How to Trade Ripple 2021: A Step-by-Step Guide
Comprehensive Guide to Trading XRP in 2021
Looking for an entry point into the exciting world of Ripple trading? We'll help you through it.
Ripple trading is pretty straightforward once you get the hang of it.
Trading Ripple and other digital tokens online is now more popular than ever.
As you likely know, Ripple is the name of both the open payment network and the digital currency, XRP. The technology ensures instant, and virtually free transactions, on a global scale.
As of 2021, XRP is the seventh-largest cryptocurrency in terms of market cap. This highlights that Ripple is attractive to investors and traders of all shapes and sizes.
Interested in learning how to trade Ripple yourself, but not sure where to begin?
In this Ripple Trading Guide, we are going to cover all you need to know.
This includes a simple walkthrough on how XRP trading works, tips for making money, potential risks, and helpful strategies to utilize.
That’s why Trading Education has put together a list of 5 steps to start trading XRP.
So without further ado…
How to Trade Ripple in 5 Easy Steps
To trade XRP, the first step is to open an account with a regulated broker or exchange, deposit funds, select Ripple XRP from the platform list, and lastly Buy XRP (Go Long) or sell XRP (Go short), and check the trade order.
Step 1: Open an account with a regulated exchange
Step 2: Funds your account
Step 3: Choose how much XRP you want to trade
Step 4: Buy XRP (go long) or sell XRP (go short)
Step 5: Confirm the trade order
What is Ripple Trading?
In layman's terms, when it comes to Ripple trading - you’ve got to try and foretell whether the price of XRP will go higher or lower than it is now. The process is the same, whether you happen to be trading stocks or foreign currencies.
Sounds simple enough right? Of course, you only make a profit from your trade if you predict correctly - if not, you lose money.
It goes without saying that the more money you risk, the higher your reward could be if you speculate correctly.
Let’s look at a quick example of how a Ripple trade works in practice:
- You wish to trade Ripple against the US dollar
- This is represented by the pair XRP/USD
- The pair is currently priced at $0.60
- You feel like this price is going to increase
- With this in mind, you create a buy order worth $1,000
- Days later, Ripple is worth 15% more at $0.69
- Upon closing the XRP/USD trade, you made gains of $150
As the above example illustrates, trading XRP is no different from buying and selling any other financial asset. You were able to make a profit in our hypothetical trade because you correctly predicted that the pair would increase in value.
But of course, had the price of Ripple moved in the other direction, you would have closed the trade at a loss.
How Does Ripple Trading Work?
As we mentioned, Ripple trading is highly comparable to any other asset class. On the other hand, it’s worth bearing in mind that compared to markets that have been around for hundreds of years, cryptocurrency trading is a fairly new phenomenon.
Due to the fact that XRP itself has only existed since 2012, it’s vital that you have a clear understanding of what you are doing, and how the market works.
See below a list of important Ripple trading metrics to be aware of.
Ripple Trading Price Movements
The price of any financial asset is the supply and demand of the market. When the feeling of the market is positive towards XRP, or any asset - the buyers will outnumber the sellers. This will usually lead to a price increase.
The same goes vice versa. The fact is, the supply and demand of this popular digital asset can be affected by various different factors, such as relevant news, the value of Bitcoin, heavy XRP ‘whale’ activity, and more.
Cryptocurrencies like Ripple can be traded 24 hours a day, and 7 days a week. Be mindful when making your own predictions, that the price of XRP will fluctuate many times in a single trading day.
This is just the nature of the market, which makes it perfect for trading on a short-term basis.
Ripple Trading Pairs
When it comes to Ripple trading pairs, you could compare this to forex trading. This is because you are fundamentally trading two different currencies in a pair - against each other.
There are two ways in which you can trade XRP pairs.
One way is to trade the digital currency against a fiat currency. The most-traded fiat currency globally is the US dollar, so it makes sense that most people choose to trade Ripple against it.
As noted earlier, this pair is represented by XRP/USD.
