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/ Market Analysis / News & Analysis / Get started with Cryptocurrency CFDs: Everything You Need to Know
/ Market Analysis / News & Analysis / Get started with Cryptocurrency CFDs: Everything You Need to Know
Oct 04, 2021

Get started with Cryptocurrency CFDs: Everything You Need to Know

by Blueberry Markets
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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 circumstances. 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.

going long and making profit

 

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.

going short and making profit

 

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.