How to Trade Stellar (Lumens) 2021: A Step-by-Step Guide

Learn How to Trade Stellar XLM

Last Updated July 23rd 2021
23 Min Read

Founded by Jed McCaleb in 2014, Stellar Lumens sits comfortably in the top 15 cryptocurrencies in terms of market capitalization. Naturally, it’s now super popular to trade.

You can trade Stellar against fiat currencies such as USD and EUR, as well as other crypto-assets like Litecoin and Bitcoin.

Interested in trading this digital currency yourself, but haven’t got the foggiest idea where to begin? You have landed on the right page.

In our How to Trade Stellar 2021 Guide, we are going to dive into the ins and out of trading this digital currency. 

Join us on a journey where we cover the basics, risk/reward management, and trading strategies. We also talk about key metrics for finding a great crypto broker to trade Stellar, and how to sign up today.

Before you can start to trade stellar (XLM), it is important to learn how the cryptocurrency market works and what moves the market price. So, we’ve compiled a guide on how to trade stellar in five steps.

Five Steps to Trading Stellar

1 Choose a Stellar Trading Site

2 Open a Stellar Trading Account

3 Deposit Funds

4 Choose Stellar Trading Market

5 Place Stellar Trade

We’re going to dig deep into Stellar trading, but feel free to jump to any section that interests you:

What is Stellar Trading?

Whilst Stellar is what’s known as a digital currency, it still holds financial value as an asset. The value of the crypto-asset will increase and decrease throughout every single trading day - usually by the second.

After all, the price of any tradable asset will fluctuate frequently, as this is the nature of supply and demand.

When thinking about how to trade Stellar yourself, you are trying to speculate on the price of XLM coins in the future, albeit in the short or long-term.

If Stellar Lumens is in high demand, then the price of the financial asset will rise. If people begin to offload their coins, the price will fall. Foreseeing these price fluctuations is what can make you a profit.

Let’s offer up a clear-cut example of how to trade Stellar:

  • Stellar is valued at $0.15
  • This is shown as XLM/USD
  • You think Stellar is undervalued so place a $100 buy order
  • 2 months pass and the digital currency is worth $0.32
  • This illustrates a 113% increase in value
  • Happy with your profit - you place a sell order to close your trade

In our above example, Stellar increased in value from $0.15 to $0.32, so you made a 113% profit from your $100 buy order. This translates into gains of $113!

As you can see, if you speculate correctly, there is plenty of profit potential when you trade Stellar. If you had speculated incorrectly, the story would have been quite different - resulting in a loss on the trade.

It’s crucial that before you consider how to trade Stellar, you have an educated idea of how this specific market works.

The Benefits of Stellar Trading

If you’re looking to get involved in the Stellar rading, one of the first steps to consider is whether you will buy the XLM digital assets or speculate on its prices. Take a look at some of the benefits to trading Stellar XLM.

The benefits of Stellar XLM trading include:

  1. XLM volatility
  2. Cryptocurrency market hours
  3. Ability to go long or short
  4. Leveraged exposure
  5. Faster account opening

How Does Stellar Trading Work?

If you have ever traded forex, commodities, or stocks before - you will have a firm grasp of how Stellar trading works.

However, what differentiates Stellar from tradable assets like commodities, is that people have been trading gold and such for hundreds of years. Cryptocurrencies on the other hand have only existed for just over a decade.

For newbies, we are going to cover some Stellar trading fundamentals to clear the fog.

1. Stellar Trading Price Movements

Starting with Stellar trading price movements, understanding what drives the price of digital currencies is vital.

You will find XLM coins at most crypto platforms. The price will be affected greatly if the general feeling of Stellar is to go long (or short). 

The price of Stellar increased by more than 44,000% in the 4-year period between 2014 and 2018 - so the general feeling towards the cryptocurrency was stronger than ever.

As you can no doubt imagine, the price of Stellar will always differ slightly at different crypto platforms. You might notice that one online broker quotes you $0.2105, whilst another one values the coins at $0.2108. 

This is nothing to be concerned with, as the difference in price is usually nothing to write home about. If it was, this would quickly get eaten up at by experienced arbitrageurs! 