If you fancy trading XRP against the British pound, Canadian dollar, or another fiat currency, just make sure your chosen broker can offer you those pairs.
As we said, most people stick to XRP/USD, but there are more niche options available via some trading platforms. Importantly, you would expect to see much lower liquidity and trading volumes going this route.
Another option is to trade Ripple against another crypto-asset, such as Bitcoin (XRP/BTC), Litecoin (XRP/LTC), or Ethereum (XRP/ETH). This is generally called crypto-to-crypto pairs, or crypto-cross pairs.
Both ways of trading Ripple can provide you with ample profitable opportunities, depending on the feeling of the market.
Owning Ripple or Trading CFDs
Speaking of profitable opportunities, you may want to consider whether you want to purchase XRP or trade it. Purchasing the digital currency would indicate that you wish to trade on a medium-long-term basis, pinning your hopes on the value rising later down the line.
Alternatively, have you thought about trading Ripple CFDs? You can trade CFDs without having to own the underlying asset, so all you have to do is correctly speculate on the pair’s future price direction.
Please note that if you are a US citizen, you will not be offered Ripple CFDs by a regulated broker. The CFTC has banned all CFDs for that matter, and the leverage the contracts invite.
Trade and Own Ripple
Should you decide you would rather like to own XRP, you can do this via a trading platform such as eToro. This way, you own the digital tokens until you decide to sell them on.
Crucially, if you are a complete novice and have no idea how to trade Ripple, then you might find owning it a more simple option.
The reason being, you don’t need to be concerned with a highly volatile market in the short-term, nor do you need to spend hours making sense of technical analysis.
Another route is to enter the market via a cryptocurrency exchange offering heaps of pairs. Though, if you wanted to trade XRP against the US dollar, you would actually be offered XRP/USDT. This is a digital currency known as Tether which is pegged to the value of the US dollar like-for-like.
Ripple Trading via CFDs
Next, onto the aforementioned Ripple CFDs option. For those unaware, contracts-for-differences enable you to trade XRP without owning or storing it.
Ripple CFDs instead monitor the real-world price shifts of the digital currency. Better still, CFDs enable you to reap the benefits of going short.
So, put simply, even if the value of Ripple falls, you can still make a profit. This is, of course, if you correctly predict the said decrease in value.
Additionally, Ripple CFDs allow you to trade using leverage - meaning that you are able to increase your purchasing power.
- For example, let’s say you are in Australia and want to enter the market with AU$1,000.
- Via your Ripple trading broker, you can trade with up to 50% (or leverage 1:2)
- This means you would only have to cover AU$500 yourself, while the balance is covered by the broker.
Take note, not only are US citizens banned from trading cryptocurrency CFDs, but so too are those based in the UK. This is because the FCA implemented a ban that kicked in on 1st January 2021!
Ready to dive into Ripple XRP market?
How to Trade Ripple Online - Setting up a Trade
You need to find a broker before you can set up a ripple trade, and we have some tips on that process later.
But for now, we are going to run through the XRP trading order procedure. This will give you an idea of the fundamentals, and what to expect when you’ve found a great Ripple trading platform
Buy or Sell Order
You will invariably need to create buy or sell order trade Ripple online. This tells your chosen broker which way you think the markets are likely to go.
Let’s look at a simple example.
- Let’s say XRP/USD is priced at $0.6068
- If you suspect the price will rise - place a buy order via your Ripple trading site
- If, on the other hand, you think the price will fall - place a sell order
As per the above, a buy order simply illustrates that you think the price of Ripple will increase, while a sell order means the opposite.
With that said, each and every Ripple trade that you place will require both a buy and sell order. For example, if you entered with a sell order, then you would close the trade with a buy order. This works in the same way had you entered with a buy order, but you’d close with a sell order!
At this point when setting up a Ripple trade, you will need to indicate to your trading platform of choice whether you want to place a market order or a limit order.
See below for a quick explainer of both.
