How to buy and trade Uniswap (UNI) coin in Australia

How to buy Uniswap coin: investing vs trading

Investing involves the buying of Uniswap coins, meaning you’ll own these outright. When investing, you’ll pay the full value of the Uniswap coins upfront. Note that your risk is capped – in other words, any loss you make will be limited to what you’ve paid. We don’t offer Uniswap investing on our platform.

Even though you won’t own Uniswap coin outright when trading, you can speculate on its price movements. Since you don’t own the coin, you can go long (‘buy’) or short (‘sell’), but when investing you can only go long.

You can trade Uniswap using CFDs (a leveraged product) on our platform. This will enable you to trade the full value of the underlying asset at a small percentage of the cost by using a margin. It’ll also give you more exposure, potentially increasing your profit if your predictions are correct. However, it’s important to note that your losses will be magnified, too, so manage your risk carefully.

Investing in Uniswap (UNI)

To own a part of the Uniswap network, you’ll need to buy the UNI cryptocurrency. Once you own these UNI tokens, you can make profits on your investment by selling them if the coin appreciates in value over time. If the coin depreciates in value, selling them would result in a loss.

To begin your Uniswap investment journey, you have to find an online broker that sells cryptocurrencies. You’ll need to get a Uniswap wallet to store your UNI coins until you decide to sell them, too. Note that we currently don’t offer this.

Trading Uniswap with CFDs

When trading on Uniswap with CFDs (contracts for difference), you’ll speculate on the UNI coin’s price, and make profits or losses depending on the outcome of your prediction. The profit or loss you make will be based on the difference in price between your opening and closing positions. As mentioned before, leveraged trading amplifies your risk – so take the necessary risk management steps upfront.

Also note that, when trading you won’t take direct ownership of UNI coins, meaning you won’t need to open a Uniswap wallet or exchange account.

Here’s how trading Uniswap with CFDs works:

• Open a trade: when trading Uniswap, you’ll ‘buy’ if you predict an increase in price or ‘sell’ if you think it’ll decrease
• Pay an upfront margin: you can open your position with a margin, which is a small percentage of your total market exposure. Trading Uniswap will give you exposure to the underlying asset without direct ownership of it, as would be the case if you were investing in it
• Use leverage: you’ll use leverage when trading Uniswap with CFDs, which has its positives and negatives. Remember that leverage will give you full exposure to the underlying Uniswap coin at a lower cost, but gains and losses will be magnified, so do take the necessary precautions to manage your risk
• Beware of the risks: your losses could far outweigh your initial deposit, because the gains and losses made on the leveraged products are calculated based on the total position size and not the margin. When trading with us, remember to use our risk management tools
• Overnight funding costs: if you hold a short-term trade and you’d like to keep it open overnight, you’ll be charged a daily interest fee that will be applied to cash CFD positions held through 10pm (UK time)

Learn about the difference between trading and investing

How to trade Uniswap

When you’re satisfied with the amount of research and monitoring you’ve done on Uniswap’s performance, you’ll be in a better position to decide if you want to take a position.

Here’s how to trade Uniswap with CFDs:

1. Create a CFD trading account or log into your existing account
2. Open the trading platform and type ‘Uniswap’ into the search bar
3. Select ‘buy’ or ‘sell’ on the deal ticket
4. Set your position size, as well as your stops and limits
5. Click ‘place deal’ to confirm the position and open the trade

If you’re new to trading, you can practise trading Uniswap with us by creating a demo account, where you’ll get virtual money worth $10,000. The demo account will also give you an opportunity to become more familiar with managing risk when trading cryptocurrencies.

What is Uniswap (UNI)?

Uniswap is a decentralised cryptocurrency exchange protocol that operates on the Ethereum blockchain, differentiating it from its peers – Binance and Coinbase – both of which run on centralised exchanges.²

UNI tokens are blockchain-based assets that have the same functionalities as Bitcoin and ether in that they can hold value, and can also be sent and received.³ The tokens differ from other cryptocurrencies because they’re created and hosted on the Ethereum blockchain, while the likes of Bitcoin are hosted on blockchains in which they were created.⁴

Centralised exchanges hold funds under their management, and facilitate trades between buyers and sellers via an order book. Uniswap, on the other hand, uses a basic mathematical formula, pools of tokens and ether to match transactions – removing the ‘middelman’.³

It also uses smart contracts to hold liquidity reserves of numerous tokens, and trades are executed directly against these reserves.^{3, 5} These are pooled between a network of liquidity providers who supply the system with tokens in exchange for an equivalent share of the transaction fees.

