How to Trade Cardano 2021
Cardano (ADA) is one of many rapidly growing digital assets in the cryptocurrency industry. Though it had a relatively slow start in terms of pricing, Cardano has since surged in value.
Whether you want to diversify your long-term investment portfolio or go after short-term profits, Cardano can be a strategic fit for your trading plans.
You can trade Cardano against a fiat currency such as the US dollar or against other cryptocurrencies like Bitcoin.
Here we have put together an extensive guide on How to Trade Cardano in 2021.
This includes an introduction to the many strategies that seasoned pros utilize, as well as tips on finding the right online broker for trading Cardano online.
What is Cardano Trading?
Cardano (ADA) is a cryptocurrency that runs on the blockchain network of the same name. Unlike other blockchain platforms, Cardano prioritizes partnerships with academic institutions.
Since it was created in 2015, ADA coins have increased in value by a considerable amount.
That said, the price of cryptocurrencies - especially Cardano, are highly volatile. Any global financial trend or development in the blockchain industry can therefore cause its value to shift.
In simple terms, the price of Cardano is dictated by the supply and demand of the market.
An increase in demand for Cardano results in its price moving upwards. If the opposite happens, the price will decrease.
In essence, if you are wondering how to trade Cardano, your goal is to predict the general market sentiment. As long as you speculate correctly, you will make a profit.
Let us show you how to trade Cardano with an example:
- Say the price of Cardano in January is $0.25
- You will find this illustrated as ADA/USD at your chosen broker or exchange
- Speculating that Cardano will increase in price, you place a buy order worth $2,000.
- Two months later, the value of Cardano has increased to $0.30.
- This represents a rise of 17.18% from the price you originally paid
- Convinced that it's time to cash out, you place a sell order to exit the trade.
As you see, in a matter of two months, you made a profit of $343.60 on your original $2,000 stake.
On the other hand, if you had predicted the market incorrectly, you would have ended up with a financial loss.
Put simply, you can capitalize on Cardano by taking advantage of market fluctuations. In order to achieve that, you should first educate yourself on how the cryptocurrency market works.
How Does Cardano Trading Work?
When compared to the likes of stocks and forex, digital assets such as Cardano might be a relatively new addition to the trading market. However, those familiar with the basic ins and outs of trading will find Cardano easy to master.
If you need a quick refresher, or rather, a complete introduction, here are the fundamentals on how to trade Cardano online.
Cardano Trading Price Movements
For any financial asset, it is paramount that you know what drives its cost in order to be able to predict its future value accurately.
The case of Cardano is no different.
- If more traders are going long on Cardano, this will reflect on its market price.
- In reverse, if you see that traders are going short by selling their Cardano coins, it will further reduce the value of the digital currency.
You can trade Cardano either through an online broker or a cryptocurrency exchange. While at it, you will notice that the price of Cardano varies slightly between competing trading platforms.
For example, on one platform, Cardano might be valued at $0.249; while on another, you might find it priced at $0.250. Regardless, such minute variance is only natural between multiple cryptocurrency exchanges and is of no concern to you and your ability to make a profit.
Cardano Trading Pairs
As mentioned earlier, Cardano trading can be conducted in the form of a crypto-fiat pair or a crypto-crypto pair.
For instance, you can trade Cardano against a government-issued currency like the US dollar (ADA/USD) - or against another cryptocurrency such as Bitcoin (ADA/BTC).
While trading Cardano-fiat pairs, most prefer to speculate on the value of ADA against the global benchmark currency - USD.
However, you might also find platforms that offer alternatives such as the Euro (ADA/EUR), Japanese yen (ADA/JPY), British pound (ADA/GBP), or the Australian dollar (ADA/AUD).
It is worth noting that Cardano-fiat pairs come with high liquidity and are more likely to get you better spreads in the market. Further, it is also easier to speculate on Cardano against a fiat currency rather than the likes of Bitcoin or Ethereum.
