How to trade ripple

Find out everything you need to know about how to trade ripple (XRP) CFDs – including how the cryptocurrency works, what affects its price, the difference between trading and investing, and four steps to opening your first position.

Bitcoin’s boom in 2017 brought many other cryptocurrencies into the limelight. One of those was ripple, a payment solution that comes with its own digital currency called XRP. If you’d like to start trading XRP, then follow these three steps:

  1. Decide how you’d like to trade ripple
  2. Find out how ripple works
  3. Explore the factors that influence its price
  4. Open your first trade

Ways to trade ripple

The first step to speculating on ripple is deciding how you’d like to take advantage of its price movements. You can trade ripple in one of two main ways:
 
  • Buy ripple on an exchange, and hold it in the hope of selling it on for a profit
  • Use leveraged trading to speculate on ripple price movements 
When you open a leveraged trade, you won’t have to put down the full value of your position upfront – so you can get much larger exposure without committing extra capital. Your profit or loss will be based on the full size of your position, though. So while profits can be magnified, so can losses.
 
CFDs enable you to open leveraged trading positions on ripple, as well as bitcoin, ether, litecoin and more. Here’s a quick introduction to how CFDs work.

Ripple CFDs

A CFD is a contract in which you agree to exchange the difference in price of XRP from when you opened your position to when you close it. You can buy CFDs to go long, or sell them to go short.

Find out more about CFD trading

How does ripple work?

Ripple works as a decentralised peer-to-peer payment network of gateways (called RippleNet) that enables the almost-instant transfer of any currency – whether a traditional one such as USD, JPY or GBP, or a cryptocurrency such as bitcoin or litecoin. It does this by using its own digital currency (XRP) as a bridge that underpins the network.

A public ledger keeps track of all the payments made using RippleNet. Transactions are approved by consensus, so there’s no central authority slowing things down.

What are gateways?

Gateways are the intermediaries between banks (and other institutions) on RippleNet, which take money from one party and release it to another once the transaction has been approved. Gateways can also exchange one currency for another – if a gateway is prepared to accept dollars and pay out in sterling, for instance.

By chaining multiple gateways together, RippleNet can convert almost any currency in a transaction. You can even use it to transfer (and exchange) commodities like gold.

What about XRP?

Gateways will always price anything they deal in XRP. This means that you can use it as the basis for any transaction: converting currency into XRP, transferring it, and then converting it back at the other end. XRP is also transferred immediately and very cheaply (because it requires fewer gateways).

What moves ripple’s price?

Ripple functions in a markedly different way to other cryptocurrencies, and was never intended to be a replacement for fiat currency. Because of this, there are a lot of unique factors affecting the price movements of XRP.

XRP supply

Unlike other cryptocurrencies, XRP isn’t produced by mining. Instead, the company behind ripple completely controls supply. This gives them a lot of control over ripple’s price – which has some traders worried.

Public perception

Ripple is often referred to as the world’s most misunderstood cryptocurrency. Much of its rise in 2017 was due to investors believing it could be a challenger to bitcoin and others, as opposed to a global payment solution.

Bank adoption of ripple

Ripple’s key users are banks and other major institutions. With Bank of America, Royal Bank of Canada and UBS among those already on board, announcements that more companies are adopting the technology see XRP’s profile raised further.

Other cryptocurrencies

Investors looking for the next big cryptocurrency can see XRP’s large market cap and low cost per coin as a buying opportunity – so when the digital currency market is rallying, ripple may follow. But if the market turns bearish, XRP could drop fast.

If XRP is added to an exchange

If a major cryptocurrency exchange such as Coinbase announces that it is listing XRP, then millions of prospective buyers would have access to the currency. That could see ripple’s price spike.

Steps to trading ripple

1. Open an account

Before you open your first CFD trading position, you’ll need an account with a leveraged provider. You can set up an IG account in a few minutes, and there’s no obligation to deposit any funds until you decide you want to place your first trade.

As you’re speculating on ripple’s price movements, instead of buying it, you don’t need an exchange account – or any specialist software – to get started. 

2. Develop a trading plan

A comprehensive trading plan can be beneficial as you get to grips with the markets, helping you maximise your profits and minimise your losses. Each trading plan is unique, but you might want to consider:
  • What you want to achieve from your trading – including daily, weekly or monthly goals
  • Whether you want to trade ripple exclusively, or include additional markets like bitcoin, fiat currencies or stock indices
  • How much you are willing to risk on each trade. This can help you choose where to place stop-losses
  • Your risk-reward ratio – or the potential profit you need to justify your risk

At this point, you might also want to consider employing a trading strategy. Day trading, for example, involves taking advantage of short-term price movements and closing each position at the end of the trading day. Swing traders, meanwhile, will try to open a trade as a trend is forming, and close it once the move has run its course.

3. Do your research

You’ve learned how ripple works and the factors responsible for driving its price movements – but before you open your first trade, you’ll still need to ensure that you’re aware of all the latest developments surrounding XRP. 

At this point, you might also want to consider using technical analysis to decide when you should open your trade. Take a look at an XRP chart to see data on previous price movements, and identify trends that could give an insight into where it’s headed next.

4. Place a trade

Now it’s time to open your first position. You can trade using the IG Trading web platform, or one of our mobile apps

Enter the size of your position in the deal ticket. This will determine your total profit or loss. You can also add a stop, which will close your position if the market moves against you by a certain amount. 

If you expect ripple to go up in value, then hit ‘buy’ to open the trade. If you think it will fall, hit ‘sell’.

To close your position, you simply reverse the original trade. So if you bought to open, you’d sell to close. If you’d sold to open, you’d buy.

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There's no minimum balance to open an account, it takes less than five minutes, and there's no obligation to fund or trade.

FAQs

Do I need an exchange account to trade ripple?

No. When you trade on ripple CFDs with IG, you never have to deal directly with an exchange. Instead, we source prices from multiple exchanges on your behalf, and then offer you the best available price (plus our spread).

If you want to buy XRP and own it over the long term, then you will need an exchange account.

What are ripple’s trading hours?

Ripple markets close at 9am on Saturday AEDT, then reopen on Saturday at 7pm AEDT. Weekend trading applies to Ripple (USD).

Please note that public holidays may affect these times.

What other cryptocurrencies can I trade with IG?

You can trade CFDs on bitcoin, bitcoin cash and bitcoin gold, as well as ether and litecoin. On top of that, you can also trade over 15,000 other markets including commodities, indices, forex and more. 

What is ripple’s ticker symbol?

The ticker symbol for the currency that underpins RippleNet is XRP

Can I add trading alerts to ripple?

Yes, you can add trading alerts to any of the 15,000 markets you can trade with IG. On the IG Trading platform, you can do this by opening a deal ticket on ripple, and choosing the ‘alert’ tab. Set your parameters, and hit ‘set alert’ to save your settings.

Can I trade ripple on mobile?

Yes. We have trading apps for iPhone, iPad and Android, which you can use to trade ripple alongside our full range of markets.

Find out more about our trading apps

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