Trading Ethereum: A simple guide for beginners

By Anita Jaynes on 26 November, 2020

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Although Ethereum was released almost seven years after Bitcoin, it has continued to see strong growth and is now attracting interest across the globe. Most of its growth has been due to its role in the decentralisation of the finance ecosystem. In this article, we are going to look at how you can start trading Ethereum as a beginner.

Choose an Exchange

Before you can trade Ethereum, you need to choose a cryptocurrency exchange. The exchange will take the money or cryptocurrency you have and give you Ethereum. When deciding which exchange works best for you, you will need to do a bit of research.

In your research, you will be comparing which Ethereum pairs are available in crypto exchanges, the fees they charge, how secure they are, and their reputation. If you notice any red flags such as overwhelming negative reviews online, walk away immediately.

Once you choose an exchange, all that remains is to sign up for an account and connect your bank account and your debit or credit card.

Choose a Trading Strategy

Ethereum can be traded in lots of different ways, including against other cryptocurrencies and fiat. A common strategy is using bots to exit trades when the price of Ethereum reaches a certain point. 

Some also enter into agreements with brokers where they say whether they think the price of Ethereum will go up or down. If the price rises, the broker pays the difference in the price of Ethereum between the start and the closing of the trade. If it falls, then they end up making a loss.

Buy-and-Hold Strategies

Both of the ways explored above to trade Ethereum are not the best strategies for beginners. This is because they require an in-depth understanding of the market as well as constant monitoring so you can execute trades at the right prices.

A hold-and-buy strategy involves buying and holding Ethereum in anticipation of its price increasing. A buy-and-hold strategy is perfect for beginners because it is easy to understand and it is the least-involved strategy. It is also viewed as a long-term strategy because it works the same way as trading stocks does.

If you want to use this strategy, find a reputable exchange because they will be holding your money for a long time. Next, you need to purchase Ethereum and leave it alone. You can check up on it to see if the price has risen to the levels you wanted when you bought Ethereum. Once it does, you can then sell the Ethereum for fiat or trade ETH to BTC. An ETH to BTC trade is where a trader uses Ethereum to purchase Bitcoin. Note that they can do this with other cryptocurrencies depending on the trading platform they use.

Think Ahead

When trading Ethereum, it is important to think ahead. You need to think about the strategies you will use beforehand, although if you are a beginner the buy-and-hold strategy works fine, how much you want to invest, and how much you are ready to lose. By doing this, you will not let emotions dictate your trades and actions.

Conclusion

Trading Ethereum can be profitable if you do it right. The most important things to pay attention to are choosing the right exchange and the strategies you are going to use. Since you are a beginner, choose a reputable exchange to lower your risk and avoid aggressive trading strategies as those are a recipe for disaste