Ripple is the fourth most capitalized cryptocurrency in the world. The coin recently dropped out of the top three after it lost its position to Tether Stablecoin. We will take a look at the best XRP trading strategies and explore different ways to trade Ripple in a portfolio. But first, let’s briefly recap what Ripple is all about.
XPR was created in 2012.
The maximum allowable issue is 100 billion coins.
There are currently 44.3 billion coins in circulation.
The maximum price was reached in January 2018 at $3.84 per coin.
The goal of Ripple was to reduce the cost of cross-border money transfers.
The base for payments is the RippleNet network.
An important point to consider before trading XRP is concerns about the coin’s inflated issuance, which could mean a loss of value for the asset over time. In addition, a recent study showed that most current coin holders are in deep negative territory because they entered the asset at a price 7 times the current levels.
While bitcoin has further managed to show several periods of impressive growth since reaching its highest levels in December 2017, the same cannot be said for Ripple.
At the time of writing, Ripple was trading 53% below its record high of $20,089. At the same time, ETH was 83.5% below its all-time high of $1,432. And now let’s take a look at XRP – the coin lost 95.1% of its capitalization.
Those new to trading Ripple should note that, unfortunately, this asset does not boast the same performance as its competitors. Among the 25 coins compared in terms of capitalization, with the exception of bitcoin, Ripple performed the worst during the first quarter of 2020.
However, this could also be a forfeit if you are just thinking about how to trade Ripple. Assessing market trends and position relative to leading digital currencies can help you make the right decision.
If you decide to start trading Ripple, it is very important to determine in advance the price levels that will cut off and determine the returns.
CFDs are often used to trade XRP. With the right approach, this tool allows you to make money on rises and falls, and there is no need to own the underlying asset, which eliminates a lot of risk.
There are two types of CFD. Long CFDs are used for growth and short CFDs are used for fall.
Let us consider an example: you want to short sell 10,000 XRP at a price of $0.22. If you close the position at $0.19, your profit will be $300, but all of it will be eaten up by fees and commissions.
The crucial factor in answering the question of how to trade Ripple is the ability to use technical analysis and deeply study price charts. This data can be an important source of useful information about what might happen next. Next, let’s take a look at the factors that influence the price of Ripple.
There are other strategies for dealing with XRP. For example, spread betting, which is essentially betting on whether an asset’s quotes will rise or fall in a predetermined time frame. Some trading venues offer to purchase Ripple futures, which are a commitment to buy or sell XRP on a set date.
CFDs, spread betting, and futures also allow for margin trading, which means borrowing money from a broker to increase a position. Once you start trading Ripple, you should always keep in mind that trading with leverage can lead to more profits as well as losses.
After we have familiarized ourselves with the ways to trade XRP, let’s discuss the platforms where you can make transactions.
There is an important caveat here – liquidity is the main requirement when choosing a platform. That way, you can guarantee yourself that there will always be enough buyers and sellers to trade, and that orders will be filled without delay because if you don’t, you run the risk of losing money during periods of volatility.
In the same way, you have to choose a crypto exchange: pay attention to their reputation and reliability, because many exchanges experience mass market crashes during periods of high volatility, which leads to traders not having access to their assets and missing opportunities to take advantage of strong market movements.
Next, pay attention to spreads – they should be small. Spreads are the difference between the closest buy and sell bids in pairs, which in our case would be XRP/USD.
When trading Ripple, it is advisable to use the full arsenal of tools necessary to protect your investment from losses and keep profits. Stop-loss orders ensure that positions will automatically close when drawdowns fall below acceptable levels. Take-profit orders allow to close positions when planned levels are reached and fix profits.
We cannot say with certainty what we can expect from Ripple in the near future. It is important as you dive into XRP trading to closely monitor all news background and historical data on this cryptocurrency to ensure that your strategy does not lead to undesirable results.