2. Stellar Trading Pairs

xlm/usd  cahrt

We mentioned in the introduction that you can trade Stellar against fiat currencies or other cryptocurrencies.

Let us start with how to trade Stellar in terms of ‘crypto-fiat’ pairs. When conducting your own research to trade cryptocurrencies, you will see this term banded around a lot.

As such, in this section, we clarify what that means. 

For instance, when you see XLM/USD, this is Stellar against the US dollar. Here Stellar is the ‘crypto’, whereas the US dollar is the ‘fiat’.

The US dollar is the most used fiat currency when trading Stellar. However, some online brokers enable clients to trade crypto-assets against other fiat currencies. For example, eToro supports the British pound (XLM/GBP), Euro (XLM/EUR), Canadian dollar (XLM/CAD), and even the Japanese yen XLM/JPY).

We mentioned that USD is the most commonly traded fiat currency. This means it also comes with the benefit of liquidity and tight spreads.

Consequently, sticking with crypto-fiat pairs is probably the best option for newbies. It’s much easier to try and quantify your profit and loss, but it’s also easier to try and predict the future price of the XLM pair in question.

Alternatively, you can also trade Stellar Lumens against another cryptocurrency like Bitcoin. In doing so, you are speculating on whether the exchange rate of the pair will rise or fall. 

3. Long or Short-Term Stellar Trading

When considering how to trade Stellar, you should think about which financial instrument will be most suitable for your own trading objectives.

If you like the idea of trading Stellar largely because you believe in the wider project and feel certain that its value will rise over time - it might be best to buy the XLM directly and store them in a crypto-wallet. This way you can hold on to Stellar for weeks, months, or years - until you feel ready to cash out.

If you are a beginner when it comes to trading, then understanding enough technical analysis to aid your short-term decision-making process will be no easy feat.

Chart reading and analysis can take months at a time to learn. Therefore, a ‘buy and hold’ strategy could be better suited if you are a newbie, as you don’t need to worry about short-term volatility.

If you prefer the idea of trading Stellar on more of a short-term basis, with the goal of making modest profits regularly - this is also an option. Just make sure you are trading liquid pairs like XLM/USD or XLM/BTC.

Trade and Own Stellar

We mentioned above that you can adopt a ‘buy and hold’ strategy if you wish to trade Stellar over a longer period of time. If this is the case, we recommend buying the cryptocurrency directly, via an online broker rather than an exchange.

This is where eToro comes in, as you can purchase Stellar in the traditional sense, completely commission-free. The platform serves over 13 million traders and will look after your Stellar Lumens for as long as you like at no extra cost.

As we said, this strategy is well-suited to beginners (well, all skill sets really), as short-term price fluctuations won’t be your concern.

Stellar Trading CFDs

If you would prefer to trade Stellar on a more short-term basis, by utilizing ‘swing trading’, or ‘day trading’ - you could use an online broker offering ‘Stellar CFDs’ (Contracts for Difference).

Residing in the USA? Then you should be aware that CFD instruments are prohibited according to US securities law. If you are a UK resident, you can access CFDs via regulated brokers no problem - but not cryptocurrencies, such as Stellar.

Let’s have a look at what CFDs are:

  • Stellar CFDs monitor the real-world price of Stellar, or any financial asset
  • The perks of Stellar CFDs include leverage and low fees
  • You can also benefit from bullish and bearish markets by going ‘long’ or ‘short’ on the digital currency

For those that can access CFDs, social trading platform eToro offers a variety - so you can also trade Stellar against both crypto and fiat currencies.

If you really want to access leveraged pairs from a country where they are prohibited, you can do so via a third-party crypto exchange. Be mindful of the fact that these are often free from regulation, which means you are essentially trading in a potentially dangerous space.

Furthermore, you are unlikely to be awarded the convenience of funding your account using a fiat currency like Euros or US dollars.

Not only that, but if you take this option you will likely be trading XLM/USDT rather than XLM/USD. For those unaware, USDT is a digital currency called Tether which is pegged to the US dollar.

Would you consider trading Stellar XLM?

How to Trade Stellar Online - Setting up a Trade

trading stellar xlm

When you take up learning how to trade Stellar, you must get to grips with orders. There are various useful orders to be utilized when trading cryptocurrencies. Without them, your broker won’t know your position.

