Monday, January 22, 2018

How to Trade Ethereum (Ether) - Beginner’s Guide

 

Ether (ethereum), the world's second largest cryptocurrency has been growing exponentially. Read this handy guide to learn all about what influences the price of ether, how it was invented, what it is correlated to, and gain the knowledge you need to master this powerful cryptocurrency! Start your ethereum trading journey today.

 

Origin of Cryptocurrencies in a Nutshell

Bitcoin, the first decentralized cryptocurrency, was created by an anonymous person (or persons) using the pseudonym Satoshi Nakamoto. Satoshi also mined the ‘genesis block’ of bitcoins in January 2009.

Bitcoin is the world’s largest cryptocurrency and its market capitalization has expanded tremendously. For example, on June 11, 2017, its market cap was more than 48 billion dollars.

 

The Invention of Ethereum

An innovative young lad named Vitalik Buterin, through his ambition to completely transform the internet, invented a platform on which developers could build any type of decentralized application.

Having a thorough understanding of Bitcoin, Vitalik suggested that it needed a scripting language for application development. When nobody was interested in his suggestion, he proceeded with his work on his powerful new project.

In 2013, Vitalik published a white paper describing this dynamic new platform which he called Ethereum. For his incredible innovation, he was named as the 2014 Thiel Fellow and received a $100,000 award.

After this, the young man dropped out of the University of Waterloo to pursue his Ethereum ambition. With the help of other developers and co-founders, the project was quickly shifted into overdrive.

With a very successful crowd sale in July 2014, they raised more than $18 million by selling ether, the Ethereum tokens which were basically the shares of the project.

How to Trade Ether 1

Bitcoin and ether, the world's largest virtual currencies.

 

Ether is also used to pay for transactions and computational services on the Ethereum network.

A year later, their first release called Frontier was launched on July 30, 2015. A new platform was now available on which developers could create their own decentralized apps and smart contracts.

Ether is the second largest cryptocurrency in the world and at one stage in 2017 it had a market capitalization of almost $38 billion. This interesting financial instrument has grown at an unbelievable pace!

How to Trade Ether 1
Ether Daily Chart (eToro) - A Portion of 2017 Price Action

 

The closing price on 28 February was $15.7305 and the price closed at $92.9766 on the 6th of May. That’s an incredible gain of 491%.

 

How to Trade Ether

It is highly recommended to trade ether with reliable, well-established forex brokers.

One such broker is eToro. eToro doesn't offer leverage on ether but there are other brokers that offer leverage, of course. Some of these firms offer as much as 33X leverage.

Some brokers offer a variety of ether pairs which include not only ETH/USD (ether/U.S. dollar), but also ETH/BTC (ether/bitcoin), ETH/EUR (ether/euro), ETH/CAD (ether/Canadian dollar), and ETH/GBP (ether/British pound).

Because of the volatility of ether, traders shouldn’t trade it with much leverage. Zero leverage is the safest, of course. Because of the massive growth in the price of ether, ‘buy and hold’ has been an excellent strategy. ‘Buying dips’ has also worked really well, although traders would have missed out on a number of great opportunities if they only used this approach (on the daily timeframe, at least).

*Would you like to learn more about trading Bitcoin, follow this link to an article dedicated specifically to: How to Trade Bitcoin - Beginner’s Guide.

What Moves the Price of Ether?

Because ether is still a rather young cryptocurrency, its price is largely affected by events related to its development.

As mentioned earlier, ether is a value token which is used to pay for transactions and computational services on the Ethereum network. Consequently, the expansion of the Ethereum blockchain and related services will obviously impact the value and the price of ether.

A really important external factor that influences the price of ether, is the price of its big brother, bitcoin. When money flows into bitcoin, ether and other cryptocurrencies usually benefit from it.

The reason for this correlation is because cryptocurrencies belong to the same market sector, so to speak. When the price of bitcoin increases, the general market perception is that the cryptocurrency market is ‘healthy’ and also a viable investment option.

Since ether is the second biggest cryptocurrency, it comes as no surprise that it is strongly affected by the bitcoin price and sentiment.

 

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