Ethereum is a Blockchain platform that allows its network's users to create, publish, monetize, and use diverse applications on the platform and use its Ether cryptocurrency as payment.
Being a Blockchain network, Ethereum is a decentralized public ledger that verifies and records transactions.
As of May 2021, Ethereum was the second-largest virtual currency on the market, behind only Bitcoin. The number of ETHs in circulation crossed the 100 million mark back in 2018. (Source: Investopedia)
However, before you can start trading Ethereum, you should know how it works.
How Ethereum Works
Most people take Ether to be the same thing as Ethereum or confuse Ether as the short form of Ethereum. In its simplest form, Ethereum is the network system, while Ether is its currency. Before you can do anything with Ethereum, you will need Ether, as it's the fuel to the Ethereum system. Because of that, Ether is referred to as “gas”.
On Ethereum, every transaction requires a definite amount of 'gas’ before a job can be done. So, the bigger the job, the more gas you need.
Just like people compare Ether with Ethereum, they do the same with Bitcoin and Ethereum. Now, comparing Bitcoin with Ethereum, there is no limit to the number of Ethereum created, unlike Bitcoin.
However, with the massive opportunities Ethereum Network is proposing for development, ETH is an investment that most traders and investors perceive to be more favorable than Bitcoin.
So, with the way it's being backed up by several profitable companies and used by multiple financial institutions, several investors are rapidly adding ETH to their portfolios.
Nevertheless, we will be discussing the simple tips to how you can trade Ethereum.
Steps to Trading Ethereum
Identify a platform for Trading
To start any trade, the first thing you are to do is know the best trading platform that suits your needs. So, when it comes to considering a cryptocurrency trading platform, the most significant thing to note is the type of exchange. However, a cryptocurrency trading platform can either be a fiat currency exchange or a peer-2-peer network (P2P).
Nevertheless, always have it at the back of your mind that cryptocurrencies are not controlled by any single authority, (i.e. it is unrestricted) with rapid innovation. It can be an opportunity to a significant market opportunity. But, on the other hand, it increases the risks of fraud, so it's vital to be sure of the reliability of whichever trading platform exchange you choose. Once you have decided on an exchange, it is essential also to practice safe storage.
Create an account
Creating an account is the next step to take after choosing a trading platform that meets your needs. In this process, you are expected to provide your name, address, social security number, specified forms of identification, and some more information for verification. Once you are sure of the reliability of your chosen site, the process of creating the account should be completed as soon as possible.
However, in the account opening process, verification is mostly the final step. Most of these exchanges will necessitate that you verify your account in one way or the other before you can make any form of transaction. So, at this point, you are expected to upload your documents to identify your identity and to make sure that your account passes all regulatory assembly. Verifying your account can take up to approximately one hour to about a day or two, depending on the exchange platform that you choose.
Develop a trading strategy
At this point, you might decide to develop a trading strategy. Developing a trading strategy helps you take the emotions out of your time on the markets. It maps out those periods you should open your positions and when you should not. However, to develop a trading strategy, you must
Put into consideration your daily, weekly, and monthly expectations and goals.
Choose which markets you are willing to trade and do thorough research about them.
Map out how much you would like to risk per trade and how much you want to risk in total.
Make use of the above mapped-out details to decide your risk-reward ratio.
Do thorough research.
After setting or developing your trading strategy, the next thing to do is research the market you want to invest in. There are several ways and means you can do that. They include.
Exploring Social Media platforms
Analyzing upcoming crypto events
Research the fundamentals
Discover trending crypto topics
Utilize the power of niche forums
Go to crypto meetups
Observe transaction volume
Applying these research strategies can be an excellent start for better investment decisions and optimistically results in more profits.
However, remember that no matter how great you plan it, every strategy will constantly centre on predictions and calculated risk. There is no way to make a 100% perfect prediction. For that reason, don't put all your eggs in one basket. In other words, always remember to invest what you can afford to lose.
Deposit your currency
The next step after you must have created your account is to deposit some currency into the verified account. There are two ways to depositing currency into your account. It can either be through fiat currency platforms or a peer-2-peer network platform. Depositing your money via a fiat currency platform can be very easy. All you need to do is add some money through your bank account or via your debit card on file.
On the other hand, depositing money via a peer-2-peer network can seem very difficult as the exchange requires that you send a code from one location to another. However, Ethereum is a common depositing currency for most P2P platforms, so trading large amounts can significantly benefit. Please note; that transferring code can take a bit longer before it can be completed. Usually, it takes up to an hour, depending on the network.
You can now start trading.
Once you’ve followed all due process of creating your account, verifying it and depositing money into the account, the next thing to do is obviously to start trading. That is, you can begin purchasing Ethereum and any other form of cryptocurrencies you are willing to sell via the exchange. Please be aware that each exchange has an edge that operates differently. But, it is ready to validate transactions and allow for processing time, which can be determined by the number of transactions requested.
Withdraw Ethereum into your wallet
This step is the final stage of Trading Ethereum. Once you have purchased Ethereum, the next thing to do is withdraw it into your wallet that only you control. Or you should send it directly into your bank account. Fiat currency platforms allow you to withdraw ETH easily by selling and transferring the income to your bank account. While on the other hand, P2P takes a more extended period as you would still need to send your ETH to fiat exchange and then sell to cash out.
One way to acquire Ethereum is by using a cryptocurrency exchange. So, suppose you are happy to trade your fiat currency to buy Ethereum directly. In that case, you could use an exchange like Tradefada, which allows users to purchase crypto in almost any currency, anytime, anywhere, and globally. Looks good.
If, at the end of this article, you've decided that you'd like to invest in Ethereum, you can do so @ www.Tradefada.com.