If you have ever traded before, you will see that the order process is the same no matter what the asset. Put simply, the order you place with your broker indicates what action they should take on your behalf.

Please see below a list of easily employable orders, used by traders of all levels of expertise.

1. Buy or Sell Order

The buy/sell order is mandatory when trading Stellar.

In a nutshell:

  • If you think the price of Stellar is going to rise - create a buy order
  • If you think the price will fall - create a sell order

As is apparent from above, this process is super simple. 

However, all of your crypto trades will need both a buy order and a sell order.

For example, if you enter the Stellar market with a buy order - you create a sell order to exit. And vice versa, if you enter the market with a sell order - you create a sell order to exit.

2. Entry Price

Now that we’ve covered the basics, we can move onto some other Stellar orders to add to your trading repertoire.

When trading Stellar, you will be asked whether you want a ‘market order’ or a ‘limit order. This will tell your trading platform what your entry strategy is.

Let’s clear the mist with an explanation of each:

  • Let’s say Stellar is priced at $0.22. You like that price and want to secure it immediately - so create a market order. Your broker executes this straight away, however, you will see a minuscule contrast in value due to price fluctuation.
  • In terms of a limit order, this one allows you to enter the market at a specific price point. Let’s say Stellar is valued at $0.22, but you aren’t interested until XLM increases to $0.23 This is when you create a $0.23 limit order. This remains until the price is realized, or you cancel your order.

The lion’s share of Stellar traders utilizes limit orders as they give you a level of control over your position.

3. Exit Strategy

We’ve covered how you can enter the market when looking to trade Stellar. When it’s time to close, your ‘stop-loss’ and ‘take profit’ orders come into play.

Let’s clear the mist with an explanation of each:

  • A stop-loss order stops you from losing more than you can afford to on a Stellar trade. For instance, if you want to stop your loss at 1% - your broker will automatically execute your order when Stellar falls in value by that amount.
  • Onto take-profit orders,  this locks in the profit from your trade at a specific point. For instance, if your target is 3% - your trade will be automatically closed when Stellar rises in value by 3%.

If you are learning how to trade Stellar for the first time, you will see a further example below:

  • You are trading XLM/USD at a price of $0.30
  • You think the value will rise, so create a buy order
  • You do not want to lose more than 1% so create a $0.297 stop-loss order
  • If your Stellar position makes a profit of 4% you want to cash out
  • As such, you create a $0.312 take-profit order

It is a commonly used strategy to use both orders, at either side of the current price. Whether it’s a loss or a profit, the trade will be closed automatically at a price agreed by you.

Here are the two potential outcomes of the above stop-loss/take-profit orders:

  • Should XLM/USD rise to $0.312 - your take-profit order will be executed by your broker. Your profit is 4% and the trade is closed.
  • Should XLM/USD fall to $0.297 - your stop-loss order will be executed by your broker. Your loss is 1% and the trade is closed.

How to Make Money Trading Stellar

You can utilize the aforementioned orders to cut out the need to manually close trades and time the market correctly. However, the fact these orders are automatic doesn’t mean it’s easy to make money trading Stellar.

Please find below a list of other considerations when trying to make money trading this popular crypto-asset.

1. Stake

Once you have a firm grasp on order types and the fundamentals, you need to specify a stake at your trading platform of choice. The more you risk, the higher the returns could be - or losses.

To give you an example, if you stake $200 on Stellar and make a profit of 2% - this translates to $4. If you had splashed out and spent $1,000 instead - your profits from the same trade would be $20.

That said, it is easy to get carried away with your trading emotions. For this reason, many traders utilize a bankroll management strategy to trade Stellar, and other assets.

Put simply, think about how much you can afford to spend on each Stellar trade, referencing your current account balance. Many people decide to use no more than 1%2% of their account funds at a time.

For instance, if you had a balance of $3,000 in your trading account - you would not stake more than $30 - if utilizing a 1% strategy.

If you adopted a 2% strategy your maximum stake would be $60 - and so on. There are brokers out there who will allow you to trade cryptocurrencies for small amounts.

