How to Trade Zcash 2021
The cryptocurrency trading scene is gaining more popular with those seeking a combination of high liquidity and volatility.
As with most crypto-assets, you can trade Zcash against a fiat currency such as the USD, or against other digital currencies like Bitcoin or Ethereum.
For those interested in the cryptocurrency trading market, we have put together a comprehensive guide on How to Trade Zcash in 2021.
Within it, we dive into the basics of this digital asset, order types, risk/reward strategies, and how you can choose an online broker to trade Zcash from the comfort of your home.
What is Zcash Trading?
Zcash (ZEC) is a digital currency designed with one main goal - to ensure the privacy of its users. It started as a fork of the Bitcoin blockchain and soon established itself as one of the fastest-growing digital assets in the space.
Zcash distinguishes itself from Bitcoin with its selective disclosure feature - which guarantees that transactional details such as the sender, recipient, and the amount transferred can be kept private based on your needs.
That said, the market outlook for this digital currency is largely volatile. As is the case of all cryptocurrencies, the financial value of Zcash changes multiple times throughout a single trading day.
When trading Zcash, your aim is to correctly predict whether the price of the cryptocurrency will increase or decrease from its current market value.
In the event that more traders want to access Zcash by buying the digital currency, then the price of the asset will increase. If, on the other hand, there are more people selling Zcash than buying it, the price will fall.
Therefore, forecasting how the market will move and placing your trades accordingly is how you will turn a profit while trading Zcash.
Let us show you a basic example of how Zcash trading works:
- Let's say the current value of Zcash is $75
- This means you are trading the pair ZEC/USD.
- Believing that the price is going to rise, you place a buy order on Zcash.
- Your stake on this trade is $1,000.
- In two weeks, the price of Zcash stands at $76.50
- This translates to gains of 2%.
Since you speculated correctly, you made a profit of $20 on this trade (based on a stake of $1,000).
As evident from the example above, the foundation of trading Zcash remains the same for all asset classes. That is to say, your profit potential depends on how accurately you speculate the market sentiment on the cryptocurrency.
How Does Zcash Trading Work?
The trading rudiments of cryptocurrencies and other financial assets share a high degree of similarity.
Having said that, the trading marketplace for stocks, commodities, and forex has been around for over a hundred years. In comparison, cryptocurrency trading has existed only for a decade or so.
In light of this, we believe the best approach to start trading Zcash online is to first understand the fundamentals of the cryptocurrency trading market.
Zcash Trading Price Movements
If you are considering how to trade Zcash, it is crucial that you know what factors could alter the course of its supply and demand. For instance - current affairs, technological development, economic news, regulation or security of cryptocurrency exchanges.
In simple terms, if sentiment towards the Zcash project is positive, more traders will buy the coin, and this will reflect in its price. Should this enthusiasm towards Zcash fade, the price will consequently decrease.
Whatsmore, you can trade Zcash 24 hours a day, seven days a week, through an online broker.
As you can imagine, the price of Zcash will differ slightly between multiple cryptocurrency platforms. One platform might quote you $93.50, while on the other, you will see Zcash priced at $93.52.
Such a price difference is only common between competing trading platforms, and regardless, has no impact on your potential to turn a profit.
Zcash Trading Pairs
There are two ways in which you can trade a cryptocurrency.
The first option is a crypto-fiat pair, where you trade Zcash against a 'fiat' currency. The best example for this is ZEC/USD - with ZEC as the cryptocurrency and the US dollar as the fiat.
With the US dollar being the de facto global currency, you will find that Zcash is most commonly traded against it.
That being said, some trading platforms such as eToro also allow you to trade Zcash against other major currencies, such as the British pound (ZEC/GBP), Euro (ZEC/EUR), Australian dollar (ZEC/AUD), and Japanese yen (ZEC/JPY).
Most importantly, trading Zcash against fiat currencies can get you access to high liquidity and trading volumes.
The second option is to trade Zcash against another cryptocurrency - as a crypto-crypto pair. For instance, eToro allows you to trade Zcash against Bitcoin (ZEC/BTC), Ethereum (ZEC/ETH), Stellar (ZEC/XLM), Dash (ZEC/DASH), and more.
While trading crypto-crypto pairs, you are speculating on the exchange rate of the trading pair. This requires you to have a firm grasp of both the digital currencies in question.
As a result, beginners often choose to trade Zcash against a fiat currency. Not only is it easier to speculate, but also more simple to quantify your profits and losses.
Long or Short-Term Trading
The cryptocurrency market is riddled with uncertainty. How you take advantage of this volatility depends on which trading route you take.
If you opt for long-term investing, you will be buying Zcash coins - hoping for its price to increase in the future. Traders who prefer this "buy and hold" strategy tend to hold on to their digital currency for weeks, months, or sometimes, even years at a time.