On the other hand, a crypto-crypto pair requires you to have a firm grasp of both the digital cryptocurrencies that you are trading. For this reason, a Cardano-fiat pair is considered more suitable for novice traders.
Long or Short-Term Trading
When deciding how to trade Cardano, one of the first things is to consider is whether you want to trade on a long-term or short-term basis. The choice of your financial instrument will also vary accordingly.
For instance, if you want to invest in Cardano because you think the value of the asset will rise in the future - you can opt for a long-term strategy. In this approach, you will be buying Cardano coins and storing them in a secure crypto-wallet.
You can hold on to these coins for weeks, months, or sometimes even years until the right time arises for you to maximize your profits.
On the other hand, when trading Cardano via a short-term strategy, you aim to make smaller profits but more frequently. This involves placing several trades in a short duration of time, such as in "swing-trading" or "day-trading."
Moreover, you will need to have an understanding of technical indicators and chart analysis to make profits in the short-term trading of Cardano. The process can be tricky for new traders.
Consequently, you might find the "buy and hold" strategy an easier method when trading Cardano. After all, you don’t need to worry about in-depth analysis of short-term price swings.
Trade and Own Cardano
If you want to trade Cardano in the long run, it is recommended that you do it via a regulated broker.
However, research for a trustworthy online broker can become a tricky and equally overwhelming process. In case you are yet to begin your search, we suggest that you consider eToro. The social trading platform has 13 million clients to attest to its success.
eToro facilitates the trading of Cardano and other cryptocurrencies at zero-commission. More importantly, you can store your ADA coins safely at eToro - as the broker is regulated in several countries.
Whether you are a beginner or a seasoned trader, eToro can be beneficial for the long-term trading of crypto-assets. It is especially handy for those who do not have the time or resources to watch every small market fluctuation.
As such, the "buy and hold" strategy will allow you to profit from the rising value of Cardano without having to analyze the market constantly.
If a short-term strategy is something that interests you, it is worth learning about Cardano CFDs (Contract for Differences).
A CFD is a derivative that reflects the market value of the asset - in this case, Cardano.
When trading CFDs, you will be speculating on the digital currency without taking ownership. This way, you can go both "long" and "short," taking advantage of rising and falling prices of the asset.
Trading Cardano CFDs invites additional advantages. For one, it gets you competitive spreads in the market, as well as access to leverage.
With that said, leverage can result in you losing more than you had intended. As such, many countries, including the USA, have prohibited CFD trading. If you are a resident of the UK, you can engage in CFD trading on other financial assets, but not cryptocurrencies.
That said, it is likely that you will be able to find unregulated spaces that offer leverage on Cardano -for example, at cryptocurrency exchanges. However, you will be putting your capital at risk with such third-party trading platforms - as they operate without a license.
Further, the majority of these platforms require you to trade Cardano against ‘USDT’ instead of actual US dollars.
USDT is a cryptocurrency named Tether, with its value pegged to 1 USD. This means that instead of trading a crypto-fiat pair such as ADA/USD, you will have to settle for a crypto-crypto pair like ADA/USDT.
How to Trade Cardano Online - Setting up a Trade
The cryptocurrency market is known for its volatility. In order for you to benefit from these price movements, you need to speculate and place trade orders accordingly.
You need to effectively communicate these orders so that your online broker can execute your Cardano trade for you.
These orders remain the same across all financial assets - such as stocks and forex.
With that said, if you are just starting out as a trader, listed below are the most fundamental orders you will be using while trading Cardano online.
Buy or Sell Order
Let us start with the most basic and essential order types when trading Cardano online:
- A buy order is placed when you think the price of Cardano will increase
- A sell order is placed when you think the price of Cardano will decrease.
A buy or sell order is how you open your position in the market. In essence, if you are going long on Cardano, you will open with a buy order and close your position with a sell order.
If you are going short, you enter the market with a sell order and close your position with a buy order.
