Ripple is a cryptocurrency just like Bitcoin and Ethereum, and according to capital and the market size, it is the third largest cryptocurrency. Like any cryptocurrency, the goal of Ripple is to break free from any kind of financial institution or other such networks that enforce fees while trading. The Ripple network has billions of dollars’ worth cryptocurrency in its account and owns the Ripple XRP, which is its digital coin and one that has increased its value over 40 times in the year 2017 itself.
How To Trade Ripple
When Bitcoin came into light in the year 2017, many other cryptocurrencies went in the light as well. One such being Ripple which was a payment solution and one that came with its own currency called XRP. At present, there are about 100 billion XRPs, and the Ripple network owns 60 percent of them.
- If you have decided to start trading in XRP, you can just follow the next three steps:
- Deciding on how you want to trade your Ripple.
- Finding out how Ripple works
- Exploring the factors influencing its price
- Opening your first trade.
1. Deciding on how you want to trade your Ripple.
The first thing you will have to decide before you start trading Ripple is how you would like to take advantage of the price fluctuations. There are two main ways in which you will be able to trade ripple, and they are-
- Buying and holding ripple with the hope of selling it for a profit.
- Using trading called leveraged trading that can help you speculate on the ripple price movements, wherein you will not have to put down the full value.
For practicing leverage trading, you will have to have CFDs. A CFD is a contract wherein the difference price is contracted to be exchanged regarding the period between which you opened and closed your position.
2. How does Ripple work?
Ripple work as a payment network of gateways and ensures in most cases that immediate transfer takes place, be it any kind of currency and uses its own currency XRP as a bridge to do so.
Gateways are an essential aspect as they connect Ripple to other financial institutions and through which these transactions can be transferred. This can be done for the transaction in the same as well as different currency. Gateways help to price by converting anything in the form of XRP. The currency you want to deal in is first converted to XRP, put through a gateway and turned again when the transferee receives it. XRP can be transferred directly as well.
3. Exploring factors that influence prices
There are a lot of unique factors that affect the price fluctuation of the XRP, and they are-
- XRP supply- Ripple’s cryptocurrency is not mined but supplied by the firm. This means that the currency is entirely under their control which can result in different prices at different times.
- Public perception- Public perception plays an important role here as well; more people that invest in Ripple, higher will be its value.
- Bank’s adopting Ripple- The critical users of Ripple are financial institutions. The more companies and institutions adopting Ripple trading, the more will the value increase.
- Other cryptocurrencies: the more people and companies invest in other cryptocurrencies will make the value fall and the more they invest, the value will increase.
4. Opening your first trade
While opening your early trade, keep the following things on your mind.
- Opening an account
Before beginning your first trade, you will need to make an account with a leverage provider. Since you will only be speculating on the price movements rather than buying it, you will not require software for exchange purposes.
- Developing a plan for trading
You will need a foolproof trading plan that will ensure that you have maximum profits and minimum losses. You may consider the following as well-
(i) What it is that you want to achieve
(ii) If you wish to deal in multiple markets at once or concentrate just on Ripple trading.
(iii) The amount of risk you are willing to take with each trade.
(iv) The risk to reward ratio on your trading.
- Conducting research
You now know how Ripple works and factors that affect the price. So be sure to be aware of the latest developments with regards to XRP. Also, do some technical analysis as to how and when to open your trade.
- Place a trade
Once you have done the above, you are ready to start trading! Choose a web platform that provides for Ripple trading and put up your position which you believe will maximize your profits. If you think that your ripple currency is going to go up then hit buy if not then hit sell.
You can close your position by reversing your original trade, i.e., if you sold to open you buy to close and vice versa.
Now that you are clear with the steps of Ripple trading and what to keep in mind while opening your first trade, you can start your ripple trading and can eventually become a pro at XRP trading