Cryptocurrencies may be volatile, but they are also among the most lucrative assets of the last decade. Most cryptocurrencies since Bitcoin launched have given investors gains in the thousands of percentages. One cryptocurrency that makes it to the top as one of the best digital asset investments is Ethereum.
Ethereum is the second-largest cryptocurrency by market capitalization and one of the most adopted. Today, Ethereum dominates the smart contracts market, and most Dapps are ERC-20 tokens. This makes Ethereum one of the highest potential cryptocurrencies to trade. But with so much volatility in the cryptocurrency market, how do you become a successful Eth trader?
While there is no holy grail to becoming a successful trader, following the steps below can significantly improve your odds of success.
Choose the right broker.
The broker you choose can make or break your potential success as a trader. To increase your odds of success, go for a broker whose interests align with your interests. One of the key factors you need to look for is the ability to borrow for you to magnify your odds of success. They also need to have strong risk management tools to help you protect capital if the market goes against you. Most importantly, choose a broker that has a strong customer care department. This assures you that if anything goes wrong in the course of trading, they can help you take corrective action fast, and minimize the risk of losses.
Analyze the markets well
Ethereum is a cryptocurrency, and cryptocurrencies are known to be highly volatile. This means there is always the risk of extreme losses if things go wrong. However, you can lower the risks by doing a thorough market analysis. Below are some of the key factors to consider when trading Ethereum:
a) Overall market direction when trading
Ethereum, like all altcoins, tends to follow the overall direction of Bitcoin. When Bitcoin drops, Ethereum and most altcoins also tend to fall, and vice versa. In essence, to make the most of an Ethereum trade, it is best to place your bet in the overall direction of Bitcoin. You may probably be wondering, what’s the point of trading Ethereum then? Why not stick with Bitcoin? Well, altcoins tend to outdo Bitcoin in whichever direction it takes. By using Bitcoin for guidance, but investing in Ethereum, you get to maximize potential gains.
b) Ethereum-specific news
Before you start trading Ethereum, make sure to consider the news. News tends to give a particular cryptocurrency a boost relative to other cryptocurrencies. For instance, in August 2021, Ethereum had big news regarding the London fork. This changed Ethereum tokenomics in a big way and saw Ethereum rally for months and test new highs of $4800 in November 2021. By capitalizing on such news, and the ability to magnify gains that comes with using a good broker, you can easily make significant gains by investing in Ethereum.
c) Macro-market news
The cryptocurrency market is heavily correlated to traditional markets more than ever before. For instance, for most of 2022, the stock markets have been bearish due to rising interest rates and geopolitical issues. This has hurt cryptocurrency prices and presented short opportunities for Ethereum. With this background in mind, it is essential to factor in what is happening outside the crypto sphere before trading Ethereum. Awareness of what is happening outside of crypto can significantly lower your risks when looking to trade Ethereum.
Ethereum is the number two cryptocurrency and one of the most lucrative. To make the most of your Ethereum trades, you need to choose a broker whose interests intersect with yours. It would help if you also had an in-depth understanding of the broader market factors. Ethereum does not operate in isolation, and the more aware of the overall market, the better your odds of success.