How To Trade Ripple CFDs – a Simplified Guide
The exceptional growth and popularity of Ripple has seen many CFD brokers add cryptocurrencies to their trading platforms for the first time. This has allowed traders, investors and speculators the opportunity to trade Ripple CFDs, without owning any ripple.
Firstly, what is Ripple?
Ripple is an open payment network designed to give people an alternative to traditional financial institutions (i.e. banks) whom charge extortionate fees etc. and thus enabling the transfer of any currency around the world using the Ripple coin, XPR.
Ryan Fugger conceived the idea of Ripple in 2004 but it took another decade before the concept took off when, in 2014, several large banks started using its payment networks. The company behind Ripple is called OpenCoin and there are two distinct entities within the company; (1) the open payment system referred to as Ripple and (2) the actual currency – ripple coin – used on the payment system called XPR or Ripples.
There are a grand total of 100 billion XRP that exist and Ripple owns around 60% of all XRP. Ripple is constantly growing its network of partnerships with many global financial institutions and firms – currently working with BBVA, SEB and Cambridge Global Payments, with many more in the pipeline. As it’s market size and network continues to grow, so does its value, with 1 XRP currently worth around US $90.
Trading Ripple CFDs – How Do You Get Started?
Before you can begin trading Ripple using a CFD platform, you will need to apply for a CFD trading account with a broker. Some of our recommended, ASIC-Regulated brokers can be found in the table below. As soon as your account has been approved you will need to deposit some funds onto your trading account so you can begin to trade. For a $1 stake size on Ripple (when its price is c., $80) you will need as little as $30 – $40 on your account to open this trade.
Please ensure you ‘test drive’ a couple of demo accounts before you decide which broker to open an account with. This will allow you to test out the trading environment before committing to a live account using real money. Please also ensure you understand all the risks involved with CFD trading.
Recommended CFD Brokers That Offer Ripple CFD Trading:
Simple Trading Platform
Litecoin, Monero, NEO, Stellar, TRON
Low Trading Costs
Ether, Dash & Litecoin
Cash, Litecoin & Ripple
Important Considerations When Choosing The Best Ripple CFD Trading Platform
Finding a broker that best suits your trading requirements can be a difficult task. There are an overwhelming number of CFD brokers to choose from, all with varying strengths and weaknesses, which makes choosing one even harder.
Below are some important factors to consider when looking to find the best CFD Ripple broker.
Brokers make their money in a number of ways; spreads, commissions, financing charges and client losses. Trading costs soon add up and can have a significant bearing on whether your trading is profitable or not. Always remember that the lower your trading costs (tight spreads, low (or no) commissions etc.), the better chance you have of turning a trading profit. Here are some of the more common trading costs that you should be aware of. You should also know how much each broker charges you to trade.
- Spread Costs: the wider the spread, the more a broker is charging you. The tighter the spread, the less they are charging you. The spreads that each broker charges will vary, with some like TradeDirect365 being the cheapest, and others like Plus500 being slightly wider (more expensive). Please shop around.
- Commission Charges: most brokers only charge a commission on stock CFD trades – but some brokers do charge commission on other trades like Ripple so please ask before opening a trade.
- Overnight Financing Costs: overnight financing is when you are charged a small fee for keeping a position (trade) open overnight. Please find out how much your broker charges to keep trades open overnight, as these can vary broker-to-broker.
Breadth of Markets
With over 1,400 different cryptocurrencies now available, it’s important that your broker of choice actually lists the markets you wish to trade on their trading platform – i.e. if you want to trade Ripple, then ensure the broker has it on their system otherwise there’s little point in opening an account with them.
Please always use a regulated online broker when looking to trade Ripple or any other financial instrument. The governing regulator, such as ASIC or the FCA for example, has set rules and regulations in place that protect the integrity of the market, as well as the interests of its traders.
The Trading Platform
Each broker will usually offer the globally-used MT4 trading platform and an in-house built trade platform alternative. No two in-house built platforms are the same and so if you’re not using MT4, then you need to familiarise yourself with the alternative/s – try each out by opening a demo account and seeing if it’s what you want in a trading platform.
Also test out the broker’s trading App (if they have one) as you will probably want to keep an eye on any open trades whilst you’re on the go. Trading apps also allow you the ability to adjust/ move stop-loss orders, profit orders etc.
From time-to-time you will require help from your broker – whether it’s help funding your account, opening trade for the first time, asking about spread & commission costs, or help closing a trade when the trading platform isn’t working – you need to be assured that someone will respond to you quickly and professionally, and that your issue is resolved fairly. FP Markets, for example, are renowned and awarded for their customer support.
Benefits of Trading Ripple CFDs
You can go LONG and SHORT
Trading Ripple using CFDs allows you to sell (go short) as well as buy (go long). With traditional investments, you always want the asset to go up in value otherwise you will lose money. With CFD trading you can also SELL a financial asset like Ripple if you think it will decline in value. If you made a sell trade on Ripple and the price of Ripple did in fact go down, you would have made a profit on that trade.
Unlike the sharemarket or other regulated financial markets, cryptocurrencies have no regulated exchange and so they are open all hours of the week – 24/7.
CFDs are a leveraged product
Trading Ripple via CFDs means you are trading on leverage. This means you only need to deposit a small amount of money onto your account in order to open significantly larger positions sizes . For example, if Ripple is valued at $80, then you might only need to place $30 onto your account to trade Ripple. More on leverage here.
You do not own any Ripple
When trading Ripple via a CFD platform you are betting on the price movement of Ripple. You do not own any Ripple. As you do not own any Ripple, you won’t have to worry about selling it etc.
What Are The Risks of Trading Ripple CFDs?
Trading Ripple using leverage can be very cruel – yes, profits can be magnified quickly but so can losses. Never trade with money that you can’t afford to lose. It’s reported that 70-80% of Ethereum CFD traders lose money!
Ripple is a volatile asset
Cryptos like Ripple are extremely volatile products to trade. In fact, they are probably the most volatile markets in the world to trade. If you trade Ripple and the market goes against you, you could lose a lot of money.
Our Preferred Ripple CFD Broker:
TradeDirect365 – one of, if not, the best value CFD provider.
TD365 Best Low-Cost CFD Provider
- Tight, Fixed Spreads: TD365 offer some of the lowest spreads going – cryptocurrencies included. Trade Ripple with a FIXED 1 point spread
- Minimum Deposit: there is no minimum deposit with TD365 (although you will need funds in your account to trade). Deposits to trade crypto’s start around $10
- No Commission Fees: you will only pay a spread charge to open a Ripple trade with TD365 – no commissions apply
- Easy-To-Use Trade Platform: trade using their in-house CFD trade platform, CloudTrade – intuitive, fast and user-friendly
- Risk Management: TD365 offer a range of risk management tools; stop loss orders (including guaranteed stop losses), profit limits, trailing stops etc.