Ripple (XRP) is the world’s third-largest cryptocurrency behind only Ethereum (ETH) and Bitcoin (BTC). With so many people buying and trading XRP around the world, there are plenty of opportunities for traders and investors to make money form this exciting and fast-growing currency. In the past few years, Ripple has been gaining a lot of attention from investors after it increased in value by 40 times during 2017. Of course, anyone who owned a substantial amount of XRP during that time was very fortunate. However, even without absurd value increases like that, you can still generate profits by trading XRP on a regular basis, especially if you do your research and heed the following tips:
1. Make Money By Trading XRP/USD
Trading XRP against the dollar has become a popular practice for many savvy cryptocurrency traders, as it provides the opportunity to generate a desirable daily return. However, as with every other form of trading, there will always be risks involved and you could also lose money. One way to improve your chances of doing well with Ripple is to trade using Contracts for Difference (CFDs). This is a more strategic method of leveraging the ongoing growth of the market.
2. Study Trading Psychology
Any time you’re venturing into a new form of trading, it’s important to practice restraint, be strategic, and understand trading psychology. Ripple is a particularly volatile currency, and even though the huge fluctuations are what bring the potential for profit, they also bring the possibility of taking losses. By having a solid understanding of trading psychology, you can keep yourself from making novice and impulse-based mistakes.
3. Manage Risk to Mitigate the Impact of Drawdown
Practicingsensible risk management is essential when trading XRP due to the currency’s high volatility. The best way to manage risk is to limit each individual trade to a small percentage of your overall trading account balance. As a general rule of thumb, it’s best to never devote more than 3% of your balance to a single trade. That way, when you encounter drawdown (a streak of losses), they won’t be severe enough to significantlydamage your account balance.
4. Use Ripple as a Means of Momentum Trading
If you’ve been paying attention to trading news during the past few years, you’ve probably noticed that XRP can jump significantly in value after certain events or seemingly out of the blue. While it might not be the best daily performer, it’s worthwhile to stick around and use it for momentum trading because when it does make those huge jumps, it can pay off tremendously.
Will XRP Ever be as Popular as BTC?
At this point, Bitcoin is already so far ahead of the entire pack that it seems unimaginable that an alternative currency could compete with it. However, when you know that Ripple is based on an entirely different system of ledger-keeping that doesn’t need to rely on computer mining, it’s easy to see why many analysts and investors feel that XRP will be a major player in the future of cryptocurrency.