Expected to reach a market size of $1088 million by 2026, the Cryptocurrency market will soon become one of the largest financial markets in the world. As a result, people are leaning more towards Cryptocurrency trading because of its heavy profits, secure transactions, high user autonomy, and no third-party intervention. Trading Cryptocurrency CFDs is an ideal way to enter the digital currency market as it allows you to trade positions on margin.
What is Cryptocurrency CFDs trading?
A Contract for Difference (CFDs) for Cryptocurrencies allow traders to speculate on prices without taking direct ownership of the digital currencies.
By trading cryptocurrencies in the form of CFDs, you get the opportunity to enter the market and invest in coins without paying the entire trade’s value. It does not even require you to have a Crypto account or wallet. Hence, trading Cryptocurrency CFDs open up more trading opportunities for you.
Benefits of Cryptocurrency trading through CFDs
Advanced technical instruments
Trading digital currencies with CFDs introduces you to a variety of risk management techniques, including taking profit and stop loss tools. Such advanced technical instruments protect you against significant losses and also help you make informed decisions that improve your trading performance.
Margin trading
Trading with CFDs gives you access to high leverage in a market. Since you can trade with more capital, it is possible to earn decent profits even with minor price movements. Trading on margin means that if you want to open a $2,500 position with the leverage ratio at 5:1, you only need a $500 capital.
Better regulation
Since all CFD brokers are regulated by a reputable financial authority, all clients trading Cryptocurrency CFDs are protected against malpractices, frauds, and theft. It is easier for traders to get their money back in case of any adverse circ*mstances. CFD platforms are secure and licensed, eliminating the possibility of your funds getting hacked.
Higher liquidity
The liquidity that Cryptocurrency CFD trading offers is higher than trading Cryptocurrencies directly. Since CFDs do not need any conversion from one currency to another, you can directly withdraw your money in one click.
Trading Cryptocurrencies directly may seem more complicated as some do not support a direct cash-out system. In such cases, you are required to switch to Bitcoin or any other digital currency offering a cash-out system to withdraw your money. Direct trading also has a daily withdrawal limit, which creates a bear market risk as it can often lead to high losses due to sudden market dips.
Quicker trade executions
CFD transactions are executed within seconds. This enables traders to react quickly to market price movements and benefit from the rapid market changes.
How to trade Cryptocurrency CFDs
Cryptocurrency CFDs are always traded against regular currencies like USD, EUR, GBP, and more. Hence, they are denoted as BTC/USD, BTC/GBP, BTC/EUR. Trading Crypto CFDs allows traders to forecast whether the digital currency price will increase or decrease.
For example, the price of BTC/USD is $1,000/1,050, and you buy 1 CFD of Bitcoin for $1,050, your CFD is worth 1 Bitcoin, and the position size is $1,050. The price of BTC/USD increases to $1,500/1,550, you decide to close the position at that price. Hence, you make a profit of $500.
You can also make profits with a falling market by placing a short position. For example, the Bitcoin CFD price is $1,000/1,050, and you sell 1 CFD for $1,000. If Bitcoin falls to $500/550, making the position worth $550, it gives you a profit of $450.
Start trading Cryptocurrency CFDs today
Cryptocurrency CFDs offer you the opportunity to profit from small price movements through leverage trading. This gives you greater market exposure with less capital investment. Blueberry Markets offers easy and reliable tools to make Cryptocurrency CFDs trading as easy as possible.
Sign up for a live account today to get started.
About The Author
Ben Clay
Ben Clay is a skilled and experienced CFD trading professional and writer with 14 years of experience in the industry. As a part of the Blueberry Markets team, Ben is known for his ability to simplify complex concepts into insightful and engaging content. His profound understanding of CFD trading, coupled with his exceptional communication skills, has established him as a trusted contributor who delivers insightful information to a wide audience.
Expertise: Forex and CFD trading
FAQs
Trading Crypto CFDs allows traders to forecast whether the digital currency price will increase or decrease. For example, the price of BTC/USD is $1,000/1,050, and you buy 1 CFD of Bitcoin for $1,050, your CFD is worth 1 Bitcoin, and the position size is $1,050.
