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Ethereum Classic Trading Guide For Beginners

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Author: Saad Ullah

Ethereum Classic (ETC) is the original version of the Ethereum blockchain, renamed to show its originality after it forked from the main Ethereum chain. Though not as popular as its brother, Ethereum Classic is still amongst the favoured digital assets in the crypto community. ETC's rise in value over the years has garnered the interest of people who look at Ethereum Classic trading as a good means of generating wealth and profits.

If you want to trade Ethereum Classic, read this page for an in-depth look at the key metrics and strategies that can help you make better decisions.

3 Reasons to Trade Ethereum Classic Now!

1

Crypto Winter is Over

With the last year seeing interest in cryptocurrencies rising, as COVID-19-led economic shocks had people scrambling for alternative investments, the public looked for better alternatives to fiat currency and even gold. They set their eyes on digital assets and this ushered in another major bull run. ETC also thawed out and rose in value, making it a good coin to invest in for gains.

2

Institutional Investors

Ethereum Classic has attracted large players in the market, such as Grayscale, who created the first-ever publicly available ETC trust that allows investors to gain exposure to the blockchain-based asset without even buying Ethereum Classic. With big players in the market seeking Ethereum Classic, the stability and long term viability of the coin are arguably bolstered.

3

Deflationary

After its split, Ethereum Classic adopted the Gotham upgrade at the end of 2017 that put the maximum coins that can be mined at 210.7 million. Unlike its cousin Ethereum, which has a fixed supply per year but no finite value set, ETC is deflationary. Over time as the supply dwindles (by 20% every 5 million blocks), the demand will only rise, which many believe will lead to ETC increasing in value.

Ethereum Classic Trading vs. Investing

The rise and fall of the ETC price is an opportunity that everyone would love to capitalise on. However, to start making profits, you should have an understanding of how to go about it. There are two distinct ways to do it: either invest in ETC tokens or trade the cryptocurrency.

As a digital asset, it is much easier to hold than gold or other physical assets. This makes it an excellent investment option, where people actually buy Ethereum Classic and hold on to it, until a time where the ETC coins give sufficient profits based on their new value.

On the other hand, trading entails a different method of creating profits. Rather than buying ETC, people can open positions based on the value of ETC. Since there is no exchange of actual coins going on, trading is a very powerful tool that allows traders to quickly capture the swift movements in the prices as all they have to do is open or close the positions, not actually exchange ETC tokens.

Trading is popular in the crypto community because it offers exposure to ETC’s underlying value without the hassle of setting up wallets, exchange registrations, and securing the tokens. At the same time, since no actual coins are being exchanged, the traders can enter complex contracts that derive values from the price of ETC.

Contracts for difference (CFDs) are simple agreements that traders can buy and sell at a later date, pocketing the difference in the price of Ethereum Classic between when the contract was opened and closed. As derivatives, traders can open both long and short positions on the contracts, enabling them to make profits even when the market is falling.

Futures are fixed-time contracts where the value of Ethereum Classic is predicted for an upcoming date and the contract is bought against that predicted price. At the end of the contract period, the buyer is obligated to buy the coins at the speculated price. If the market price is higher, the trader makes a profit and if the market is lower, he has to close the contract at a loss.

Options are just like a futures contract, but with one small variation that changes everything. Instead of waiting for the contract to expire, a trader has the option to close the contract on settlement day. This can save a trader from potential losses (if the underlying trade turns out to be unprofitable) but at the risk of losing the premium (the fee paid for the contract itself).

Each type of trade and contract, the market situation, risk profiles of the traders, and other factors can affect strategies chosen, and there is no single go-to formula that can be applied across the board. For the best results, you are going to benefit from deciding which type of derivative you would like to deal in, locking in your strategy, and then sticking to it.

Ethereum Classic Analysis: The Key to Success!