- If you see the value of XRP and think that’s a good price - chances are you want your trade to be carried out straight away. This is where the market order comes into play. Your Ripple broker is going to execute your position immediately, ensuring you get it as near as possible to that price. Taking into account the fluctuating nature of digital currencies, there will be a slight difference in the price your order is executed at. .
- On the contrary, with limit orders - should you instead not like the price on offer, you can specify a price at which your trade will be executed. For instance, if you are quoted $0.50 on XRP, you might not want to get involved until it reaches $0.65 - therefore that’s your limit order value
Which order you use will depend on each individual trade. As we are sure you can imagine, both can be very handy when thinking about how to trade ripple.
It really depends on whether you want to execute the XRP trade immediately at the current market price or specify your own. In the case of limit orders, your XRP position will remain pending until the price has been reached.
As such, if it looks like the Ripple trading order isn’t going to be matched, then you will need to cancel it manually.
If you are a newbie, take note - stop-loss and take-profit orders are invaluable when it comes to a bit of damage limitation, and maintaining some control over your Ripple trades.
Put simply, when you have placed your buy or sell order, and market or limit order, you can close your XRP trade whenever you like.
However, when utilizing stop-loss and take-profit orders, you are telling your Ripple broker to automatically close your trade when one of two instances occur.
The stop-loss order, as the name suggests - allows you to limit the losses on your Ripple trade. Let’s say you do not want to lose more than 2% of your stake - you place a stop-loss order at that specific amount.
In the case of take-profit orders - you might want to make no less than 5% profit. In this case, set the value of your take-profit order at 5% over the current position.
To clear the mist, let’s have a look at how that might look when trading Ripple through an online broker.
- In this example, XRP/USD is quoted at $0.7010
- You want to go long, so elect to place a buy order
- As we said above, you want to limit your loss on this trade to 2%
- With this in mind, you need to set your stop-loss to $0.6869 ($0.7010 - 2%)
- We mentioned you want no less than 5% profit
- As such, your take-profit order will need to be entered at $0.7360 ($0.7010 + 5%)
In the above scenario, your 2% stop-loss order will be executed if Ripple drops to $0.6869. If the digital currency rises to $0.7360, your Ripple broker will action your 5% take-profit order for you.
Would you consider trading Ripple XRP?
How to Make Money Trading Ripple
One of the first questions asked when people start trading digital currencies is “How can I make money?”
There is no definitive answer to this question - but learning the ins and outs of Ripple is a good place to start.
After all, money doesn’t grow on trees, so it’s crucial you enter the market with your eyes open. The same goes for forex, stocks or any other tradable asset.
For the beginners out there, we’ve listed some common factors to be aware of when trading Ripple online.
Starting with the stake, this value essentially tells your broker how much you want to risk on your Ripple trade. The more you stake, the higher the profit could be if you speculate on the value of XRP correctly.
At any online Ripple trading site, there will be a minimum deposit stipulated, and also a minimum stake. This can vary from broker to broker, but regulated platform eToro allows you to begin trading XRP from as little as $25!
A popular strategy amongst Ripple traders is to never risk more than 1% of your account balance. For instance, if you had $10,000 in your account, you wouldn’t stake more than $100 - and so on.
As your trading balance is likely to change regularly, this is an easy way to recalculate your maximum stake strategy.
2. Gains in Percentage Terms
Your profit from trading Ripple isn’t just determined by how generous your stake is. Of course, the specific price shift of the digital currency also plays a part.
- For instance, let’s say you placed a $500 buy order, and XRP’s value increased by 10%
- Your gains would be $50 ($500 + 10%)
- If you placed a $1,000 sell order on Ripple, and its value fell by 15%
- You would make gains of $150 ($1,000 + 15%)
Using the above calculator allows you to easily quantify your profits and losses.
3. Ripple Trading Leverage
This brings us smoothly onto leverage. As we touched on earlier, leverage allows Ripple traders to utilize ‘margin’. Of course, XRP CFDs aren’t on the table for US residents due to strict regulation.