With the basics of buy and sell orders covered, now we can look into the types of orders that can reinforce your trading personal strategy. For instance, in a fast-moving cryptocurrency market, the price of ADA coins will go up and down every second.
As such, you need more than just buy and sell orders to specify what price you intend to enter the market. These are carried out by setting a "market order" or a "limit order."
Here is a simple explanation of how each of these orders work when trading Cardano online.
- Market Order: Let's say the price of Cardano is at $0.26. Happy with this, you place a market order to buy Cardano straight away. This means that the broker has to execute your order immediately or at the closest price available. There might be a slight difference between when you place the order and when it is carried out, as is natural in any market.
- Limit Order: In comparison, a limit order is more precise. For example, Cardano is valued at $0.26 in the market. But, you only want to place your buy order when the price of Cardano reaches $0.27. This is where a limit order comes in. You can place a limit order at $0.27, meaning that the order will be executed only when Cardano hits your target price.
As you might have guessed, limit orders give you more control over your trades. Subsequently, it is the preferred choice of order type among traders. However, if you are looking to enter your Cardano trade instantly, then a market order will be the better option.
How you exit your Cardano trade is perhaps even more crucial than how you enter it. As such, take-profit and stop-loss orders can be instrumental while planning when to close your position.
- Take-Profit: Let's say you want to lock in your profits when your Cardano trade makes gains of 2%. This can be done by setting a take-profit order at 2% above or below your entry price. Your broker will close the trade when the value of Cardano hits your specified stop-loss order point.
- Stop-Loss: Similar to securing your profits, you can also limit your losses when trading Cardano. In simple terms, if you do not want to risk losing more than 1.5% on your Cardano trade, set the stop-loss order at 1.5%. Your trade will be closed only when ADA coins reach your specified price level.
You can set both take-profit and stop-loss orders on the same trade. In fact, this is highly recommended.
Let us explain how to trade Cardano with these two order types with an example.
- You want to trade ADA/USD.
- Cardano is priced at $0.2600.
- Hoping that the price will rise, you place a buy order.
- As a contingency, you want to limit your losses to 1%. This means placing a stop-loss order at 1% below your entry price of $0.2600 - so that’s $0.2574
- You want to close your Cardano trade automatically at a profit of 2%, so you place a take-profit at order at $0.2652.
Now, depending on which direction the value of Cardano moves, your broker will execute the respective order and close the trade automatically.
The above example can go two ways:
- Cardano increases in value - your broker executes the take-profit order and closes your trade at $0.2652.
- Cardano decreases in value - your broker executes the stop-loss order and closes the trade at $0.2574.
Ready To Dive Into Cardano ADA Trading?
How to Make Money Trading Cardano
Setting the right orders can eliminate the need for you to manually watch how your trades are playing out. In fact, this would be a highly inefficient way of learning how to trade Cardano.
That said, understanding the aforementioned orders alone will not guarantee that you leave the trade with a profit or that you will avoid substantial losses.
As such, when learning how to trade Cardano, you also need to be aware of a few other factors that can and will impact whether or not you make a profit.
Your ‘stake’ when trading Cardano is the amount of money you risk on the position. As it goes, the size of your stake is directly proportional to your potential profits. Unfortunately, this correlation extends to losses as well.
For instance, if you stake $100 on a Cardano trade and make a profit of 2%, it will give you gains of $2. But, if you raise your stake to $1,000, your profit will stand at $20.
In other words, a higher stake translates to higher profits and higher losses, too.
This makes it imperative that you employ a bankroll management strategy. In practice, you will be setting a restraint on how much money you trade with. Most traders implement a rule never to stake more than 1% of their available trading funds.
To illustrate - if you have $1,000 in your trading account, you will stake no more than $10 on a single Cardano trade.
Having such control over your funds is particularly important when you are trading in the short-term, with money flowing in and out of your account all the time.
Regulated platform eToro makes it possible to start trading Cardano with as little as $25 per order. This enables you to try your luck at Cardano trading without needing to risk large sums of money.