Since you are reading this page, you might have already decided to trade in Ethereum Classic. If you want to, you must first understand different metrics you can employ to do a technical and fundamental analysis of the ETC market. This will give you insights into the possible outcomes of ETC value in the future.

Technical analysis takes into consideration different patterns determined from past values and chart movements. Indicators such as moving averages, Bollinger bands, and other values can be used to predict how ETC will move in the coming days. Fundamental analysis is a qualitative approach that cannot be represented in numbers but can help you gauge the future through factors such as market sentiment, regulations, general news on blockchain technology, and ETC adoption.

Another important factor to consider is the wider, macro picture. An economic downturn (like the one caused by COVID-19) doesn’t directly affect cryptos and Ethereum Classic in general, but the public can look towards ETC to hedge their eroding assets. Similarly competitors, influencers, and technological breakthroughs can have an impact on the price. 

A good trader takes all of these into account. Though there is no set formula on which aspect of analysis should be given what weight. This is an art that will require you to fine-tune your analysis over time as you gain more experience.

Trade Ethereum Classic Today!

Choose a Trading Strategy

Once you are confident enough that you understand and can conduct fundamental and technical analysis of Ethereum Classic, it is time you kick off your ETC trading journey. There are a few strategies that you can decide on, which will largely depend upon your decisions of time, patience, the contract selected, and the ability to absorb losses.

  • Scalping

The most intense trading of all, scalping involves placing a large number of trading orders in very small periods. The strategy behind this is to capture the tiny movements of the price that would be otherwise mitigated by accompanying reversals. For many traders, this is a very sound methodology that can potentially reduce their risks to losses as they open positions, follow the micro-movement in their desired direction, and then close it immediately before a retraction can occur.

  • Day Trading

A very popular approach by many people, day trading involves a person executing several buy and sell orders over the course of a day. The idea behind day trading is to capture the small changes that occur in trade prices as much as possible, with the tiny profits amounting to something worthwhile when the day ends and all orders are closed. Since day trading requires capturing small price movements, a trader should have a keen eye to notice ETC price movements.

  • Swing Trading

As the name suggests, swing trading is all about using market swings to create profits. This strategy requires more dependency on technical analysis and its indicators as the movements are more scientifically explained and managed. The trading duration of each order can usually last anywhere from a few days to a week, but even more if the trader is comfortable with his homework. The idea behind swing trading is to not worry about the small ups and downs and capture the larger market shift over several trading sessions.

Sign Up on an Online Broker or Derivatives Exchange

Once you have decided on the trading strategy, the next step is to register on a platform that allows you to trade Ethereum Classic. There are two choices here. You can either sign up on a derivative exchange or go to a cryptocurrency broker. Using a derivatives exchange means that you will have to place the orders directly on the platform, while an online broker will just act as a middleman and execute orders for you.

Though there isn’t much difference in this direct/indirect trading, each carries its own benefits. Where these exchanges do offer a greater degree of control through different contracts that a trader can buy depending on the market conditions, a broker will be able to offer you higher leverage in comparison which means you get a larger exposure and potential to increase your profits. A broker will also give traders options to use short or long positions easily, letting them profit from their trades even in a bear market. A broker might also allow you to use advanced trading solutions such as bots.

Deposit Funds

After registration, you will need to fund your derivatives exchange or brokerage account. The process is pretty straightforward. A good crypto exchange or broker will have done a KYC and AML check during your registration. If not, you might need to fill it out before depositing any money. All you have to do is to go to the deposit page of your preferred platform (usually it is either separately mentioned or is in the profile details). Here you will upload a form of ID and a proof of address to unlock deposit options.

Since trading isn’t about you exchanging or buying crypto, most derivative exchanges and brokers will only accept fiat money as an initial deposit. Depending on the platform, they may have one or several options for you to deposit, which may include direct bank deposits, credit or debit cards, PayPal or another money transmitter service. Many platforms allow deposits only from accounts or cards that are registered in the name of the user, so this is something you might want to look into if you are going to fund your trading account from other people.

