Learn how to invest in cryptocurrencies using CFDs and take advantage of price fluctuation.
What are cryptocurrencies? Cryptocurrencies are digital currencies which operate independently of banks and governments, but can still be exchanged – or speculated on – just like any physical currency. While there’s a huge number of cryptocurrencies available, we offer CFD trading on a few of the most popular: bitcoin, bitcoin cash, ripple, litecoin, and Dogecoin. posted on bitcoinsmaster.com
Most people buy and sell cryptocurrencies through cryptocurrency exchanges, there is, however, another option with which you can trade on price movements. This can be done by using CFDs. In order to fully understand the potential of CFD instruments in cryptocurrency, we need to take a closer look at CFDs.
CFDs are financial derivatives which are conducted as agreements (contracts) between a trader and a brokerage company. When we have a contract, we do not actually own the underlying asset, instead, we possess the right to receive the difference between the current value of an asset and its value in the future. If our prediction on the value of the underlying asset is incorrect, and the difference is negative, the trader will have to cover that loss. CFDs can be created for shares, indices, forex, and also cryptocurrency. With CFDs, traders can speculate on the price growth and price decline of an underlying asset. There is a great guide to cryptocurrency trading which explicitly focuses on crypto trading with CFDs. posted on bitcoinsmaster.com
CFD trading is usually regarded as a better option for day trading cryptocurrencies because the spreads are usually lower. There is, however, usually a swap fee which brokers charge when traders stay in a position overnight. Due to this, most CFD brokers are not suitable for long-term investing and holding. Cryptocurrency exchanges do not have swaps, so long-term investing is ideal here. One buys cryptocurrency, and holds it for however long he or she prefers, and then sells it for fiat currency, or exchanges them for other cryptocurrencies. The bigger spreads here are negated by a substantial increase in value.
While Bitcoin is not the only digital currency on the market, it is indeed the first and most popular digital currency, the technology behind this cryptocurrency holds a large part of its value. The secure way to identify a transaction and the way to transfer funds. If more and more people use digital currency, then this could save billions in transactions but this idea is still new and people are in fact just learning about it.
Trading CFDs carries a high level of risk and may not be suitable for all investors. There is a possibility that you may sustain a loss equal to or greater than your entire investment. Therefore, you should not invest or risk money that you cannot afford to lose. Before using Admiral Markets UK Ltd or Admiral Markets AS’ services, please acknowledge all of the risks associated with trading.
This makes their operation cost efficient because they have no costs of service delivery… simply because there are no real trades out there. And that’s why they can only offer a few contracts. They need to aggregate trading around a limited number of markets, so their customers are trading against one another and losses are perceived as manageable.
Active traders looking to speculate on Bitcoin over the short or medium term may find that trading CFDs on Bitcoin using an online broker will provide them with 24hour trading, potentially lower margin, and the ability to go either long or short. Because of counter-party risk, choosing a broker is just as important as finding one with the best trading tools or commission rates.
The fusion of derivatives and cryptocurrencies was probably inevitable in a market that appears to be spinning out of control. Thanks largely to Ethereum, a three-year-old open-source software project inspired by bitcoin’s blockchain technology, anyone can create a digital token.
Cryptocurrency trading does not involve the use of a multiplier and, therefore, implies fewer risks than CFD trading. It is literally impossible for a trader to lose all his money unless the cryptocurrency he purchased hits the price level of $0. Short-term exchange rate fluctuations have little to no effect on long-term positions. By simply holding the position open, the trader can avoid temporary downfalls and wait for the price action to go back up. Read more.
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Introducing the new concept to its clients, the company explained that unlike the trading instruments most CFD traders are used to, cryptocurrencies may be traded 24/7, including on the weekends when fiat currency pairs, commodities, and stocks are not available for live trading operations. The brokerage says that this factor provides traders with an opportunity to use more trading strategies, which require some extra time to add to a usual business week.
Trading in a cryptocurrency doesn’t require any specialist knowledge, and in fact, it’s not all that different to trading in Forex, commodities or many other markets. Despite its unusual nature, crypto still rises and falls like any other market, and is still subject to predictable external factors in a way that gives you the opportunity to make substantial profits.
The value of digital currencies tends to change very quickly. Therefore, there is no guarantee that the cryptocurrencies’ value will remain stable. We highlight the growing popularity of the digital currencies. Yet, we warn our clients that there is a number of potential risks when dealing with CFDs on virtual currencies – the main be their inherent volatility.
This CFD trading platform features fixed spreads, zero slippage, and an extremely user-friendly interface. New traders will find it easy to navigate and experienced clients will find all the tools they need. Android or iOS Access markets anywhere with an internet connection to any Android and iOS device. It features the same great tools and usability as our web platform with the option to set up price notifications when the app isn’t open, so you are never caught by surprise.
Ripple is both a transaction network and crypto token which was created in 2012 as the go-to cryptocurrency for banks and global money transfers and has recently experienced a period of growth. Bitcoin Cash (BCH) meanwhile, is a blockchain derived from the Bitcoin blockchain which followed the Bitcoin hard fork in August 2017. Bitcoin Cash has also recently experienced gains as investors seek to diversify their portfolios through altcoins.
A cryptocurrency is a virtual currency that is not issued or backed by a central bank or government. They have experienced significant price volatility in the past year which, in combination with leverage, places you at risk of suffering significant losses and potentially losing more than you have invested.
Check the FCA Register of financial services firms. If a company does not appear on the register then it is best not to trade with that firm, transfer funds, or provide any banking details.
CFDs are also a useful instrument for hedging risks on exchanges and for arbitrage.
The cryptocurrency market is constantly expanding and provides many opportunities to informed online traders. We’ve added this popular, revolutionary instrument to our hundreds of other CFD instruments which include shares, commodities, indices, currency pairs, and ETFs, all of which you could choose to trade with leverage while benefitting from free information resources and updates.
When you trade Bitcoin as a CFD, you are speculating on the price movement of the underlying Bitcoin market. The price of Bitcoin will be quoted in established currencies, primarily USD, and you will not own the underlying instrument. Additionally, you will be trading on leverage which allows you a greater market exposure without tying up large amounts of capital.