How To Trade Ethereum Classic - Step-by-Step Guide
Today, we wanted to talk about how to trade Ethereum Classic in 2021, as the cryptocurrency still represents one of the more popular cryptos, even though it trades as the 50th-largest coin by market cap currently. It is important to remember that trading is a time-consuming activity that requires regular monitoring of the crypto market.
Only by keeping a constant watch can you spot opportunities to buy low and sell high. Also, by studying the token’s past performance, staying informed about news, you can make price predictions and know what to expect next.
Ethereum Classic Trading Summary
Of course, trading anything can be quite complicated, and trading relatively new and unstable assets like digital currencies is even more risky than usual. However, skilled traders are still able to make things work by employing various trading strategies and taking advantage of the price volatility.
Trading must be done only through strict rules and strategy that ensure that the trader is as efficient as possible.
Some traders prefer trading derivatives, such as crypto CFDs, options, and futures, where they do not own an asset, but only bet on its future price. This can be a good way to earn money even when the prices are falling, which is what made it very popular over the past few years.
All in all, trading can make traders earn a decent income if they are careful, patient and determined.
Start Trading in 3 easy steps
Before you put your money on the line, you need to know what it is you are going to do. You need to pick a coin—Ethereum Classic (ETC) in this case—and study its past performance, recent price behaviour, and decide on how you wish to approach it by studying various strategies.
The next step is to find a platform that offers ETC—preferably with as many trading pairs as possible—and register on it. On most platforms, you will also have to verify your identity, although some platforms still let you trade anonymously. Keep in mind that they might not be regulated, and for your own safety, choosing a regulated platform is a better option.
With an account ready and verified, and a clear goal in your mind—all that is left is to deposit money and start trading. If you are trading derivatives, you can go long or short, depending on what you expect from the price. If you are trading ETC itself, the process is even simpler—buy low, sell high. The trick is to know when the price reached its bottom, and when it is only making a quick break before continuing its drop.
Find the Right Place to Trade Ethereum Classic
Finding the right place to trade Ethereum Classic is one of the most important steps when starting. For your convenience, we have analysed numerous trading platforms and exchanges and selected the ones that offer the best terms for trading.
Ethereum Classic Trading Explained
Coin trading is simple enough to understand when it comes to concept, although it can be quite challenging to do in practice. The biggest reason for this is cryptocurrency volatility. Due to volatility, crypto prices are constantly moving up and down.
These changes can go from a few cents to even hundreds of dollars at a time.
Now, every trader monitors the market and has their own expectations. Some believe that the prices will grow based on signals that the market is sending, while others believe that it will drop. Those who own the coins and expect the price to drop will attempt to sell the coins. Those who believe that the price will grow are coming to buy. Obviously, if you buy when the price is low, and it grows—you sell the coins again when you are satisfied with the growth, and profit from the difference.
But, what if you wish to trade crypto and the price doesn't move in the favourable direction? Well, that's where crypto derivatives come in. Derivatives are contracts that use an underlying asset to establish value.
They allow users to bet on the future price of the underlying asset, and they can profit if they predicted the price movement correctly. This is useful as you stand to earn money even if the price is dropping—as long as you predicted the drop, of course.
If you believe that the prices will rise, you "go long," and if you expect a drop, then you "go short". You can also increase your earnings by trading with leverage. Trading with leverage, or margin trading, basically means that you trade partially with your own money, and partially with the money provided by the broker or exchange that you are using.
This allows you to purchase assets of greater value than the amount of money that you yourself have at your disposal. The benefit of doing this is a much greater reward if you get it right. However, you also get a lot less room for mistakes, and it gets easier to lose your entire investment.
Traders often make the mistake of trading with leverage without understanding the risks, and some even go into trading without any strategies or a plan at all. This is a sure way to lose your money, and something that you should definitely try to avoid. There is a lot of research to do, but it will all be worth it.
Trade Ethereum Classic: Establish a Proper Plan
We cannot stress enough how important it is to have a proper plan before you start trading. But, how do you make a plan for trading ETC? Well, first you need to understand the coin, including how it works, and pick up a few skills along the way. For example, you should:
Understand What Moves the Price of Ethereum Classic
Crypto prices move for two reasons—either they follow their natural cycle, or they are influenced by outside events. These are fundamental reasons for price movement, and they can be understood through fundamental analysis.
What does that mean? Well, essentially everything that might influence investors to want to buy or sell the coin. Crypto prices are not tied to any real-world asset, so their prices change depending on supply and demand. If people believe that the coin's price will grow, they start buying. In doing so, they make the price grow. This is how supply and demand work.
The more people want something, the more it is worth—especially if it has a limited supply such as cryptocurrencies. And why would people think that the price will grow? That idea could easily be triggered by news, or regulations, or some new benefit that the project has achieved through development, such as network stability.
