Technology is not only a powerful driver of change and innovation, but it is also a risk. In this fast-paced digital age, the risks associated with the highly volatile cryptocurrency markets cannot be ignored by anyone. Like any asset class that has a long price history and high volatility, investing in Ethereum can potentially yield rewards or losses beyond one’s imagination. To begin trading Ethereum, click the image below.

The post outlines best practices for safe trading of Ethereum regarding fundamentals, technical analysis indicators, and potential risks to investors. Ethereum has rapidly become one of the world’s most exciting and fastest-growing cryptocurrencies, with a market cap of $400 billion as of April 2022. Investors interested in exploring the cryptocurrency markets should apply due diligence and technical analysis testing before committing capital for trading purposes.  

Ethereum trading is prevalent:

Indeed, Ethereum is one of the most popular cryptocurrencies with a wide range of applications. The technological platform has led to the development of various applications, such as smart contracts and decentralized applications. In addition, the Ethereum blockchain technology has inspired many developers to develop their cryptocurrency and other blockchain-based assets.

However, the crypto market is highly volatile due to daily high daily trading and transaction volumes. Traders can achieve short-term gains through trading cryptocurrencies such as bitcoin or digital currencies like Ethereum, but this does not solve your long-term investment goals in digital assets or ICOs backed by existing technology like Ethereum. 

The goal is to prevent losses and achieve real gains from smart investing in cryptocurrencies as long-term assets. So let’s look at some of the best practices for investors who are looking for a quick fix or short-term trading profits without doing any fundamental analysis: 

Short-term trading

The cryptocurrency market is about to enter a bearish phase for the foreseeable future. Many pundits and analysts have predicted that the markets will decline by 20-50% from the current levels. The market has been volatile since its inception, and Ethereum is one of the most popular cryptocurrencies in this space, with a high demand for investment options.

In fact, due to multiple factors, including regulatory fears, negative news reportage, hacking attacks, and other challenges affecting Bitcoin, other digital currencies such as Ethereum are rising fast. So, to reduce risks while trading in Ethereum, the key is well-structured short-term trading or day trading, and considering options to swap ETH to navigate market uncertainties.

Day trading allows traders to capture gains within minutes of buying and selling Ethereum. However, these gains are small and cannot be sustained in the coming months if trends continue as expected. So while day trading Ethereum is not ideal for long-term investment, it allows traders to profit from market dips while capturing smaller profits as time goes on. In addition, it allows investors to enter Ethereum only when prices dip down by 10% or less by buying at lower prices and selling at a higher price.

Best practices to perform day trading:

1. High Liquidity cryptocurrency exchange:

The underlying liquidity of a cryptocurrency is essential to trade during the volatile times of Ethereum. Liquidity refers to buying or selling an asset quickly without affecting the price. For example, if trading levels remain high, one can quickly exit or enter positions without affecting prices. Another option for investors is to exchange crypto for other coins, promoting a more expanded portfolio.

2. Never Halt Trading:

Traders should never halt trading with a position in the markets unless there is a major adverse news report or if they are closing their position entirely. Instead, stop losses and limit orders should be used instead of halting trades. At the same time, in a position, traders should avoid rudimentary analyses like market moving averages as they are not helpful to day traders.

3. Trade on Short-Term Price Movements:

The most common mistake traders make is entering positions and then waiting for the price to move their way. The markets are highly volatile, and even short-term price movements of 5% in an hour can result in massive gains or losses.

4. Technical Analysis Indicators:

Even though the cryptocurrency market is rapidly growing, fundamental indicators are not reliable enough for traders looking to trade smartly. Moving averages, Bollinger Bands, and other indicators help traders to make sense of the world’s fastest-moving markets. Still, they cannot be entirely relied upon to accurately predict price fluctuations and trends.

Investing through index funds:

In a perfect world, investors could invest directly in Ethereum through an index fund or exchange-traded fund, which is already available on the Australian stock exchange. However, since the markets are not yet fully standardized and transparent enough for large-scale investment, this is beyond the current state of cryptocurrencies. 

People can apply the best practices recommended in this guide to investing. They help traders avoid trading losses quickly while also ensuring they have a chance to recoup losses if trends reverse by exiting positions at favorable prices.

Trading is not a get-rich-quick scheme:

Investors need to remember that trading is not a get-rich-quick scheme. While traders can successfully invest in Ethereum through day trading, it should be considered an opportunity for learning purposes on how to take advantage of trends and trading opportunities by identifying where there are potential bottlenecks or weaknesses in pricing or liquidity.

Creating a solid understanding of the market’s workings is essential; these guides can help investors identify trends before going further. Then, if traders decide to trade smartly, they can leverage technical analysis indicators while investing other funds into ICOs or Ethereum, which is already possible through cryptocurrency exchanges.

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