Why Trade Cryptocurrency CFD?

In recent years, cryptocurrencies have caught the attention of the masses. There are two ways to trade cryptocurrencies – cryptocurrency CFD through brokers or via cryptocurrency exchanges.

Buying And Selling Cryptocurrencies Via An Exchange

When you acquire cryptocurrencies through an exchange like Coinbase or Binance, you are purchasing the coins themselves (COIN). To open a trade, you will have to open an exchange account, deposit funds, buy your desired cryptocurrency, and keep it in your wallet until you are ready to sell.

Transacting via exchanges may require some learning curve because they tend to have more complex interfaces, which can make them intimidating for new crypto investors. 

Cryptocurrency CFD Trading

Crypto CFD is similar to traditional CFD assets – you will speculate on the price movements of cryptocurrencies without actually owning the digital asset. You can do this through a CFD trading account or an MT4 account with a broker. 

An example of a crypto CFD pair is Ethereum/US Dollar (ETH/USD) (ETH-X,UUP). Trading this pair is just like trading Forex pair EUR/USD – you buy or go long if you think Ethereum’s price is going to rise against the US dollar or sell or go short if ETH's price will decrease versus the USD.

Cryptocurrency CFD are also leveraged, so you do not have to worry about putting in a big deposit right off the bat to increase your market exposure. While that is great, you have to be mindful of your profits and losses being magnified by the leverage since it is calculated according to the entirety of your position.

Trading crypto CFD offers some advantages. Let’s have a closer look below:

Take Short Positions

When trading crypto CFD, it is also possible to trade an asset's declining prices instead of depending on its increasing worth. For instance, a sell position on the BTC/USD pair (Bitcoin/US Dollar) (BITCOMP,UUP) will gain profit if Bitcoin’s price falls against the US dollar. Consequently, the sell position will lose if the price of Bitcoin rises against the dollar. 

Increased Liquidity

Liquidity refers to how active the market is. Traders know that liquidity is one of the most important things in trading because higher liquidity means improved pricing and shorter transaction speed.

When trading crypto CFDs, you may benefit from improved liquidity because brokers get their prices from multiple sources on your behalf. As a result, your deals are more certain to be completed swiftly and at a cheaper cost.

High volatility

Crypto CFD is more volatile than traditional CFD like stocks or indices. Traders in the crypto world typically make profits on shorter-term positions, taking advantage of significant price movements over weeks, days, hours or even minutes. It is not a rare occurrence for cryptocurrencies to witness a couple of price changes per day. You can benefit from this because it gives you the opportunity to take advantage of short-term trades.

While this makes cryptocurrency trading a thrilling endeavour, it also opens up a lot of risks. Cryptocurrency trading requires you to be more careful with your strategies because your losses can easily pile up. 


man pushing a bitcoin on an arrow moving upwards, text CFD in the background

The ability to trade cryptocurrencies with significant leverage is perhaps the most prominent advantage of trading cryptocurrencies via CFD. This technique permits traders to open bigger positions with small capital. You do not have to put up a deposit as big as the full value of the trade  just a fraction of it is enough. 

Cryptocurrency CFD trading allows you to have a huge profit from a small investment. That is a great thing, but since it is leveraged, your gains are not the only thing amplified. Your losses can also be magnified so a strong risk management strategy is needed.

Quick To Get Started (No Digital Wallets Needed)

With cryptocurrency CFD trading, you don’t have to worry about the hassle of opening and verifying wallets. If you already have a trading account with a broker, you can trade cryptos from the same MT4 platform you use for trading other assets like currencies or stocks. This allows you to just focus on trading while the broker deals with everything else.

Disclaimer: Riki nema disclaimer.

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