This way, you store the digital asset in your crypto-wallet, waiting for the right time to dispose of these assets and make the biggest financial returns.
Choosing a long-term strategy cuts out the need for you to track the short-term volatility of the market. For this reason, the "buy and hold" approach might be better suited for novice traders.
On the other hand, a short-term trading strategy requires you to be an expert in technical analysis to help your decision-making process. It might take months for you to gain an understanding of chart reading and market analysis.
If trading Zcash on a short-term basis is something you are interested in - your goal is to make modest profits regularly. You can achieve this by trading highly liquid pairs such as ZEC/USD or the ZEC/BTC.
Trade and Own Zcash
As we mentioned above, you can opt for a "buy and hold" strategy if you wish to take direct ownership of Zcash coins. If this is how you want to proceed, it is best to buy the cryptocurrency directly via a regulated online broker like eToro.
With 17 million happy clients, eToro has a longstanding reputation in the trading scene. You can purchase Zcash coins completely commission-free and store them in a dedicated crypto-wallet free of charge.
While at it, it is worth noting that the long-term strategy is not reserved only for beginners. On eToro, you will find traders of all skill-sets investing in Zcash in the long run.
In a short-term trading strategy, you are attempting to benefit from ever-changing movements in the market price of Zcash.
If you prefer to trade Zcash by using a 'swing trading' or 'day trading' strategy- you can opt for an online broker offering Zcash CFDs (Contract for Differences.)
CFDs are derivative instruments that track the real-world price movements of the asset in question - in this case, Zcash.
There are two main advantages to taking the CFD-route:
- CFDs allow you to go both long and short - meaning you can take advantage of bullish as well as bearish markets.
- Zcash CFDs allow you to trade with leverage.
At this point, we should mention that CFD instruments are prohibited in the US as per domestic securities laws. Not only that, as per the FCA, crypto-CFDs are banned for UK citizens too.
On the other hand, those residing in Europe, Australia, New Zealand, and plenty of other regions can benefit from unrestricted access to the Zcash CFD trading scene.
If you are determined to access leverage via CFDs, regardless of whether it is legal in your country or not - you can do so via a third-party cryptocurrency exchange. However, be careful - as in most cases, these platforms are free from regulation.
Moreover, if you choose an unregulated platform, it is unlikely that you will be able to trade Zcash against fiat currencies. Instead, you will have to settle for trading ‘ZEC/USDT’ rather than ‘ZEC/USD’. For those aware, ‘USDT’ is a digital currency named Tether, with its value pegged to one USD.
Would You Consider Investing In Zcash?
How to Trade Zcash Online - Setting up a Trade
A trading order enables you to convey your position to an online broker. There are a few different trading orders that you can use to specify how you want to enter the cryptocurrency market and how you want to exit it.
If you have traded in some capacity before, you might already know the different types of trading orders. Regardless, in this section, we will take a quick look at the most useful orders to trade Zcash online.
Buy or Sell Order
Buy and Sell orders are invariably the most fundamental of all trading orders.
In a few words:
- If you speculate that the price of Zcash is going to rise - you place a buy order.
- If you speculate that the value of Zcash is going to fall - you place a sell order.
All your cryptocurrency trades will require you to create both a buy and sell order. One allows you to enter the market, while the other will enable you to close the trade.
For instance, if you enter the Zcash market with a buy order - you will exit the trade with a sell order - and vice versa.
When opening a Zcash trade with your online broker, you always have the option to specify how you want to enter the market. This is done by choosing between a 'market order' and a 'limit order.
- You place a Market Order when you want your order to be executed instantly. For instance, let's say the price of Zcash is $90.50. You want to trade Zcash at this price - so you create a market order. Your broker executes this right away or at the nearest price available. That said, due to market fluctuations, you might see a minuscule difference in the price you placed the order at and the price it was executed.
- A Limit Order enables you to buy or sell your asset at a specified price level. Once again, let's say Zcash is valued at $90.50. You do not want to enter the market until the price of ZEC increases to $92.00. This is where a limit order comes in. Your broker will execute the trade only if and when Zcash hits the price target, or you cancel the trade manually.
In case you are wondering which order type to choose - it depends on your trading strategy. But, it must be emphasized that limit orders allow you to maintain some level of control over your position - so they are typically preferred by seasoned Zcash traders.
So far, we have looked at how you can enter the market when trading Zcash. When you want to exit the trade, you will be taking advantage of 'take-profit' and 'stop-loss' orders.
Let us help you clear the mist with an explanation of each:
- A Take-Profit order locks in the profit from your trade at a specific level. For instance, when trading Zcash, you can set a take-profit order at 2% above or below its current price. If Zcash reaches the target price, the trade will be closed automatically - securing the profit.