Some brokers and exchanges also accept cryptocurrency as payment. If you happen to own one which the website supports, you can always deposit it instead of fiat. Be sure to check that the trading website’s wallet address is correctly entered lest your cryptos are lost forever.

Open your First Ethereum Classic Trade

Placing your first order can be a daunting task, especially when looking at the trading interface with all the numbers, graphs, and data fields making it look like you are in the Matrix. However, placing a trade is not that difficult once you understand what all the numbers and terms mean.

Before we jump into the ins and outs of placing orders, make sure that you understand that some orders will only result in you profiteering in fiat, while some orders such as futures or options might lead you to have your own Ethereum Classic as profit when the contracts expire. If you still want to hold fiat, check out any crypto to fiat trading pair the website might have. Alternatively, you could withdraw your ETC and store it in a personal wallet.

In all cases, you should do your homework carefully. Study the indicators, both fundamental and technical. Identify the past trends of ETC and concentrate especially on your trading strategy. A broker will help you in this regard, especially advising you on what contracts to buy and when, but if you are using a derivative exchange, you will not have that support so it becomes even more paramount to understand the market, its sentiment, and whether it is going towards a bull run or a bear market.

Now let’s look at a few concepts you will need to know for placing a successful order.

Short or Long Position

Taking a long position is basically betting that Ethereum Classic will rise in value over the coming days and weeks. If your calculations are correct and ETC does rise, you gain profits on the differences between when you place the order and when the position is closed.

Shorting is the opposite of taking a long position where you bet on ETC falling in value. If it does, you still make profits because your bet was true. In this way, you can even make money in markets when Ethereum Classic will take a downturn. Be careful, though: an increase in price will leave you in the red.

Order Book

An order book is a journal where all pending trades are recorded and available to participants. It is basically a complete list of all buy and sell orders placed, but not executed so far. The information contained in the book is the list of orders and the asking price. Using the order book, a user can gauge where the traders within that platform are leaning, and if there is a buying or a selling pressure, including the gap between the closest bid and ask price.

Order Types

Depending on the derivative exchange or broker you select, you will also have choices on the order types. Typical types include a plain market order (buying or selling on the market rate), limit order (placing an order where you define your buying or selling price) and stop orders (what should be the market condition to place the limit order in the book).

Leverage

By building a risk profile on traders, brokers and exchanges can allow them to use leverage, where the trader can create larger orders than their deposits can. In other words, the platform offers them a loan for their order, which they must repay at the position closing, plus a leverage fee. Leveraged trading allows a trader to potentially increase their profits by several orders. There is a downside to leveraged trading, however. A wrong decision can see the platform executing a margin call to protect their investment, which can see your assets being liquidated to cover their losses, leaving you penniless.

Risk Management

Considering that there is a lot at stake in Ethereum Classic’s trading, it is prudent to risk profiling your strategies and moves beforehand. Every trade carries risks. All you can do is to study the inputs very carefully to mitigate your chances of losses. When managed correctly, risk management can complement your profit-making moves.

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Experts Insights: Common Ethereum Classic Trading Mistakes and How to Avoid Them

To err is human, and in the world of crypto trading, one can take actions that can lead to losses. Though losses are a part of life, especially in trading, there are a few things that you can look into to mitigate your chances of running in the red. To begin with, only sign up on a reliable trading platform. A good way to check this is to see if the website displays any regulatory compliance like a registration number, and then confirm this with the relevant authorities. Keep your trades small initially. Get yourself familiar with the whole trading environment and learn how to keep your impulses in check during shifts in ETC price. This also lets you determine if your trading strategies are working for you. Another classic rookie mistake is investing too much. The best advice is to invest only an amount you are willing to part with. Never overextend your finances (either through dumping large amounts of money or using leverage levels you cannot cover) to the point where you can find your pockets empty.