What is the Ripple and how does this cryptocurrency work?
Originally, the Ripple was the name of a company based in San Francisco which recently created a payment system that resembles a lot the system of blockchain that you know thanks to the Bitcoin. This is also a payment system that is based on a computer protocol and a currency exchange. The Ripple works therefore with different crypto currencies but also with traditional currencies and raw materials against which it can be exchanged.
The protocol of the Ripple also has the particularity of being able to be integrated in the system of the customers. This is particularly the case for certain large banks such as the National Bank Abu Dhabi, which uses the Ripple protocol for its international transactions and can thus offer its customers real time and online money transfers.
Ripple is also the name given to the cryptocurrency that flows from this protocol and which uses this chain of blocks. This dematerialized currency is today one of the most important in the market since it has the third highest market capitalization, just after the Bitcoin and the Ether.
On the financial markets and especially if you want to trade Ripple online with CFDs, know that you will find it under the name of XRP which can be integrated into a pair of currencies with the dollar or the euro.
Concerning the more detailed operation of the Ripple, its objective is to allow certain financial market players such as banks, to reduce the cost of their transactions by its preponderant role in the global settlement network. But the Ripple also offers certain benefits such as real time and online transactions all around the world. Of course, those transactions are secured by an encryption system particular of crypto currencies and can very easily be integrated to existing systems in traditional banks.
Among the specificities of the Ripple, we can mention that this system and its cryptocurrency allow banks to do transactions between them without having to go through an intermediary, in a confidential and secured way. Ripple transactions processing levels are very high, and it is also possible to connect multiple networks between them.
The Ripple is currently the most used crypto currency in the banking sector thanks to its ability to process transactions fast and almost instantaneous, but also at a low cost.
What are the differences between the Ripple and other crypto currencies such as the Bitcoin?
If the Bitcoin is still considered as a reference in the world of cryptocurrencies, it is interesting to know the differences between this historical dematerialized currency and the Ripple which is today one of its main competitors. And when we talk about difference, it is particularly to mention the advantages of the Ripple when compared to the Bitcoin.
The first advantage of the Ripple which the Bitcoin doesn’t have, is the fact that this crypto currency does not depend on a single company in terms of the management of its transactions, which enables it to process its transactions much faster and almost instantaneously since the wait for the confirmation of the blocks is extremely fast. To better understand this major difference, let’s remember that the average processing time of a transaction with the Bitcoin is currently more than 160 minutes and the average processing time of a transaction with the Ripple is only 3.7 seconds. Always as an example, a comparison was made by the BBVA bank about the time to process a transaction between Spain and Mexico. Normally, such a transfer of money will take about 4 days whereas with the Ripple, it only takes some seconds.
The processing time of the blocks is therefore the main difference between the Bitcoin and the Ripple. But the two cryptocurrencies also have other points of divergence which are interesting to know. Thus, the Ripple does not use the mining process for the generation of new units but an interactive consensus process. Finally, if the Bitcoin is a decentralized currency, the Ripple is mainly a transaction network that integrates one cryptocurrency.
The major differences between the Ripple and the Bitcoin are also valid for the other crypto currencies.
What are the advantages of the Ripple as a stock market asset and why should you trade on it?
You probably want to know now why is it interesting to take a position on the course of the Ripple online by using CFDs for example. In reality, the advantages of the Ripple as a stock market asset are numerous and we invite you to find out its main advantages here.
- Transactions in real time: This is probably the main strength of the Ripple compared to its main competitors. In fact, the Ripple allows an almost instantaneous processing of transactions while the processing time of blocks by the other currencies takes much longer. Thanks to this detail, the Ripple could attract more and more banks and financial institutions in the future and therefore gain points on the financial market.
- A very low transactions cost: This is the second strong point of this cryptocurrency. The Ripple allows you in fact to carry out financial transactions at a very low cost with one of the least expensive commissions whether for small amounts or for big amounts. The transaction process remains free particularly for trade and commerce, which is also one of its major assets.
- A reliable and secure cryptocurrency: Of course, to occupy the place that it currently has on the market of crypto currencies, the Ripple has demonstrated a very high transaction security thanks to its system of blocks and to the consensus principle. A complex security system has been put in place by the Ripple company in order to protect investors who use this system. With this system, It is necessary to do several signatures before validating an online transaction.
- A particularly volatile asset: Like most of the other crypto currencies, the Ripple has the advantage of being highly volatile in its upward and downward movements. Therefore, it is not necessary to use a leverage effect that is known for being very risky to take advantageous positions and benefit from interesting price differentials.
