How to Trade Ripple CFDs

Brandie E Blackler
14 Min read

The ability to trade both Long and Short with cryptocurrency CFDs gives further diversity to one's trading plan. 

You may have traded with Bitcoin or Ethereum, but have you heard of Ripple, also known as XRP, for short? How do you trade Ripple CFDs?

Let's review the Ripple vs US Dollar pair in detail which discusses the tools, instruments and trade plan concepts.

Our article will explore various aspects of trading the XRP/USD pair, applying technical analysis aspects like trend, momentum, support and resistance, and showing how to day trade the pair on our MetaTrader 5 platform.

How Volatile is Ripple?

Ripple's primary currency, XRP, has certainly been considered volatile over the last years; that said, which cryptocurrency hasn't been considered volatile?

But how can one answer, how volatile is Ripple, or XRP? Why is Ripple volatile?

  • In December 2020, The Securities and Exchange Commission (SEC) filed a lawsuit against Ripple, basically claiming they were trading XRP as a security without registering it.
  • This has continued into 2022, both an up- and downhill battle which has seen both sides struggling - Still yet to come to a final conclusion.
  • Altcoins tend to follow the price pattern of Bitcoin, which is notorious for volatility. This is a major contributing factor.
  • Over the year 2021 and 2022, the XRP price has remained surprisingly more steady compared to previous years, despite the ongoing lawsuit.

Ultimately, it is fair to say that Ripple (XRP) has had both incredibly volatile periods, as well as slightly more steady periods, since its release in 2012.

The quick price action up and down, however, does not mean a trend is visible or available.

Source: Admirals MT5 Supreme Edition, XRPUSD, Daily - Data range: from November 22, 2018, to November 22, 2019, accessed on November 22, 2019, at 12:00 pm BST. - Please note: Past performance is not a reliable indicator of future results.

Current vs. Historical Price: Trending or Ranging?

An established trend has not proven itself yet despite the strong momentum up and down because the price is not offering a clear trend channel.

We, therefore, consider the XRP/USD to be in a range without an established trend, even though a drop to new 2019 yearly lows would establish a sequence of falling highs and lows and we could consider finding itself in a downtrend.

But even if we find ourselves in a range-bound environment, the quick price action however does offer trading opportunities, which is what we will discuss in the next part.

How to Trade Ripple CFDs

Support and Resistance (S&R) is always a key component when applying technical analysis to the price chart. The S&R concept becomes even more important when the pair is ranging rather than trending, which is how XRP/USD is behaving at the moment (see above).

When trading Ripple, we believe it is important to use a Support and Resistance (S&R) indicator that works dynamically in our view. There are two main reasons for using a dynamic rather than a static one:

  1. The volatility of price action is high.
  2. There is limited historical data.

The dynamic indicator of our choice is the Admiral Keltner band, which is part of MetaTrader 5 Supreme Edition. It offers consistent support and resistance levels and is automatically updated with every new candle. The indicator also provides key break and bounce levels as you can see in the chart below.

Source: Admirals MT5 Supreme Edition, XRPUSD, Daily - Data range: from November 22, 2018, to November 22, 2019, accessed on November 22, 2019, at 12:00 pm BST. - Please note: Past performance is not a reliable indicator of future results.

Another important factor remains candlestick patterns, which provide guidance about the price direction and whether price is breaking, bouncing or failing to break or bounce. These concepts will be explained in more detail in the next part which discusses strategies for trading XRP/USD.

Which Strategy Should You Use to Trade Ripple CFDs?

Our main tactic is to trade bounce trades at support levels whereas breakout trades above resistance receives our second preference. We will review both ideas on four-hour charts.

Bounce Setups at Support

We use the Admiral Keltner bands as a decision zone for price action. There are two ways how we can enter the bounce:

  1. The initial reaction to the support level: a candlestick pattern which is confirming the bullish bounce at Admiral Keltner.
  2. The second reaction after the bounce: price bounces, then pullbacks to the support level, fails to continue lower and bounces up again.

For the candlestick pattern reactions at support, we refer to the price action trading school that reviews this aspect and more.

An entry could be made now on the break of the high of the big green candle (a 'Bullish Engulfing') (red line in the image below).

Source: Admirals MT5 Supreme Edition, XRPUSD, Daily - Data range: from January 27, 2019, to 15 August, 2019, accessed on November 22, 2019, at 12:00 pm BST. - Please note: Past performance is not a reliable indicator of future results.

More information on how we trade these setups, including stop loss and take profits are available via our daily live webinars.

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Breakout Trades Above Resistance

The Admiral Keltner indicator can also be used as a breakout level. To measure a successful breakout, traders can monitor candlestick formations that occur at the Keltner resistance:

  1. A strong candle closing near the high tends to indicate a strong breakout → ok to trade.
  2. A weak candle closes with the wick at the top tend to indicate a weak breakout → avoid trading.

There are two other good tools that should be added:

  • The RSI with a value of +/-10 to see if a small pullback could occur to gain a better entry price point
  • An oscillator, like the MACD or the Awesome Oscillator, is used to avoid trading breakouts when divergence is present.

