Since 2019 when ethereum blockchain toke otherwise known as ether (ETH) ranked the 3rd valued cryptocurrency in the market falling after Bitcoin and ripple (XRP) individuals and cooperate bodies have been in a frenzy looking to add it to their trading portfolio.
Though Cryptocurrency assets have dwindled since their peak in December 2017 there is still a great case for buying them as the market continues to see innovation. ETH’s value is trading at around $152 in April 2019, thus the need for this article on trading with ethereum in 2020. The primary appeal to the digital currency is its integration with the Ethereum Network. Essentially. With the Ethereum Network offering vast opportunities for development using ETH as it’s sole currency,
ETH is an investment that many see as more promising than bitcoin. Ethereum is also backed by multiple Fortune 500 companies and is being used by multiple financial institutions. For all of these reasons and more, many investors are rapidly adding ETH to their portfolios.
Trading with ethereum in 2020 cannot get any better (or even more profitable) owing to the ever-developing and evolving nature of the currency. No wonder lots of traders are considering it a viable option.
Why trading ethereum in 2020
Ethereum is proving to be one of the most favorable technology investments of all time. It was created in 2015 and since then has grown by over 1000%. To better understand what it is, Ethereum is an open-source network, much more than just a digital currency. Therefore, when you purchase Ethereum you are investing in the network, and placing money into a unique transformational platform, with many of its greatest applications still to come.
Before jumping into the best strategies for trading with ethereum (ETH) in 2020, there are a few things you must know before maximum profitable experience while trading with ethereum in 2020.
Before purchasing ethereum;
- Find an appropriate trading platform that works for you:
Depending on how you want to trade, it is important to pick a trading platform tailored to meet your trading needs. One of the biggest considerations for choosing a cryptocurrency trading platform is the type of exchange. Cryptocurrency trading platforms can be either fiat exchanges or cryptocurrency to cryptocurrency exchanges (C2C). As one of the three largest cryptocurrencies in the world, investors can trade ethereum easily on fiat exchanges. Some investors who want to trade multiple currencies or have the option to convert other currencies easily into ethereum may want to consider the C2C exchanges more closely.
Keep in mind that cryptocurrencies are highly unregulated with rapid innovation. This can create a great market opportunity but also increase the risks of fraud so it’s important to be sure you are confident in the credibility of the trading platform exchange that you choose. A few key questions to ask when considering an exchange include: Where is the headquarters?, Do they have a license?, How secure is their website?, How secure are your funds?, and Who are the managing executives?
- Create and fund you exchange account: Once you have decided on a trading platform that fits your needs then the next step is to open an account. This process is similar to opening an account with a brokerage platform. You will need to provide your name, address, social security number, specified forms of identification, and more. Once you are confident with a site, the account opening process can usually be done pretty quickly
Verifying the account is usually the final step in the account opening process. Most exchanges will require that you verify your account in one or more ways. This is where you will likely need to upload documents to verify your identity and ensure that your account passes regulatory muster. Verification can take anywhere from approximately one hour to potentially a day or two depending on the exchange.
For fiat currency platforms this can be relatively easy after verification of your payment information. Simply add money through your bank account or debit card on file. Cryptocurrency exchanges do not generally have high minimum investments so you can invest as little as $5 or as much as $1,000 or more. Most exchanges have fees per trade so it can be best to trade large amounts at once.
Depositing currency in C2C exchanges can be slightly more difficult. These exchange require you to send cryptocurrency by code from one location to another. Ethereum is a popular depositing currency for many C2C platforms so holding large amounts of it can be beneficial. Code transfers take slightly longer to complete, typically up to an hour.
Withdraw ETH into a Wallet
Once you have purchased ETH through the exchange, you can withdraw that currency into your bank account or a wallet that you control. Fiat exchanges make it easy to withdraw ETH by simply selling and sending the proceeds to your bank account. C2C platforms take a longer amount of time. On a C2C platform, you would need to code transfer your ETH to fiat exchange and then sell to cash out. On all platforms, you also generally have the option to send ETH to a wallet.
Strategies for trading ethereum in 2020
below are pro tools and tips to help you kickstart trading Ethereum in 2020. Note that these strategies are universal cryptocurrency trading strategies and can be used across any trading platform to ensure maximum profit especially while trading Ethereum.
Keep in mind that it is possible to lose money. Your capital is at risk while trading cryptocurrency because it is still trading at the end of the day. We always recommend that you demo trade before risking any live money.
The following steps are meant to guide you on trading with Ethereum this 2020
Step #1: READ THE CHARTS.
Overlay the Ethereum chart with the Bitcoin chart and the OVB indicator.
Your chart setup should basically have 3 windows. One for the Bitcoin chart and the second one for the Ethereum chart. Last but not least, make one window for the OVB indicator.
NOTE: On Balance Volume (OBV) is one of the best indicators for day trading bitcoin. It is used to basically analyze the total money flow in and out of an instrument. The OVB uses a combination of volume and price activity. This tells you the total amount of money going in and out of the market.
The OBV indicator can be found on most trading platforms like Tradingview and MT4. How to read the information from the OBV indicator is quite simple. All you have to do is ensure that your OBV indicator is moving in the same direction as the trading mark. This means that the market is less volatile and would remain consistent for a while.
Step #2: Look for Smart Money Divergence between Ethereum price and Bitcoin price.
What do we mean by this?
Simply put, we are going to look after price divergence between Bitcoin price and Ethereum. Smart money divergence happens when one cryptocurrency fails to confirm the action of the other cryptocurrency.
For example, if bitcoin price breaks above an important resistance or a swing high and ethereum fails to do the same, we have smart money divergence. It means that one of the two cryptocurrencies is “lying.” This is the main reason why we have used this cryptocurrency trading strategy.
Step #3: Look for the OVB to increase in the direction of the trend.
If ethereum is lagging behind the Bitcoin price it means that sooner or later Bitcoin should follow Bitcoin and break above the resistance.
But, how do we know that?
Simply put, the OBV is a remarkable technical indicator. It can show us if the real money is really buying Bitcoin or if they are selling. What we want to see when Ethereum is failing to break above a resistance level or a swing high, and the Bitcoin already broke, is for the OBV to increase in the direction of the trend.
Step #4: Place A Buy Limit Order at the resistance level in an attempt to catch the possible breakout.
Once the OBV indicator gives us the green signal, all we have to do is to place a buy limit order. Place the order at the resistance level in anticipation of the possible breakout.
It’s no surprise to see this trade getting triggered and for the Bitcoin price to break higher than expected. After all, we told you the OBV is an amazing indicator.
Now, all we need to establish is where to place our protective stop loss and when to take profits for the best Bitcoin trading strategy
Step #5: Place your SL below the breakout candle and take profit once the OBV reaches 105,000.
Placing the stop loss below the breakout candle is a smart way to trade. We’ve written more about the reasons for hiding your SL above/below the breakout candle in our most recent article here: Breakout Trading Strategy Used by Professional Traders.
NOTE: The above was an example of a buy trade… Use the same rules – but in reverse – for a sell trade.
While trading with Ethereum this year, keep in mind that though ETH is more volatile than Bitcoin, it promises a steady and continuous growth while encouraging security and ease of trade