All-round crowd-pleaser eToro allows you to trade Stellar for a minimum of $25 - making this kind of strategy easy to stick to.

2. Stellar Trading Leverage

If you are able to access Stellar CFDs where you live, you can boost your profit by using leverage.

It’s important to not be naive when it comes to applying leverage to Stellar trades. Sure, they can amplify your gains when you’ve made a good decision. But, if you make the wrong call - the very same leverage will magnify your losses.

Let’s take a look at an example of a Stellar trade using leverage:

  • You place a $1,000 sell order on XLM/USD
  • You add leverage of 1:2
  • You make 15% in gains
  • With no leverage - your profit is $150
  • With 1:2 leverage - your profit is $300

As is evident from our example, if your country permits it - you can increase your potential Stellar trading profits by applying leverage.

Some online brokers offer as much as 1:10, or even 1:100. Always check that any trading platform offering leverage is regulated.

3. Fees to Trade Stellar Online

Irrelevant to whether you decide to trade Stellar against a crypto or a fiat currency - you will be liable for fees of some description.

Like any business, online brokers need to turn a profit to keep the ball rolling. Before you commit to a broker to trade Stellar, check our list of potential fees to keep an eye out for.

Stellar Trading Commission

The vast majority of brokers make money via trading commission fees. This tends to be worked out as a variable percentage rate, against the value of your Stellar order.

To give you an example of what’s out there commission-wise, crypto trading platform Coinbase charges 1.49% on each and every trade action. This is chargeable at either end - when entering and exiting your XLM trade.

Online broker eToro charges no commission at all for trading cryptocurrencies, and there are 15 more on offer!

Stellar Spread

The Stellar spread is best viewed as an indirect spread charged by the trading platform. The spread is the gap between the buy price and sell price of a financial asset.

The wider the gap between the two prices, the more you have to indirectly pay your crypto broker. The tighter the spread the better it is for your potential gains.

If the spread is 2.45%, you are starting your trade by that amount in the red. This means you would need to make 2.45% to break even. Anything over 2.45% you can count as a profit.

Other Stellar Trading Fees

We’ve covered a selection of commonly charged fees. 

Here are a few more to look out for.

  • Deposit/Withdrawals: Some online brokers charge clients a fee for deposits and withdrawals. Coinbase charges 3.99% on all debit card transactions. Over at Binance, clients are charged 2% on every credit/debit card transaction. eToro charges a mere 0.5%, and only if you don’t fund your account in US dollars.
  • Inactivity: Many brokers charge a fee for not actively trading or funding your account. This doesn’t usually kick in until 12 months of inactivity have passed, although some brokers charge after just 3 months. Inactivity fees are usually charged monthly until there is nothing left in your account.
  • Overnight Funding: If you can access Stellar CFDs where you live, you will invariably be charged an overnight funding fee for each day your position is left open. This is often charged at a higher rate on weekends, and is otherwise referred to as a ‘swap-fee’.

All things considered, we have to take our proverbial hat off to eToro. The trading platform charges 0% commission, a deposit fee of 0.5% (if not USD), and super-tight spreads on cryptocurrencies.

Ready to trade Stellar XLM?

How to Trade Stellar 2021 - Step-by-Step Walkthrough

By this point in our How to Trade Stellar Guide, you are probably itching to get started.

To make things run as smoothly as possible for you in your trading pursuits, we’ve created an uncomplicated step-by-step walkthrough.

Step 1: Choose a Stellar Trading Site

The very first thing on your to-do list needs to be choosing a trusted platform to trade Stellar at. There are hundreds of cryptocurrency brokers online, so do watch out for sharks.

With that in mind, we have listed some key considerations when finding an online broker to trade Stellar:

  • Regulation: Is the crypto trading platform regulated by a respected organization like ASIC, FCA, or CySEC?
  • Fees: What fees are you expected to pay to trade Stellar?
  • Payments: What payment methods are supported on the trading platform?
  • Account Minimum: What is the minimum deposit and stake required to trade XLM?
  • Stellar Pairs: What fiat and digital currencies are available to trade against Stellar?
  • Trading Platform: Do you find the trading platform easy to navigate and beginner-friendly?
  • Mobile: Is there an app available?