- The virtual currency of the future: The Ripple just like the Ethereum and the Litecoin, is one of the crypto currencies that you should monitor closely in the coming years. Having several advantages, which we have just mentioned above, it is likely to attract more and more users over the next years, which will make it more speculative than it currently is.
- An excellent response to technical analysis: Finally, it is relatively simple to anticipate the changes in price of the Ripple thanks to a simple technical analysis since this asset is particularly responsive to the main graphical indicators.
The advantages of trading with the Ripple are therefore numerous enough for investors to be attracted to this asset. We advise you therefore to do the same and take a position right now on this value.
How should you invest on the course of the Ripple?
In order to take advantage of the Ripple as a stock market asset, the best method is to use CFDs or contracts of difference. There contracts are available to individual investors on brokers online trading platforms.
In fact, by speculating on the Ripple with CFD’s, you will have several interesting advantages. First of all, the CFDs allow you to take positions to buy but also directly to sell. Given the high volatility of this asset and the number of its correction movements within a stable background trend, this will offer more opportunities and allows for sensible hedging strategies.
The CFDs also allows the use of stop and limit orders that close your positions automatically without you having to intervene and at a price that you have set in advance. Also, you only have to set up your strategy and your objectives so that they are automatically respected without having to remain connected to the market. Those orders can also significantly reduce your risk by cutting your losses as much as you choose.
Finally, CFDs trading platforms have several analysis tools available for its users, which allow you to create complex and effective strategies. For example, you could access Ripple charts live and in real time and customized them by adding the indicators of your choice or choosing your way of displaying them and their recurrence settings. Your technical analysis will be faster and much more simplified. Concerning the fundamental analysis, you can also count on your broker to give you access to several financial and economic news live. You can of course also customize this feed by choosing for example to display only the news of the cryptocurrencies market.
To start speculating on the course of the Ripple or of other crypto currencies, or even on several other assets such as currencies, securities or raw materials, you only have to create your investor account online and deposit your investment capital. You will then only have to take a position on the assets of your choice.
How to set up an effective trading strategy on the course of the Ripple?
As we have just seen, trading on the course of the Ripple through CFDs has several advantages, including giving you access to a variety of analysis and support tools to help you take a decision. But an efficient strategy on this kind of asset requires some experience on the market, excellent resistance to stress and good risk management. These are the qualities that a trader must have to speculate on any sort of asset but particularly on the Ripple which is an extremely volatile asset.
Your self-control will be in fact put to the test while you trade with the Ripple. You just have to take a look at the historical stock charts of this value to see how quick and volatile its movements are. The uptrends and the downtrends of this asset are impulsive and very strong, which requires an excellent resistance to stress as well as a lot of patience and discipline. This is what we call the « psychological trading ». We advise you to do the maximum to keep your strategic line without giving into panic or excessive enthusiasm with a particular movement. One of the simplest ways to achieve this is to write your strategic objectives and to keep them permanently in front of you. Try also carrying out a technical analysis on different periodicities in order to have an overview of all the main trends and microtrends.
A good trader of crypto currencies such as the Ripple must also be able to manage certain risks with utmost care. As we have just seen above, this asset shows very high volatility which could manifest during the movements against the trends as well as during the trends. It is therefore very easy to lose money if you do not put in place the appropriate limits. The first thing to do to limit those risks is to take positions only with a small part or your capital. It will be ideal, that each position does not exceeds 2 or 3% of your total capital. You could and should use the maximum automatic orders to make profits or reduce your losses at the right time without being too greedy or too enthusiastic. It is better in fact to accumulate small gains than to risk a big loss. However, take into account the micromovements in order to not close your positions too early.
Finally, an effective trading strategy on the Ripple just as on any other asset is of course based on a good analysis. These analyzes will enable you to take a position according to an elaborated trading plan. For this you can use the graphics put at your disposal by the brokers, which are customizable. Do not hesitate to customize them to the maximum and to use all of their features in order to display different indicators. You could also use the fundamental analysis to detect the best points of entry on the market. For that, you should follow closely all the news of the world of cryptocurrencies in general and of the Ripple in particular. You could also, on certain platforms, consult other trader’s opinions and thus have a visibility about the general feelings of the market by other investors.
Once your trading strategy is established, you will also have the possibility to try it in real conditions without taking any risk thanks to a free demo account. This type of account allows you to trade live on the market with virtual money and is an excellent way to refine your strategies while protecting your capital. Of course, it is necessary to switch to real trading to make real transactions.
In order to trade Ripple, we advise you to opt for a short-term strategy such as Day trading which offers more possibilities thanks to the very high daily volatility of this asset which is ideal with the use of CFDs from online brokers. Long term strategies will require more capital and are considered as riskier. They are therefore reserved to the most experienced traders with high investment funds.