How to trade Ripple Cryptocurrency?

Hello friends, forex traders!

At the moment, capitalization of cryptocurrencies only grows, as well as public interest in the market itself. This growth is not linear, but very exponential.

However, there comes a point when each new cryptocurrency is faced with the same problem of self-identification. Against this background, Ripple compares favorably – not exactly the cryptocurrency, but it is by no means the customary system of settlements. Today, we will find out what it really is, and what opportunities Ripple provides to ordinary traders, will also consider the strategies and prospects of trading Ripple (XRPUSD)

How Ripple works

Ripple is different from other cryptocurrencies. In fact, it cannot be called a currency, a more precise definition is a protocol for financial transactions. At the same time, the system has its own internal currency – XRP, used for the most part for technical needs of the network. So, each transaction is taken by a symbolic commission (practically invisible), which, in addition, immediately burns out. That is, the amount of currency in circulation decreases with time, which protects the domestic currency from inflation. All XRPs were fully released at the system startup. At the same time, the creators kept to themselves about half of the total amount of currency, so to speak, to maintain the interest of developers.

All mutual settlements in the Ripple network are made in debt. In fact, this is a live implementation of the concept of a network of trusted relationships and there are no transactions in the usual sense of the word. All transactions in the Ripple network are an exchange based on a limit of trust to specific network nodes. In this case, there is no fundamental significance what currency to use. You can issue any amount of any currency. But, in order to exchange this currency, you need to have a line of trust with who you want to exchange with, and in the right amount. That is, everything is built on trust and limits.

Let’s look at an example of a built trust line. Let’s say Alice wants to exchange 500 XRP units for $ 100. Bob wants to make a return exchange, but he does not know Alice. In this case, both Alice and Bob know Carol and are ready to lend her money, up to the indicated amounts. As a result, such a chain is built: Alice owes Carol $ 100, Carol owes Bob $ 100, Bob owes Carol 500 XRP and Carol owes Alice 500 XRP. As a result, there is a mutual exchange and now Alice has $ 100 in the purse, and Bob has 500 XRP.

Main advantages and disadvantages

While most of the crypto-currencies are aimed at creating a single currency, as a rule, without limiting the scope of application, Ripple as a whole changes the notion of the usual settlement system. At the moment, the main purpose of Ripple is the rethinking of international bank transfers. Due to the high transaction speed and partial decentralization, Ripple simultaneously ensures the quality and security of translations, on the whole, is a much more efficient system.

And, although everything looks very bright on paper, introduction to the banking system requires a lot of effort, and lack of a serious motivating factor (material) for the banks themselves does not help. Anyway, it can become a serious obstacle to the popularization of the new settlement system.

The main reason for the community’s concern is the presence of a large number of internal currency networks in the hands of developers. It turns out that in which case the founders can manipulate the course of XRP at their discretion, for example, purposefully depreciating the value of the currency. On the part of an ordinary trader, such a situation does not look very rosy.

Where to take the chart

Bitstamp is the main trading platform for XRP. The currency pair chart can be found through the TradingView service. To open the tool chart, enter the XRPUSD symbol in the field.

For the spring of 2017, the XRPUSD rate rose more than 60 times, but after reaching the peak, it lost 50% of the value. At the moment, the price is moving in the channel from 0.1500 to 0.3000. The current dynamics are negative, in the medium term we observe flat, the long-term trend is upward.

If you want to make money on speculation with the Ripple course – it’s best to do this through a forex broker. This will save you from additional problems with exchangers, commissions and other restrictions that you will certainly encounter when trading currency on the exchange. Right now, the pair of XRP against the dollar is already available for trading in AMarkets, InstaForex.

Trading conditions for AMarkets are very standard. The minimum lot is 0.1, with the same pitch. The standard leverage for cryptocurrency is 1:3 and floating spread. From the pleasant – there are no restrictions on putting stops close to the price.

InstaForex offers almost identical conditions. Here, take into account that the size of the contract is an order of magnitude larger – 10,000 versus 1000 for AMarkets. The main difference is the availability of a fixed spread and lower marginal requirements. There is already a matter of taste and preferences, but the spread will often be lower for AMarkets. Also, stop-levels cannot be put closer than 40 points from the current price.

Trading Strategies

So, we have already found out that a unique idea on the basis of the project significantly reduces the impact of the market on the exchange rate of XRP. It turns out that in the market, Ripple’s cryptocurrency is a good choice for hedging risks.

For example, if you plot a correlation graph with the same Bitcoin, the result is very changeable, and it cannot be called a stable relationship. Here we take into account that a lot of altcoins try to go in compliance with Bitcoin.

Long-term investment is the simplest strategy for earning money. Ripple has great prospects, so buying in a recession, you can make good money on the next wave of growth. If you believe in the future of Ripple, right now is a good time to buy – the rate is just starting to recover after a long consolidation.

However, long-term investment does not mean investing and forgetting. To avoid long-term drawdowns and increase profitability, from time to time the position will have to be adjusted in accordance with the changed situation. The project has an official Facebook page where you can get up-to-date information about changes and innovations in Ripple.

Once you catch a wave, you can hold a position for a long time, doing nothing with it. Given that virtually every next wave has a well-adjusted correction of 61.8% fibo, this level can be used for next purchases by the trend.

Standard technical oscillators, like Stochastic and RSI, work out well. Even without additional filters, the indicators give quite suitable signals for trading, but only if it is a question of large timeframes. On the chart, an example of trading at the RSI exit (period of 5 bars) is from overbought / oversold zones.

Given the relative novelty of the instrument, you can trade Ripple using any traditional strategy. Levels, channels, and graphic patterns work well. To minimize risks simultaneously with Ripple, trade other altcoins, ideally for one strategy. The weak relationship between the courses will help to reduce the total drawdown.

Conclusion

Ripple is, on one hand, a very promising project, possibly with a very large future. But, at the moment, the currency has not yet received full recognition from both banks and ordinary users. Also, the network’s stability to large-scale attacks is not yet clear, and the anti-spam mechanism using additional commissions is clearly not an ideal solution. Nevertheless, this is already one of the largest in terms of capitalization of currencies, and most likely the growth will continue along with the rest of the crypto-currency market.

Regards, Michael

ForexTraderPortal.com