As is obvious from our list, there is a lot to be mindful of when you are looking to trade Stellar.

If you are still unsure about which trading platform to sign up with, we think highly of eToro - as do most of its 13 million users.

See below some of the benefits trading Stellar via this online broker.

  • The trading platform is regulated by the FCA, ASIC, and CySEC. For US residents the broker is registered with FINRA
  • You can trade Stellar on a commission-free basis with competitive spreads
  • Deposits are processed immediately. Additionally, credit/debit cards and e-wallets like PayPal are accepted
  • At eToro you can trade Stellar against either fiat currencies like the US dollar, or digital coins like Bitcoin
  • The minimum stake is achievable for beginners - at just $25 per Stellar trade

Step 2: Open a Stellar Trading Account

open trading account

Head over to the eToro website - or the broker of your choosing - and sign up. At eToro, this usually takes fewer than 10 minutes end-to-end.

To start, you will need to tell the platform who you are - this is usually your name, address, email, and mobile number.

Next, you will be required to upload a copy of your photo identification - most people use a driver’s license or passport. 

At eToro, if you want to leave this part until later on, you can. However, you will need to hand it over eventually - whether you request a withdrawal or deposit over $2,250.

Step 3: Deposit Funds

You are now free to deposit funds into your new trading account. To trade Stellar, the minimum deposit at eToro is $200.

In terms of payment methods, we find that most brokers accept various types. You should note that wire transfer is the slowest method to trade Stellar.

Crowd-pleaser eToro accepts a variety of fast and convenient payment types, including credit/debit cards, and e-wallets like Skrill, PayPal, and Neteller. The trading platform also uses automated ID validation technology - so you will be able to trade Stellar in no time.

Step 4: Choose Stellar Trading Market

Once your account has been funded, you can select a market. This part is super-easy - just head to the ‘Trade Markets’ category.

Alternatively, if you know what pair you want to trade you can perform a simple search. For example, XLM/JPY, XLM/EUR, XLM/CHF, or XLM/GBP. All of these crypto-fiat pairs are available to trade commission-free at eToro.

Step 5: Place Stellar Trade

At this point, you might need to scroll up for a recap on orders to use when trading cryptocurrencies.

Nevertheless, you can go ahead and place your first Stellar order.

Place a buy order or a sell order depending on your prediction. Click ‘Open Trade’ to execute your Stellar position.

And that’s it - you’ve just traded Stellar. If you used eToro, the process was 1005 commission-free. 

How to Trade Stellar Guide - The Verdict

If you want to trade Stellar competently, this should be done via either an online broker or a crypto exchange.

We recommend a regulated online broker, largely because of the convenience and safety this offers. At eToro, Stellar can be traded against fiat currencies like the US dollar and the Euro, as well as crypto-assets such as Litecoin and Ethereum - just to name a few.

By doing your homework and studying guides like this, you can effectively trade Stellar yourself, from the comfort of your own home. Whatsmore, at eToro, you can do this on a beginner-friendly platform, and on a commission-free basis.

eToro – Best Broker to Buy Stellar XLM 

 

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.

FAQs

Is trading in Stellar safe?

Trading Stellar is safe - assuming that you intend to trade via a regulated broker such as eToro.

How do I trade in Stellar?

The safest and most convenient way to trade Stellar is via a trusted trading platform like eToro. Deposit the minimum $200 using a credit/debit card or e-wallet, and you can trade Stellar for as little as $25.

Can you get rich by trading Stellar?

There will be plenty of traders who will tell you of unforetold riches gained from trading Stellar. The truth is, almost all traders experience regular losses too. Learn the ins and outs of the market, don’t stake more than you can afford, and use a licensed platform.

Is Stellar trading legal in the US?

Yes. Stellar trading is very much legal in the US. Nevertheless, you should note that you are not permitted to access Stellar CFDs.

Can you trade Stellar with Leverage?

Leverage is offered on Stellar at some platforms. However, this depends on the country you reside in. If you are from the US or UK, you cannot access cryptocurrency CFDs or the leverage that goes with them. Whilst you could use an unregulated space - we would recommend avoiding this at all costs.

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