- A Stop-Loss order can be used when you want to avoid losing more than a specific level. For example - if you want to limit your losses to 2% on your Zcash trade, you can set your stop-loss to 2% above or below its current value. Your broker will close the trade for you if or when ZEC coins reach the specified price point.
If you are only learning how to trade Zcash for the first time, you will get a clearer picture of these orders from the example below:
- Suppose you are trading ZEC/USD at a price of $90.50.
- Speculating that the value will rise - you place a buy order.
- If ZEC rises in value by 3%, you want to cash out.
- As such, you place a take-profit order at $93.21
- At the same time, you do not want to risk losing more than 1%.
- So you create a stop-loss order at $89.59.
In this trade, if ZEC/USD rises to $93.21, your broker will execute your take-profit order.
On the contrary, if ZEC/USD falls to $89.59, your stop-loss order will be executed instead.
Most seasoned traders prefer to set up both a take-profit and stop-loss order on the same position, at either side of the current price. This way, regardless of whether it is a profit or loss, the broker will close the trade automatically - at prices pre-determined by you.
How to Make Money Trading Zcash
The specifics of trading Zcash are not so different from that of the likes of stocks and commodities. While trading orders give you a certain control over your positions, there are a few more considerations that determine your ability to profit from trading Zcash.
Here are some key metrics that will influence the outcome of your Zcash trades.
First and foremost, how much you can profit when trading Zcash depends on how much you are willing to risk. In trading, this amount is called a stake.
As you can imagine, the more you stake, the higher your potential profits - as well as your losses.
To give you a better perspective, say you stake $1,000 on Zcash and make a profit of 5%. This means you gain an equivalent of $50. If you had increased your stake to $5,000, you will be making a profit of $250 on the same trade.
That being said, it is always best to determine your stake based on the amount you have in your trading account. Traders call this a "bankroll management strategy" - where you set out to take no more than a certain percentage of your available trading funds.
For example, the majority of seasoned Zcash traders have a strategy to risk no more than 2% of their balance. So, if you have $2,000 in your account, you will stake a maximum of $40 on a single Zcash trade.
Now, most online brokers will require a minimum stake amount to start trading Zcash. At eToro, you can begin trading Zcash with as little as $25 - making it possible for you to have a bankroll management strategy that best fits your budget.
Zcash Trading Leverage
If you reside in a country where CFD trading is legal, you should be able to get access to leverage. While trading with leverage can certainly boost your profits, you should also bear in mind that if you make the wrong prediction - your losses will be magnified.
Let us give you an example of Zcash trading using leverage:
- You place a buy order worth $1,000 on ZEC/USD.
- You apply leverage of 1:2
- Zcash rises in value by 5%.
- With no leverage, your profit on this trade is $50
- Since you applied leverage of 1:2, your profit now amounts to $100
As evident from this example, leverage can magnify your profit potential exponentially.
Some brokers offer leverage as much as 1:50, or even 1:100. Before you trade with them, always check whether the brokerage is licensed with the proper regulatory bodies. If not, it is best advised that you stay away from them.
Fees to Trade Ethereum Online
Most online brokers will charge you a fee to trade Zcash on their platform. The specifics of these fees will depend on your chosen broker.
To give you an idea of what kind of fees you can expect, we have prepared a list of the most common typically charged by online Zcash brokers.
Zcash Trading Commission
Trading platforms charge you a commission every time you enter and exit a trade. A commission is usually calculated in percentage terms against the size of your stake.
To give you a picture of what's out there - Coinbase charges you a 1.49% commission to trade Zcash, once when you enter the trade and again when you exit it.
In stark contrast, at eToro, you can trade Zcash at 0% commission. Instead, you will only be required to pay a competitive spread - more on that below.
In simple terms, the spread is the difference between the buy price and sell price of the tradable asset. When trading Zcash, you want to look for tighter gaps between the two prices - so that you will pay less to your online broker.
The tighter the spread, the more of your potential profit you can keep for yourself.
For example, if the spread is 1.90% on your Zcash position, you are beginning your trade at a 1.90% loss. In other words, you need to make 1.90% in profit to break even on this trade.
Other Zcash Trading Fees
Commissions and spreads are only the most basic of fee types your online broker might charge you. In addition, you are likely to come across an assortment of administrative fees while trading Zcash.
- Deposits / Withdrawals: Some brokers might charge you a fee for making deposits and/or when processing withdrawals. Over at eToro, you have to pay a small 0.5% fee to deposit funds, applicable only if you don't fund your account in US dollars.
- Inactivity Fee: Most traders require you to pay an inactivity fee for not maintaining minimum activity on your trading account. This fee is charged on a monthly basis, after a certain period of no activity - most commonly after 12 months.
- Overnight Fee: Also called a swap fee, this fee is charged when you keep your trading positions open overnight. You will have to pay the fee for each day until you close the trade. This is usually only the case if you trade CFDs or apply leverage.
