How To Trade Ripple And XRP/USD & XRP/BTC Pairs
To get started trading Ripple, pick a strategy based on the amount you'll trade, the timelines for your trading goals, and the amount of risk that makes sense for you
Ripple is one of the altcoins that sprung up after the success of Bitcoin. Although it is still struggling to carve out its space in the market, the coin has already shown good promise for future growth.
If you are looking to invest in Ripple’s XRP, trading is one of the easiest ways to enjoy short-term gains. However, it is also risky given the volatility in the cryptocurrency market. You need to be knowledgeable about the market, understand price movements, be strategic and have plenty of discipline.
If you are just getting started and don’t know where to start, we will take you through the exact steps professional traders use to benefit from XRP. We will start by familiarizing ourselves with Ripple, how to buy it, then reveal proven strategies that will significantly boost your earnings.
Let’s dive right in.
What is Ripple and How Does it Work?
Just like with Ethereum and Ether, there is some confusion when it comes to using the words Ripple and XRP. Technically, Ripple is the name of the company, not the cryptocurrency itself. The cryptocurrency that underpins the Ripple network is called XRP. However, you’ll find that most people simply refer to the cryptocurrency as Ripple.
This makes Ripple both a cryptocurrency and a platform for fast digital transactions.
XRP subscribes to the same protocol as most of the other cryptocurrencies like Bitcoin. It was created to allow for seamless transactions between two people without the interference of third parties like banks. The coin hopes to replace mainstream wire transfer systems like SWIFT, MoneyGram, and Western Union and make cross-border payments not only faster but also more reliable.
Although XRP uses the cryptography technology used by the other coins, it is not decentralized. The cryptocurrency is solely developed and managed by Ripple Labs for the purpose of making a profit. The developers own most of the XRP available, and only they can mine it.
Having said that, you can still trade in XRP and benefit from its steadily growing price and market cap. The coin holds a few advantages over the leader Bitcoin, giving it a bit of a breathing room in the crypto market. For instance, it is much faster. While XRP takes a few seconds to complete transactions, Bitcoin can take up to 15 minutes. Ripple also allows you to exchange other cryptocurrencies like Bitcoin, making it even more holistic when it comes to trading.
Ripple has already partnered with several banks and other financial service providers to enable faster and cheaper global money transfers.
Now, we’ll take you through some of the strategies you can use to tap into Ripple’s growth through trading. But before that, let’s answer a question that we get asked a lot by our readers.
Should I HODL or Trade Ripple?
There can be a bit of a dilemma when deciding between investing in Ripple for the long term or simply engage in daily trading. Given Ripple’s price history, this concern is justified. For instance, at the start of 2018, XRP’s price jumped from below the $1 mark to $3.40, then just as fast, bottomed out at below $1 again.
So, if you had bought XRP when it hit its all-time high, you’d have experienced significant losses for a long time. The price is still struggling to break above the $1 mark. That means that it will take a pretty long time before it touches $3 again. What do you do in this case; keep waiting or just sell it?
Of course, people who traded instead of holding XRP during this time made good profits compared to those who Hodled through a bear market. So, if you are risk-averse and not willing to bet on the hopes that XRP’s price might rise sometime, trading is best for you.
This is a good option if you are looking for short-term gains instead of investing in long-term for future profits. Again, if you are willing to be in it for the long haul, there might be a future for you since Ripple promises steady growth after recovering from the bear market. The current adoption by large financial institutions means the coin has a lot of room for growth and will likely blossom in a few years.
If you choose to invest for the long-term instead of trading, we advise that you look at the latest technical analysis, market trends, and what experts are saying. Also, do plenty of research and possibly work with an expert before adding XRP to your portfolio.
Otherwise, if you are not ready for the long-term investment but still want to profit from Ripple’s market volatility, we will show you the different ways to trade for the best ROI.
Different Ways To Trade Ripple
There are two common ways in which you can take advantage of Ripple’s volatility in the short term:
- Spot trading - This is where you directly buy and sell XRP via an exchange, depending on the current price movement.