Cardano Trading Leverage
As we already discussed, trading crypto CFDs is not legal in all countries. However, if your location does allow you to access CFDs, you need to know what leverage is.
Leveraging is a means for you to trade by putting up only a small amount of the desired stake. You will be borrowing the rest of the money from the broker.
If you manage to predict Cardano's future price correctly, leveraging can be tremendously advantageous in turning huge profits.
However, speculation wrong can also lead to losses, only amplified by leverage.
Let us offer you an example to clear the mist.
- You decide to place a buy order worth $100 on ADA/USD.
- You apply leverage of 1:10
- This means your stake is now $1,000
- The profit on this trade is 5%.
Without leverage, you would make a profit of $5 on this trade. Since you applied leverage at 1:10, your profit actually amounts to $50.
In case the market went against you, your losses would also be magnified by your chosen ratio of 1:10.
As such, it is crucial that you avoid unregulated trading platforms offering exponential leverage limits. This can often stand at 1:100 or more.
Instead, stick with regulated brokers like eToro, which offers modest leverage caps on cryptocurrency CFDs to ensure this aligns with your risk profile,
Fees to Trade Cardano Online
Not all the profits you make will find their way to your pocket. Some of your gains will be counted by trading fees charged by your online broker. Depending on your trading platform and the type of strategy you deploy, the fees you pay will vary.
As a trader, you also need to concern yourself with the terms and conditions of the online brokers you opt for.
To point you in the right direction, below is a list of the most common fees that you need to keep an eye out for when you trade Cardano online.
Cardano Trading Commission
Commission is a fee you pay to the broker to execute trades on your behalf. While some platforms charge it as a one-time fee, others will require you to pay it at both ends of the trade.
Commissions are most commonly calculated as a percentage against the value of your order.
While researching the market, we found that cryptocurrency broker Coinbase charges a 1.49% fee to enter as well as exit the market. This means you will have to pay 1.49% when you open a Cardano trade and then again when you close it.
On the other hand, eToro allows you to trade Cardano and other cryptocurrencies at 0% commission.
The ’spread’ is the variation between the asset's buy price and sell price. When trading Cardano online, you’ll want to do so at tight spreads.
A larger price gap will mean a higher spread, which will affect the profits you stand to make.
For instance, if your broker charges a 1.80% spread on Cardano, then you are entering the trade at 1.80% in the red.
Put differently, a profit of 1.80% will only allow you to break even on the trade. Your gains should be beyond 1.8% for you to actually make a profit on the Cardano trade in question.
Other Cardano Trading Fees
Apart from the commission and spread, your broker might also have an assortment of administrative fees in place.
We have listed the main fee types that might also come into play:
- Deposit/Withdrawals: These are transactional fees that occur when you deposit and withdraw money from your trading account. Some brokers charge you only for withdrawals, while they cover the cost of deposits. At eToro, you can deposit funds at a fee of just 0.5% (nothing if your payment method is denominated in USD).
- Inactivity: An inactivity fee is charged when you fail to meet the minimum activity on your trading account. The duration of inactivity could be between three and twelve months - depending on the broker.
- Overnight Funding: Also referred to as 'swap-fees,' this fee is charged by brokers for keeping your trades open overnight. However, this is only the case when trading CFDs or applying leverage.
Considering that the aforementioned fee can quickly add up, you should always check an online broker's pricing structure before registering.
Ready To Start Trading Cardano ADA?
How to Trade Cardano 2021 - Step-by-Step Walkthrough
Are you ready to trade Cardano right now?
If so, all that is left for you to do is follow the steps outlined below. In doing so, you’ll have your first Cardano trade placed in less than 15 minutes!
Step 1: Choose a Cardano Trading Site
Today, you can trade Cardano from the comfort of your home through online trading platforms. But, the struggle is to find a broker that you can trust with your trading capital.
As such, reviews the metrics below when searching for a platform to trade Cardano online.