We’ve also mentioned the crypto leverage limitations in other locations - such as the European Union, which is capped at 1:2. From April 2021, Australias will also be capped to 1:2.
If you’re based elsewhere, there is every likelihood that you will get much higher limits when trading Ripple on margin.
Nevertheless, see below an example of how applying leverage to your Ripple trade might look.
- You create a $500 sell order
- You decide to apply the 1:2 leverage offered by your Ripple broker
- The value of XRP falls by 15%
- Normally, this would have resulted in a profit of $75 from your $500 stake
- However, with leverage of 1:2, your profit is boosted to $150
As we said, it’s important to be aware that while leverage can be a great way to amplify your gains - it will also increase your losses.
Fess to Trade Ripple Online
Much like with any financial service, there will be fees to pay in order to trade Ripple. These fees will vary from broker to broker. Having said that, there is a list of commonly seen fees you should be aware of.
Ripple Trading Commission
Starting with Ripple trading commission, whilst not all brokers charge this, the ones that do will usually do so via a percentage of your stake.
For instance, third-party trading platform Coinbase charges 1.49% for each and every crypto-to-crypto trade. If you entered XRP/USD with $1,000, you would pay $14.90. Upon closing this position, you would then be charged an additional 1.49% of whatever the value is at that time.
There are reputable platforms out there - such as eToro, that allow you to trade Ripple with 0% commission. In this case, just be mindful of the spread on offer by the broker, as this is likely to be where the platform makes its money.
eToro – Trade Ripple XRP with 0% commission
eToro have proven themselves trustworthy within the industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
The spread is the gap between the buy price and the sell price of Ripple. When trading forex the spread is shown in pips, so a 0.6010 buy price and 0.6005 sell price would indicate a spread of 5 pips.
When trading crypto coins like Ripple, it’s easier to calculate the spread as a percentage. For instance, a buy price of 0.5929 and a sell price of 0.6183 represents a spread of 4.28%.
The spread is comparable to an indirect fee. If the spread is 4.28% like our example above, you are beginning your XRP trade 4.28% in the red.
If you make 4.8% on your trade, you break even.- so anything above that figure would be profit. The good news is, some Ripple brokes offer super-tight spreads. eToro, for example, averages 0.75% on major pairs like XRP/USD.
Other Ripple Trading Fees
Although commissions and spreads are the main fees you need to look out for when choosing a good Ripple trading broker - there are others.
We’ve listed more fees to be mindful of below:
- Transaction Fees: Some brokers charge clients for deposits and withdrawals. This can depend on the payment method, and sometimes the amount requested.
- CFD Fees: If you intend on trading Ripple CFDs, you need to be aware of the overnight charges they invite. Swap-fees, as they are sometimes called, will be charged for each day you leave an XRP position open overnight.
Charges vary depending on your broker, so always check the pricing table before signing up to a new online Ripple platform.
How to Trade Ripple 2021 - Step-by-Step Walkthrough
By this point, you should feel confident enough to get out there and start trading this popular crypto coin.
We have covered everything from XRP pair categories and order types - to strategies, and getting to grips with the calculation of risks and rewards.
If this sounds like something you would like to get started with right away - check out our simple How to Trade Ripple Step-by-Step Walkthrough below!
Step 1: Choose a Ripple Trading Site
To start trading XRP on the go or at home, you will need a good Ripple trading platform to execute those orders for you. There are some really good brokers in the online space, but also heaps of sharks too.
With this in mind, it’s important that as well as reading guides like ours, you also conduct your own research. Do this before signing up and handing over your bank details.
To make the process of sorting the wheat from the chaff a little easier for you - find below some key considerations when looking for a Ripple trading broker.
- Regulation: Is the Ripple broker regulated and licensed?
- Fees: How much does the trading platform charge in commission and other fees?
- Payments: What payment methods are accepted?
- Account Minimum: What is the minimum stake, and deposit amount required?
- Ripple Pairs: What Ripple pairs will you be able to access via this online broker?
- Trading Platform: Is the broker’s website easy to use?