Ultimately, if not careful, these additional fees can invariably eat away your profits. As such, we stress that you check the fees and commissions you are liable for before choosing a Zcash trading site.
Ready To Dive Into Zcash Market?
How to Trade Zcash 2021 - Step-by-Step Walkthrough
By this point, you should feel ready to start trading Zcash.
We have covered the fundamentals of cryptocurrency trading, order types, and how you can manage your risk/reward strategy to maximize your chances of success.
Our guide on How to Trade Zcash will now tell you the steps you need to follow to start trading this digital currency right now!
Step 1: Choose a Zcash Trading Site
One of the first things to do is find a regulated and respected online broker for your Zcash trading endeavours.
The fintech sector is overcrowded by trading platforms - both good and bad. It is essential that you do your homework, so you never entrust your hard-earned money to the wrong hands.
Here are some of the factors you need to consider while searching for an online broker to trade Zcash:
- Regulation: Does the online broker hold a license from a respectable regulatory body like the ASIC, FCA, or CySEC?
- Fees: How much do you have to pay as commissions, spreads, and other trading fees?
- Payments: Which payment methods does the brokerage platform support?
- Minimum Deposits: Does the broker require a minimum deposit amount and stake required for you to start trading Zcash?
- Zcash Pairs: Which Zcash trading pairs does the site offer?
- Trading Platform: Is the platform user-friendly for traders of all levels?
- Mobile App: Does the broker site offer a mobile app to trade on the go?
It is obvious that there is a lot to consider before you sign up on a Zcash trading site.
We highly recommend that you only go for regulated platforms that ensure that your rights as an investor are protected. For example, eToro is regulated by three respected bodies - CySEC, ASIC, and the FCA.
If you haven't put a pin on a broker yet, we recommend that you explore eToro first. The social trading platform offers you heaps of Zcash trading pairs, among other cryptocurrencies and financial instruments.
The platform has perfected the user experience for both beginners and seasoned traders alike. If you are a newbie trader, eToro has features such as the 'Copy Trader' - that allows you to invest in and copy the trading strategies of an experienced trader.
Most importantly, you can trade Zcash at zero commission and gain access to competitive spreads. The minimum stake required on cryptocurrencies is also quite achievable for traders - at only $25 per trade.
Step 2: Open a Zcash Trading Account
When you have chosen your regulated online broker, you can proceed to open an account with them. You will be required to provide your basic personal information, including your name, address, contact details, and date of birth.
At eToro, this process takes less than 10 minutes. As a regulated broker that complies with KYC rules, eToro will also ask you to verify your account with a photo ID. However, you do not have to do this until you need to deposit more than $2,250 or make a withdrawal.
Step 3: Deposit Funds
Next, you can add funds into your trading account.
eToro accepts a range of payment methods, such as wire transfers, bank cards, and e-wallets like PayPal or Neteller.
Step 4: Choose Zcash Trading Market
With your trading account fully funded, now you can choose the Zcash market that you wish to trade.
On eToro, you will find Zcash traded against both crypto-crypto and crypto-fiat pairs. To find the respective trading market you are interested in, you can simply search for it.
Step 5: Place Zcash Trade
At this point, all that is left for you is to place your first Zcash trade. If you need a quick refresher, you can scroll up and read our section on "Setting up a Zcash Trade" once again.
If you are confident about your prediction, go ahead and place your first buy or sell order. When done, you can hit "Open Trade" to execute your trade. And that's it!
How to Trade Zcash Guide - The Verdict
Cryptocurrencies were one of the top-performing asset classes of 2020. Learning how to trade Zcash can take time, but it is well worth the effort.
No matter which trading strategy you choose, make sure that you trade Zcash only through a top-rated and regulated cryptocurrency platform. As we have mentioned numerous times in this guide, eToro has caught our attention in many regards.
By choosing eToro, you stand to benefit from commission-free trades and competitive spreads on all financial assets. Best of all, this regulated platform is perfectly user friendly and welcoming to all beginners.
eToro – Best Broker to Buy Zcash
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.
- Is trading Zcash safe?
Yes - Zcash trading is safe. However, we recommend that you choose an online broker with a license from the FCA, CySEC, or ASIC.
- How do I start trading Zcash?
All you need to do is sign up on a regulated trading site and deposit funds. At eToro, you can start trading Zcash from as little as $25.
- How can I make money by trading Zcash?
As with any asset, you will have to speculate the market correctly to make a profit on your Zcash trade.
- Can Zcash be traded legally in the US?
Yes, trading Zcash is legally allowed in the US. But, Americans cannot trade Zcash CFDs.
- Can I trade Zcash with leverage?
Yes - if trading with CFDs is permitted where you reside, you can apply leverage through a regulated broker.