You have probably heard a lot about Ethereum (ETH) lately, given it has been one of the best performing cryptocurrencies this year… but what is it?
Ethereum is an open source, decentralized digital platform based on blockchain technology. Ethereum enables developers to build decentralized applications (DApps) and to create ‘smart contracts’ — a kind of code which allows for specific agreements to be executed automatically.
ETH is the platform’s native multi-purpose fuel that enables transactions to take place on the blockchain, and all ETH transactions are recorded on a public digital ledger available for all to see.
How to Invest in Ethereum
Anyone can invest in and buy Ether. The first step is to create an account with a licensed and trusted cryptocurrency exchange, such as EQUOS. Once you have set up your account and verified your identity, you can begin to buy ETH and start trading. ETH can be traded in a variety of ways, including against other cryptocurrencies or stablecoins and against fiat.
Traders should select a trading strategy that complements their unique trading goals.
This strategy involves traders placing multiple trades throughout the day and speculating on short-term movements to profit from emerging patterns.
This strategy involves traders placing trades frequently on very minor price movements to exploit any price gaps in the market for extremely short periods of time.
This strategy involves spotting a trend as it occurs and holding that position until the trend runs its course or is believed to change.
This method is desirable to anyone opting for a less active role of trading in which the automated trading process responds to market conditions on a trader’s behalf.
A trader will enter and exit their trade by placing orders. Here are the types of orders you will encounter when trading.
This is a buy or sell order. On an exchange, you will be matched with sellers and buyers to meet your order. A market order is fulfilled at current market price.
This is a buy or sell order with a special instruction set by the trader to either buy below the current market price or to sell above the current market price. If the price is not reached, the trade will not go forward.
Stop loss order:
This is a buy or sell order set to a certain price. ETH can be bought or sold at that set price to minimize loss if the market moves unfavorably with your trade. This kind of order remains active until the position is closed or the order is cancelled.
It is important to assess your own risk-tolerance and to inform yourself about the Ethereum market before trading ETH.
So far in 2020, Ethereum is the best-performing cryptocurrency among the top five by market cap. One of the most commonly watched metrics is ETH’s price strength as it tracks against other leading cryptocurrencies, including Bitcoin (BTC) — Similar to how in Forex markets, certain currencies are tracked against the dollar.
As the Ethereum Blockchain drives much enterprise network development as well as DeFi (Decentralised Finance), its price can be swayed by advancements or negative news in this space such as competition from other enterprise networks or high-profile hacks. Similarly, network upgrades can build price momentum.