- Mobile: Is there a mobile app available so you can trade Ripple on the move?
As you can see, finding a good broker isn’t going to be a walk in the park - and there’s a lot to think about. If you’re a complete XRP trading novice, we recommend eToro.
The broker serves over 13 million clients and is heavily regulated by several jurisdictions including the FCA, CySEC, ASIC, and more. US traders are covered too, as the platform is registered with FINRA.
Not only that but as we mentioned - trading Ripple is completely commission-free here.
You can also opt to trade XRP pairs passively by electing to use the eToro Copy Trader feature. This enables you to invest a minimum of $200 in a pro trader, and any positions they place is reflected in your portfolio automatically.
Step 2: Open a Ripple Trading Account
Once you have found a Ripple broker you like the look of, you will need to sign up. This process is usually really easy and can take a matter of minutes.
You will usually start by being asked to fill in a simple sign up form. This generally includes the basics such as your name and address, date of birth, phone number, email address.
If the Ripple trading platform is regulated, you will more than likely have to provide a copy of your government-issued photo ID.
Although in the case of eToro, this doesn’t have to be done immediately - unless you are depositing $2,250 or more. You will, however, need to provide the requested documents before you can make a withdrawal request.
Step 3: Deposit Funds
Once your new Ripple trading account is confirmed (which usually takes less than 10 minutes), you can go ahead and fund your account.
If trading via a brokerage rather than an exchange, you should be able to deposit using your own currency.
Check the accepted payment methods on any Ripple broker site before signing up - especially if you have something specific in mind.
Step 4: Choose Ripple Trading Market
Next, you need to decide on a Ripple trading market. At eToro, you can access various crypto-to-fiat pairs such as:
If you fancied trading crypto-to-crypto pairs, there’s a selection of those too. If you want to have a look, head over to the ‘Trade Markets’ section at eToro and you will see the full range of pairs under the ‘Crypto’ tab.
Step 5: Place Ripple Trade
Now you’ve decided on the market - you need to create an order. If you need a recap of how to place an order or which ones you should utilize - scroll up to our section on ‘Setting up a Trade’.
When you are happy with your Ripple trade order, confirm it. In doing so, your online XRP broker will do the rest!
Ready to trade Ripple XRP?
How to Trade Ripple Guide - The Verdict
Mastering the art of trading Ripple, or any other asset for that matter, can take a long time. However, by persevering and building up your knowledge of the digital currency, you can reap the rewards of this sometimes volatile space.
Ripple has spent most of its existence as the third-largest cryptocurrency in terms of market valuation. Despite its popularity, it’s still important to choose a well respected and licensed broker to execute trades for you.
eToro is a superb example of a trustworthy broker. The site is commission-free and has heaps of XRP pairs on offer. Not only that, but the social trading platform is regulated by various bodies such as ASIC, FCA, and CySEC.
Is trading Ripple safe?
Yes, trading ripple is safe. However, trading Ripple via unregulated brokers should be avoided at all costs. Stick with regulated Ripple brokers like eToro so you’re covered by the likes of the FCA, ASIC, and CySEC.
How do I trade Ripple?
Trading Ripple has never been more simple. Sign up with a suitable broker online, deposit some funds, and decide whether the digital currency will increase or decrease in value. Next, simply decide how much to stake and place your buy or sell order.
Can you get rich by trading Ripple?
There is no magic bullet. Some XRP traders make decent gains, others make losses. The best way to make money is to educate yourself on how to trade Ripple and learn how to perform technical analysis.
Is Ripple trading legal in the US?
Ripple is legal in the US. However, you should note that if you are a US citizen, you are not permitted to trade Ripple CFDs. You can, however, invest in Ripple by purchasing XRP at eToro - commission-free!
Can you trade Ripple with leverage?
Yes, you can trade Ripple with leverage. However, those based in the US and UK cannot. EU and Australian citizens are capped at 1:2. Other nationalities might be able to get even higher limits - depending on the location and the broker in question.