- CFD Trading - This is where you make a profit (or loss) by predicting Ripple’s future price movement. You can either speculate that the XRP/USD rate will rise (long position) or fall (short position). If your prediction comes true, you can profit from both a bearish and bullish price action.
In this guide, we will show you how to trade Ripple CFDs. Spot trading is straightforward and not as complicated as CFD trading. So, it’s pretty easy to figure out.
How to Trade Ripple: The Step-by-Step Process
To start trading in Ripple, follow the steps below:
- Open a trading account
- Do market research
- Design a trading strategy
- Place your first trade
Step 1: Open a Trading Account
Before you can start trading, you need to open an account with a leveraged Ripple provider. Since you are predicting price movement instead of directly buying XRP, you won’t need to use an exchange account.
Credible cryptocurrency platforms you can use include eToro, Kraken, and Binance.
After opening an account with your favourite platform, you will need to deposit the initial funds before opening your first CFD trading position.
Step 2: Do you Research
It is important that before you go ahead with your trade, you clearly understand what you are getting into. Trading CFDs is a bit more complicated than spot trading through an exchange. First of all, ensure that you know exactly what Ripple is, its current market standing, and what informs its price movements.
Leverage on technical analysis and study previous price movements. Look out for trends that could hint at the next price action. Don’t also forget to look at industry experts’ predictions and all the currents news surrounding Ripple and XRP.
Step 3: Develop a Trading Strategy
Although predicting Ripple price movement is not easy, you can still develop a strategy that will help maximize your profits while trading. After researching and understanding the market better, you can use your new-found knowledge to create a unique and productive trading plan.
While developing a trading plan, ask yourself the following questions:
- What are your trading goals? What do you want to achieve, daily, weekly, or even monthly?
- Do you want to include additional markets like Bitcoin or trade Ripple exclusively?
- How much can you afford to put into the trade? Remember, never stake more than you can afford to lose
- What is your risk-reward ratio?
In the next section, we will look at some of the most effective trading strategies that are used by experts to maximize their profits and minimize losses.
Step 4: Place Your First Trade
After researching and developing a working trading plan, you are now ready to open your first position. To do this:
- Indicate the amount of your position in the deal ticket. This amount will determine how much you make or lose.
- If you expect the XRP price to go up, click on ‘Buy’. If you think the price will fall, click on “Sell”.
- You can also include a “Stop” position. This will close your position in case the prices move against your prediction by a certain amount.
- Otherwise, to manually close your position, just reverse your original trade. For instance, if you opened by buying, you will close by selling, and if you opened by selling, you will close by buying.
How to Trade Ripple for Bitcoin
Trading Ripple for Bitcoin is not much different from trading for a fiat currency such as the USD. To trade the XRP/BTC pair, you will need to have some Bitcoin in your wallet. If you don’t, you can buy it from any of your favourite exchanges.
At the time of writing, 1 XRP is equivalent to about 0.000009 Bitcoin. This makes trading Ripple with Bitcoin cheaper than when using USD.
To start trading, follow these steps:
- Open an account
- Buy bitcoin using fiat currency. If you already have Bitcoin in your cold wallet, you can use that.
- Buy the required amount of Ripple for an equivalent amount of Bitcoin. You do this exactly the same way you would do with USD.
3 Most Effective Ripple Trading Strategies
If you are just getting your feet wet, cryptocurrency trading might be confusing. However, if you use technical analysis correctly, you might be able to predict price movement to some level of accuracy.
Since you might not have time to do your own technical analysis, we will share some strategies to help you get the most out of the market. These strategies include:
- Bolinger Bands trading strategy
- Ichimoku Trading Strategy
- 50-day moving average strategy
Strategy One: Bollinger Bands Ripple Trading Strategy
This is an effective technical analysis indicator that will help you understand XRP’s price volatility and make the right trading decision. The strategy comprises a Simple Moving Average (SMA) with a band above and below it.
The upper and lower bands represent positive and negative standard deviations, respectfully. These standard deviations help you to observe price action within a channel-like tunnel. The bands contract and expand based on Ripple’s price volatility.
When the two upper and lower bands pass through the middle Bolinger band, it gives a signal of whether you should buy or sell.