What is cryptocurrency CFD trading? ›
Contract for Difference trading, otherwise known as CFD trading, is a method that enables individuals to trade and invest in an asset by engaging in a contract between themselves and a broker, instead of opening a position directly on a certain market.
What is Cryptocurrency trading overview? ›
Cryptocurrency trading involves speculating on price movements via a CFD trading account, or buying and selling the underlying coins via an exchange. Here you'll find more information about cryptocurrency trading, how it works and what moves the markets.
What is the difference between crypto and crypto CFD? ›
Both ways have their own unique advantages, however it's important to note that only CFDs allow traders to enter both long and short positions when it comes to Cryptocurrencies, and allow the flexibility to use leverage, while never having to own the actual coins in a wallet.
Why is CFD trading illegal? ›
The US Securities and Exchange Commission (SEC) restricts CFD trading because it is considered a form of over-the-counter (OTC) financial instrument that is not compliant with US securities laws.
What is CFD trading for dummies? ›
A contract for difference (CFD) allows traders to speculate on the future market movements of an underlying asset, without actually owning or taking physical delivery of the underlying asset. CFDs are available for a range of underlying assets, such as shares, commodities, and foreign exchange.
What is the basic overview of crypto? ›
Cryptocurrency is digital money that doesn't require a bank or financial institution to verify transactions and can be used for purchases or as an investment. Transactions are then verified and recorded on a blockchain, an unchangeable ledger that tracks and records assets and trades.
How to understand crypto trading? ›
Understand the order book
In any trade, there is a winner and a loser, and you'll want to buy low and sell high. When there are more buy orders for an asset than sell orders, the price generally increases since there's more demand for the crypto. In contrast, when more people sell than buy, the price decreases.
Can you make $100 a day with crypto? ›
Can you earn $100 a day trading cryptocurrency? Absolutely! If you're new to crypto day trading, here's what you need to know to make money. The most effective way to make $100 a day with cryptocurrency is to invest approximately $1000 and monitor a 10% increase on a single pair.
How do CFDs work? ›
CFD stands for contract for difference. Instead of buying and selling the underlying asset, you speculate on its price movement. This means you can speculate on a host of different assets, from shares to indices to commodities and more, without needing to open accounts with lots of different brokers.
Alternatively, you can trade a derivative product such as a contract for difference (CFD) on the underlying Coinbase stock market price, and speculate on its price movements without actually owning the asset.
Is CFD the same as trading? ›
A CFD – short for 'contract for difference' – is the type of derivative that enables you to trade the price movements of these financial markets with us. With this form of trading, you don't own the underlying asset – you're only getting exposure to its price movements.
Are CFDs legal in the US? ›
CFDs are illegal in the US because they are an over-the-counter (OTC) trading product. OTC trading products aren't listed on regulated exchanges like the New York Stock Exchange (NYSE), bypassing US regulatory bodies. However, US traders have alternatives such as forex, options and stocks.
Is CFD good for beginners? ›
CFD trading can be a good option for beginners. Still, it's important to have a solid understanding of the risks involved and to start with a small amount of capital. Use a risk-free demo account to learn about markets and strategies before you invest real money.
Do professional traders use CFDs? ›
CFDs offer flexibility, leverage and cost effectiveness to institutional, professional and non-professional traders alike.
Is CFD trading a good idea? ›
CFDs are attractive to day traders who can use leverage to trade assets that are more costly to buy and sell. CFDs can be quite risky due to low industry regulation, potential lack of liquidity, and the need to maintain an adequate margin due to leveraged losses.
What does CFD mean in trading? ›
Key Takeaways. A contract for difference (CFD) is a financial contract that pays the difference in the settlement price between the open and closing trades. CFDs allow investors to trade the direction of securities over the very short term. CFDs are especially popular in FX and commodities products.
Is CFD trading real or fake? ›
Cfd Trades is not a trusted broker because it is not regulated by a financial authority with strict standards. We would not open an account for ourselves with them. If you want to stay safe, only sign up with brokers that are overseen by a top-tier and stringent regulator.
Can you lose money on CFD trading? ›
CFD trading, like any other form of online trading, involves risk. While a percentage of traders may gain profits and celebrate the rewards of CFD trading, a considerable percentage incurs losses. As it has been proven, historically, most people who start online trading fail.