If it gets adopted by merchants and can be used for payments, that is also a reason for a price surge. Also, technical outlooks, roadmaps, analysts' optimism, or anything else that is in any way positive or negative could cause investors to rush to buy or sell.
Technical Analysis: Read the Charts!
Another skill that you need to learn in order to trade cryptocurrencies successfully is to read the charts. Charts can be very useful if you know how to handle them. They offer various information, such as price movement, different patterns, trading volumes, moving averages, and more.
All of this information can indicate which way the price will grow in the future. We mentioned already that prices tend to follow patterns, and so if there is a pattern where the price rapidly grows, then calms down, and then rapidly drops—investors pick up on that. Then, when the price starts behaving in a similar way again, they recognise it and act accordingly.
The price always fluctuates, but you can recognise its bullish nature by making a point of how low it gets each time when it drops. If the lowest point of each drop is higher than the lowest point of the previous one, then the price is following a bullish trend. There are many things to learn when it comes to reading a chart, but it is important to know that charts alone do not guarantee success.
As mentioned in a previous section, it is enough for one particularly good or bad news to completely change the situation, and the coin could abandon the pattern that the chart indicated, so always keep a close eye on that.
Common Strategies to Trade ETC
Scalping can be a common strategy for any coin, but especially for those that only make smaller fluctuations, like ETC. Essentially, it revolves around buying coins and then selling them back very quickly, to take advantage of even the smallest changes in their price. It is a form of Day Trading, which is another strategy, although a more refined form, as some tend to say.
As mentioned, another strategy that you can check out is Day Trading. This is pretty much what the name suggests—a trading strategy where you buy and sell within a single day. Unlike scalping that often only lasts for a few minutes, or even seconds—day trading can take hours, or even the entire day. But, as long as you buy and sell within 24 hours and you do it in a way that secures profits for you—you are a day trader.
News Trading for ETC
Another popular strategy in the crypto industry is news trading. As mentioned before, any news can trigger a price surge or a price drop. There are traders out there who keep track of all developments regarding their project of interest. As soon as some major news hits the media, they rush to buy in anticipation of a price surge/drop.
Choose a Platform that Fits your Trading Strategy
When it comes to trading, you need to choose not only the best trading strategy, but also a good platform that will fit your trading strategy properly. Here, you will have to choose between crypto brokers and crypto exchanges/derivatives exchanges.
As always, the choice is yours, and it will depend primarily on what strategy you choose. However, keep in mind that brokers are probably a better choice, thanks to the fact that they are properly regulated and licensed by the regulatory authorities. Exchanges are becoming regulated, but most are still far from being officially recognised.
If you trade on unregulated platforms, you do not have a guarantee that your funds will be properly protected. Of course, the exchange will claim so, but you often do not have legal protection, and if the exchange disappears, the authorities will consider it your fault for using an unregulated service.
Brokers, on the other hand, are intermediaries, and they can be regulated based on the current laws in most countries. As such, they are safer and better for traders to use.
Set Up Your Trading Account
Setting up an account on pretty much any exchange or broker platform is relatively the same, and rather simple. If you have ever made an account anywhere, you will know what to do and how to do it.
Simply go to the platform of your choice, hit ‘register,’ and fill out the form that requires your name, email and other similar information. Once you create your account, you will have to go to your email address and verify it. The last step will be verifying your identity. It must be done, as all legitimate platforms are obligated by the law to require it.
Verifying your identity is very easy, too. All you need to do is upload the photos of the documents that the platform requires of you, and give it some time to review them and confirm that you are, indeed, you. This used to be a lengthy process, but it is getting faster and better.
After that, all that remains is to deposit some funds and start trading.
Open your First Ethereum Classic Trade
The next step is to open your first ETC trade. Now, the procedure is slightly different on each platform, but it is also the same in essence on every platform. The part that differs may be the exact location of the trading window, or terminology used, but in the end—all you really need to do is to find a buy/sell window and choose what to do. Here is what you need to know in order to do this.
The first thing to know is that there are several different order types available to you. You get to choose from Market Order, All or None order, Limit Order, Stop-Loss and Trailing Stop-Loss, Immediate Or Cancel Order, and more. A limit order allows buying/selling at a predetermined price and stop loss orders help to control losses by executing sell orders automatically on behalf of the user. Market order allows purchase at the prevailing current market price.
Each trader has the type(s) of order that they prefer most. For example, a lot of people prefer to use the limit order, rather than the market order, so that they would ensure a better Buy/Sell price. It simply gives them more freedom to set up their trade the way they like it.
Buy or Sell?
Next, you have to choose between buying or selling. This can also change depending on the platforms and brokers, so a regular exchange will offer the "vanilla" buy/sell options, while buying securities uses different terminology, such as bids/asks.