Strategy Two: Ichimoku Ripple Trading Strategy
This strategy, also called the ‘at a glance’ indicator, gives a full picture of what is happening in the Ripple market in one place. For instance, you can see the past price history, current prices, and future predictions.
This much information on a single page can be difficult to follow, especially if you are just starting out. However, when you understand what you are looking at, the information is very valuable for staking the right position.
You can use the range of this information to decide whether to buy or sell based on how different lines are crossed.
Strategy Three: 50-Day Moving Average Ripple Trading Strategy
This strategy enables you to monitor the price of Ripple over a period of 50 days. In short, a 50-day moving average is the average of all closing prices over a period of 50 days.
A 50-day analysis of price movements can give a strong indicator as to whether you should buy or sell. The golden rule with this strategy is that you should always hold your position until the price movement of Ripple breaks your 50-day SMA away from your trade.
For instance, if you are buying, you should close your trade when Ripple's price breaks the 50-day moving average in a downward direction. On the other hand, if you are selling, you should close your trade when the price of Ripple breaks the 50-day moving average in an upwards direction.
Don't Miss: Ripple Price Prediction
What Determines Ripple’s Price Movement?
Unlike many other cryptocurrencies, Ripple seems to be the only one not on a mission to replace fiat currencies. Instead, Ripple uses XRP to support and partner with financial institutions to ensure faster and cheaper cross-border money transfers.
For this reason, there are several fundamental factors that determine the XRP’s price movement. Let’s quickly look at some of them below:
Unlike other altcoins, Ripple is developed, managed, and controlled by a private company. The company is solely responsible for the supply of XRP in the market. This way, they are able to control price movement, sometimes to their advantage.
The way investors and the general public think about Ripple may break or build its price patterns. For instance, most people seem to believe that XRP is a Bitcoin competitor instead of a payment solution. This might make them biased and decide not to invest and, therefore, bring XRP’s price down.
Instead of trying to outcompete financial institutions, Ripple seeks to partner with them to make transactions more efficient. This way, more institutions are willing to adopt or partner with Ripple compared to other cryptos that are trying to phase out traditional banking.
As Ripple’s technology is adopted by more financial institutions, its value and market cap subsequently increase.
The existence of other competing cryptocurrencies may also affect XRP’s price in the long term. This can either work in favour of or against Ripple, depending on how unique and practical it is compared to the other coins.
Addition to Popular Exchanges
Ripple was removed from most exchanges, such as Coinbase, after a legal battle with the SEC. This caused its price to drop as some people could not access it through their favourite platforms. If Ripple were to be added to these exchanges again, its price might rise as more people can seamlessly access and trade it.
What is the Best Time to Trade Ripple?
The cryptocurrency market doesn’t sleep. It is not like the stock market that might be closed to trading on holidays or weekends. However, when it comes to deciding which is a good time to trade, we might not be able to give a final answer.
This is because there are varied opinions from industry experts:
- Some believe that any time is a good time to trade
- Others recommend that you trade between 9 – 10 GMT
- There are also those who believe that you should only trade in the up days
You can track your trading hours and find out which hours work the best for you. You will find that there is no much difference, but when it comes to trading, even slight variations matter.
Check Out: What Are The Benefits of Ripple Trading?
Conclusion: Tips to Make Ripple Trading More Profitable
To profit from Ripple Trading, you need skills, knowledge of the market, and a strategy that works. At first, everything will look alien to you. You will need to learn a lot before you understand how to study the market and learn from its history.
So, the first thing you should do as a new trader is understanding the market by educating yourself and working with experts. You will need to familiarize yourself with the different trading strategies and know how to use them to your advantage.
We advise that you first start with spot trading, then slowly move to CFDs as you get to know the market better. This way, you will understand the basics of trading and keep learning as you move to more advanced trades.
If you are trading Ripple CFDs, we recommend that you trade on a margin then use leverage to boost your profits. Keep in mind that leverage can amplify losses as much as profits. You should, therefore, only use it if you are ready for huge losses.
To be on the safe side, you should always keep an extra margin available. This way, even if your positions go against you, you will not become liquidated or receive a margin call.
eToro – Trade Ripple XRP
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