The image below shows an example of a bullish breakout (the purple box) with a candle close near the high. A small retracement does occur as the RSI goes to an extreme (the orange arrow), but the bullish momentum continues as the price stays above the resistance of the Keltner indicator (the blue arrow).

The above information is not enough to trade the above-mentioned concepts, which is why we invite you to join our daily live webinars, where we analyse and trade these setups.

Source: Ripple versus US Dollar (XRP/USD) 1 hour chart from 30 May to 2 June 2017

How to Day Trade Ripple CFDs

Trading in a lower time frame always requires more practise and experience than when trading in higher time frames. Yes, there are more trading opportunities when trading the 15-minute chart, but there is also more 'noise' and traders need to be more critical with the setups they choose.

When trading based on technical analysis, you always want to check if there is a potential news event or data release that could create spontaneous and quick price spikes. Basically, we are cautious during these times and prefer to trade normal trends rather than sudden price spikes. Technical traders especially want to trade technically and avoid price movements that are based on one time events.

The next step when trading lower timeframes and day trading the XRP/USD is to keep in mind the direction of the larger trend. That is one of the main reasons why I am adding the 144 EMA close to the chart:

  • The price must be above this MA before I would trade any of the intra-day setups.
  • If the price is below the MA then I will skip any intra-day long setups.

After that I am looking for long trades that are either based on breakout or bounce setups when using the trend lines and Pivot Points:

  1. The trend line is a dynamic tool that traders need to draw on the chart themselves.
  2. The Pivot Points are automatically added to static S&R levels.

Both Admiral Pivot Points (PP) indicators and trend lines can be used for breakout and bounce trade setups:

  • A push above the trend line or PP is a breakout setup.
  • A reversal at the trend line or PP is a bounce setup.

Of course, this is just one rough idea of how to tackle intra-day trading. There are many different types of trading methods that could be used to tackle the markets. For more information, we invite you to our daily live webinars where we analyse and trade these setups.

Source: Ripple versus US Dollar (XRP/USD) 30 minute chart from 31 May to 2 June 2017

Trading Psychology

it is important to keep in mind that trading requires patience and discipline. This is part of "trading psychology" and it is an important aspect to remain balanced in your mind when tackling the markets. Otherwise, it could be tempting to revenge trade, over trade, over analyse and/or suffer many other pitfalls that trap traders into losing habit and false biases.

Risk Management

The other key aspect is risk management. When traders risk too much, this will turn into gambling and the chance of losing the entire trading capital and perhaps more increases strongly in the long run. To avoid losing the entire trading capital (and one's mental capital as well), each trade needs to be split into small quantities of the capital, such as 0.5%, 1%, or 2%. A streak of losses (drawdown) will usually not lead to a significant depletion of the account and allow traders to keep trading another day.

Trading Analysis and Strategy

Last but not least, traders need to approach the markets with a sturdy trading plan that indicates how to analyse the charts, how to enter the trade, manage the setups and exit the trade. Each trader will have their own trading style and prefer different types of tools and indicators. This is why it is important to test your trading plan first with a demo or small risk on a real account.

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Market Sentiment - Impact on Hype in the Media

Enthusiasm for Ripple was of course high when it set a new high versus the US Dollar on 17 May, 2017. Price action made a huge spike but the momentum was a burst of energy that was unsustainable in the long run. Price needed to make a correction, as markets also eventually do.

The spike on the XRP/USD chart reminds us of the Silver (XAG/USD) spike on the monthly chart back in 2010-2013. The pattern for Ripple, however, was on a much smaller scale than Silver. Ultimately there is a decent probability that price will respect technical analysis and key levels just like any other chart.

Overall, the Ripple versus US Dollar chart seems to be more of a range pair than a trending chart. This could be a cryptocurrency pair that is especially suited for traders that like to trade momentum within a larger moment, at least for the upcoming year.

Source: XAG/USD weekly chart on the left from 2009 to 2013 and Ripple versus US Dollar (XRP/USD) daily chart from 17 March to 11 July 2017

Trading Ripple Using MetaTrader 4 & 5

Yes, it is possible to trade cryptocurrencies via Admirals including Ripple versus the US Dollar (XRP/USD). Traders can access XRP/USD and other crypto pairs via both the MetaTrader 4 and MetaTrader 5 platforms.

The process is as simple as these steps:

  1. Download/open MetaTrader 4 or 5 by clicking the open links
  2. Open a new account or log in to your existing account
  3. Open a cryptocurrency chart

Also, all of the additional add-ons for the MetaTrader 4 Supreme Edition are now also available for the latest version of MetaTrader 5 Supreme Edition.

Of course, besides cryptocurrencies, Admirals is a broker with a wide choice of instruments, including currency pairs and CFDs. With live daily analysis, webinars, articles and the extra added tools and expertise, it's time to discover Admirals and make it your trading hub!

Besides trading Ripple versus the US Dollar (XRP/USD), Admirals traders can also trade over 30+ leading cryptocurrency pairs.

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3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
4. The Analysis is prepared by an independent analyst (hereinafter “Author”) based on Brandie E Blackler, Financial Writer, personal estimations.
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