- Regulation: Is the platform licensed under regulatory bodies such as ASIC, CySEC, or the FCA?
- Fees: What are the commission, spread, and other management fees you have to pay while using the broker's service?
- Payments: What payment methods does the brokerage accept?
- Minimum Deposits: What is the minimum deposit amount and stake needed to start trading Cardano?
- Cardano Pairs: What Cardano trading pairs are accessible on the site?
- Trading Platform: Is the platform user-friendly for beginners?
- Mobile App: Can you access the trading platform and place orders through a mobile app?
The decision, as you see, requires a lot of consideration.
In that regard and many more, eToro certainly comes to mind. We found that the platform has several features that appeal to all levels of traders, such as:
- Licenses from the FCA, ASIC, and CySEC
- FINRA registration to facilitate US traders
- Zero-commission trading on Cardano and other digital assets
- Secure eToro wallet to store cryptocurrencies
- Payment methods ranging from debit cards to third-party e-wallets.
Step 2: Open a Cardano Trading Account
When you have decided on an online broker, go over to their site, and click sign up. The registration process is usually easy and can be completed within a few minutes.
At eToro, the platform will request your basic information, including your full name, email, address, and date of birth. To ensure the platform complies with KYC regulations, you will also be asked to provide a valid photo-id such as a passport or driver’s license.
eToro uses automated ID tech, so the verification of your documents will be done almost instantly.
Regardless, you can start trading Cardano even before verifying your ID. However, this step needs to be completed when your deposits exceed $2,250 or you attempt to make a withdrawal.
Step 3: Deposit Funds
Before you start trading Cardano, you need to add funds to your eToro account. You can choose your preferred payment method from the drop-down list, which includes credit/debit cards, e-wallets such as Neteller and PayPal, or a bank transfer.
Step 4: Choose Cardano Trading Market
By now, your account is fully equipped to start trading Cardano. You can see which trading pairs are available for Cardano by entering 'ADA' in the search bar.
Step 5: Place Cardano Trade
Once you have decided which Cardano pair you want to trade, you can place your first order.
Take a quick refresher of the different order types and the meanings we discussed earlier in this How to Buy Cardano Guide.
Depending on where you see the value of Cardano moving to, you can place a buy order or a sell order, before you hit "open trade".
That’s it - you’ve just traded Cardano at eToro commission-free!
How to Trade Cardano Guide - The Verdict
Your success in trading Cardano online ultimately comes down to how well you predict the market. That said, trading through a regulated online broker can help you get rid of many roadblocks along the way.
A platform such as eToro is built for new and seasoned traders alike, with plenty of features that cater to your needs. The online brokerage gives you access to more than a dozen cryptocurrencies and heaps of trading pairs.
Above all, you can rest assured that eToro is regulated that your trades will be executed on a commission-free basis.
To summarise, make sure that you educate yourself on the market and choose a reliable broker in order to trade Cardano safely and securely online.
eToro – Best Broker to Buy Cardano ADA
eToro have proven themselves trustworthy within the crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
- How can I trade Cardano safely?
You can trade Cardano through eToro, a trading platform with licenses from the FCA, CySEC, and ASIC.
- How can I trade Cardano online?
Cardano trading is possible through a regulated online broker such as eToro. You can start trading by funding your account a minimum of $200 and staking as little as $25 on Cardano.
- How can you make money by trading Ethereum Classic?
You can make profits on Cardano by speculating its future value correctly. If your prediction is wrong, you will end up with a loss.
- Is Cardano trading legally allowed in the US?
You can trade Cardano legally in the US. However, trading Cardano CFDs is prohibited for US residents.
- How can you trade Cardano with Leverage?
Yes, the easiest way is via crypto CFDs. However, residents of the US, UK, and Hong Kong cannot access CFDs through a licensed broker. You might find unregulated trading platforms offering high levels of leverage on Cardano, but it is recommended that you avoid them.