There are also entire order books, which are basically crypto exchanges' lists of open orders, currently available for any trading pair. If the order is open, that means that the investors are looking to buy or sell crypto assets, and you can consider that to be true for as long as the order is not closed. After that, your opportunity has gone, and you will have to wait for the next trader to open an order.
One common question among new investors and traders is how much money to start with. The fact is that there is no universal answer. You should start with the amount of money you feel comfortable using.
Of course, we do have another piece of advice, and that is to use only the minimum requirement in your first few trades, so that you don't experience great losses if you don't get it right the first time. This is quite common, and not a reason to worry, but you should be cautious.
Lastly, remember to never trade more than you can afford to lose. This is the golden rule that, if you follow, will help you avoid losing everything.
Leverage on Ethereum Classic
Another common question is leverage. Now, we have mentioned it briefly earlier—how margin trading, or trading with leverage is a way to borrow the money from the exchange and purchase an asset in a greater amount than what you can afford to buy on your own.
However, we also noted that trading with leverage is extremely risky, as your increased reward also reduces the room for mistakes. In other words, you need to be extremely precise, which is impossible for new traders to achieve. So, if you are interested in trading with leverage, it would be best to learn about it, read about it, observe it, but still wait until you gather enough practical experience from regular trading first.
Stop-Loss and Trailing Stop-Loss
We mentioned stop-loss and trailing stop-loss earlier. These are order types, but also play a large role in risk management.
A stop-loss order is an order where you set a certain level below the current market price of ETC. If the ETC price starts dropping, and it touches the level that you marked, your order will automatically be closed. The benefit of doing this is that you won't lose too much money by having the price fall too deep before you can react.
Alternatively, there is a trailing stop-loss, which works similarly, but it is arguably a better tool. It works like this: When you enter the market at a certain price, you still select a level where the order should be closed automatically if the price starts dropping.
However, in case the price starts rising, the stop-loss level increases with the price, by a certain percentage. That way, you can even make profits by using this tool, instead of simply preventing losses.
Take profit is pretty much the same thing as stop-loss, only reverse. This time, you are not ensuring the prevention of losses by selecting a price below the price of the asset. Instead, you are securing gains by selecting the price above the asset's market price.
In other words, you select a level above the price that the asset has at the moment when you entered a position. If the price starts growing and it reaches the selected level, your order is automatically closed and you will take profits. It is a good way to ensure that you will earn some money before the price starts dropping, if you can't afford to keep an eye on the market constantly.
Lastly, there are a few more terms to mention that you will likely run across sooner or later while trading ETC, and you should definitely know what they mean.
Commissions, for example, are fees that you need to pay on exchanges in order to make use of their platforms and services. Then, there are various triggers, which are used as signals when to enter a trade and when not to. Basically, each trader decides under which circumstances they will enter the trade, or what events in the market will serve as triggers. If they are patient enough, they will not move before the trigger is reached. This ensures that they won't trade emotionally, but based on sound analysis and forecasts.
There are plenty of other terms, such as used margin, which is credited back to available margin whenever you square off your positions, or pips, which is a term representing the price move in a given exchange rate.
Open your Ethereum Classic Trade
Once you set up everything mentioned above, from the size of your order to order type, and everything in between, it is time to click on Execute, and open the trade. Hopefully, you have done your research and analysis correctly, and you did not rush into the market blindly.
We would also suggest reviewing the order one more time before clicking that button, just to be safe. The trading industry can be strict, and even cruel, and you will pay for your mistakes. Best not to make them in the first place.
There are two ways to close orders when it comes to ETC trading. The automatic order closing comes if you have a stop-loss or limit order, or some other risk management tool in place. As the price reaches the selected values, your position will close. And, of course, there is always the option to close it yourself, manually. You can do it at any time with a single push of a button.
Final Thoughts: Ready to Trade Ethereum Classic?
With everything we have been through above, you should have most of the information you need. We did not go into great detail for every single term or strategy in the crypto industry, as it would have taken several books to write all that. But, we do leave you with some guidance on what to look up if you don't already know what it is, and where to start learning.
Remember that trading ETC comes as a great opportunity, but that the other side of the coin promises great risk. The two come combined, and you must be aware of both.
Frequently Asked Questions
Yes, ETC is a perfectly legal and legitimate cryptocurrency that you are free to use in most jurisdictions but check your local laws before trading.
Nobody can tell what will happen in the crypto industry or how it will behave down the road. There are certain predictions, but that is mostly what they are. ETC could grow, but it could just as easily see a price drop, or remain where it is. This is something that each trader needs to consider on their own.
Ethereum Classic is actually the old Ethereum. However, at one point, Ethereum decided to take a different road and it hard forked away. Those who liked it the way it was renamed the original chain into Ethereum Classic.
Yes, Ethereum Classic is one of the projects with the purest form of decentralisation, and as such, it might be viewed as the project that all cryptos should look up to, at least in terms of handling their networks.