independent from most national denominations. That means you need to stay updated in the trends relevant to your own coin.
Like any trading or investment, there are also risks involved. The simple rule to never invest more than you can lose.
But by being watchful and making informed decisions, you stand to make a profit through trading Ripple.