A brief history of Uniswap

Uniswap was created by Hayden Adams, following an inspiring post by Ethereum founder Vitalik Buterin. In July 2017, Adams was laid off from his mechanical engineering job at Siemens – his first place of work since leaving college.⁶ A friend working at the Ethereum Foundation, congratulated him on his new venture and redirected him to Ethereum as the future: ‘Your new destiny is to write smart contracts!’ he said to Adams, who didn’t know how to code at the time.⁶ To expand this new skillset, he started working on a ‘real’ project –implementing an automated market maker.

Following some convincing, Adams set out on a two-month journey of learning the basics of Ethereum, Solidity and JavaScript.

The same friend who convinced Adams to get into cryptocoding used the Uniswap demo at the Devcon 3 conference as an example of the power of crypto-economics and open-source financial applications on Ethereum.

One of the attendees at the conference, Pascal Van Hecke, reached out to Adams and expressed interest in supporting this initiative, later giving him a grant to fund a month’s worth of research in automated market makers (AMMs). Van Hecke introduced new ideas and their weekly calls brought a sense of structure and accountability to Adams’s work.

In November 2018, Adams made a public announcement to his 200 followers on Twitter – the first many had heard of the project. Almost two years later, in September 2020, Uniswap launched its UNI governance token with an airdrop (an Apple device file transfer feature) to anyone who had used the protocol before that date.

In May 2021, the third version of Uniswap was launched, which had added new features such as concentrated liquidity and multiple fee tiers.

How to analyse Uniswap’s price movements

Before you trade Uniswap, take time to monitor and analyse its price movements on the cryptocurrency market. Make use of technical analysis to guide you in tracking Uniswap price movements. Technical analysis includes the use of chart patterns, trends in market movement and historical data to make some assumptions on trading.

You could also use fundamental analysis to help you study Uniswap’s historical price charts. Fundamental analysis will help you to evaluate Uniswap’s intrinsic value as well analysing the factors such as industry trends that could influence its price in the future.

It’ll enable you to study the cause of price movements – whether sharp or gradual – as you try to determine potentially similar shifts in future. Please note that past performance does not guarantee future success.

Uniswap trading strategies

Due to the volatility of cryptocurrencies, including Uniswap, it’s important to consider incorporating a solid trading strategy and risk management. Below are some trading strategies you can consider:

Day trading Uniswap

When day trading Uniswap you’ll open and close a position in a single trading day, which means you won’t have market exposure to the asset overnight.

If you want to get exposure to Uniswap’s price shifts over the short term, day trading the coin could be for you. This strategy will also enable you to trade on Uniswap price’s daily volatility.

Trend trading Uniswap

Using trend trading as a strategy means you’ll take a position that matches current Uniswap market movements. You’d buy (‘go long’) if the market is bullish, and sell (‘go short’) if it’s bearish.

If you think that these trends are slowing down or going in the opposite direction, you might consider closing your position. This can be followed by opening a new position that matches upcoming trends.

Uniswap hedging strategy

When hedging Uniswap you’d be reducing your exposure to risk since you’ll be adopting an opposite position on a different asset as compared to the one you’ve already opened.

For example, let’s say you own Uniswap coins and you’ve got concerns about the market moving against you and dropping in value in the short term. You’d address this by opening a short position on an asset in a different market . Then if the UNI price falls, the gains you make on your short position on the other asset will offset some or all of your losses on the Uniswap coins you own.

HODL Uniswap strategy

The ‘hold on for dear life’ also known as the HODL strategy, which involves buying and holding your Uniswap token over an extended period, is popular among crypto traders. However, this strategy is likely to be used only if you buy and hold the coin with a positive outlook on its long-term price. You should also note that overnight funding charges apply daily and these can accrue over time.

You’d sell your position to lock in possible profits or limit your losses.

How to buy and trade UNI summed up

• Uniswap provides a free, decentralised exchange on the Ethereum blockchain that eliminates the ‘middleman’ from cryptocurrency transactions
• The UNI cryptocurrency is the token that you can buy to own part of the Uniswap network
• Trading the UNI cryptocurrency means you’re taking a speculative position on the price of Uniswap
• You can trade Uniswap (UNI) with us using CFDs
• Ensure you monitor and analyse Uniswap’s price movements by using technical and fundamental analysis

Footnotes:

¹ Based on IG Group's OTC data for October 2019
² Yahoo Finance, 2021
³ Uniswap, 2016
⁴ Blockchain, 2021
⁵ Uniswap, 2021
⁶ Uniswap, 2021