Trading cryptocurrency with CFDs

There are several ways to trade cryptocurrencies. The first is purchasing them directly via trading platforms or third-party services. This requires understanding how crypto addresses and wallets work. For Bitcoin, the process can be tedious. You need to enter a lengthy code to send money between wallets and exchanges or decentralised marketplaces. Getting it wrong means you could lose your Bitcoin and never recover it.

The alternative is to use CFDs. Contracts for different track markets, including popular cryptocurrency pairs like Bitcoin/US dollar (BTC/USD). With these contracts, you pay or receive the difference in market price between when you open the contract and when you close it.

The primary advantage when CFD trading cryptocurrency is that you do not have to deal with the logistics of obtaining, sending, and holding your digital money. You trade the price differences using regular funds already in your trading account. You do not actually have to hold cryptocurrency at all. The only requirement for this type of speculation is finding a reputable crypto CFD trading platform.

Frequently Ask Question

CFD crypto trading involves using contracts for difference to track cryptocurrency markets. The setup is similar to forex trading, with traders using CFDs that track crypto pairs like BTC/USD or ETH/USD.

With CFDs, you do not need to hold the cryptocurrency. Instead, you agree to pay or accept the difference in price between when you open the position and when you close it.

No, when you engage in CFD crypto trading, the contracts track the price of spot crypto markets but do not convey ownership.

With this arrangement, you can trade the markets without worrying about the headache of holding cryptocurrency, which requires online wallets, complex digital addresses, and careful security.

There are several advantages to trading crypto CFDs with TMGM. Here are some reasons our customers enjoy our service:

  • Since you trade contracts and not the actual currency, you do not need to hold your Bitcoin, Ethereum, or Ripple in a digital wallet. You can simply focus on reading the market rather than dealing with all other distractions.
  • You also avoid the fees associated with sending the digital currency to your wallet and the security concerns of holding it.
  • CFDs allow you to use leverage to increase your position size without the upfront capital.
  • You can open an account with MetaTrader 4. You can trade crypto CFDs using advanced charts and customised indicators and take advantage of state-of-the-art order processing and back-testing features.

The best currency for CFD crypto trading depends on your goals, strategies, risk tolerance, and trading style.

Two options stand out if you care about liquidity and trading volume: Bitcoin (BTC) and Ethereum (ETH). These two can experience a high degree of volatility, but you can also find a wealth of data and analyses to inform your trading. Other choices, like Ripple (XRP), are slightly less volatile, but you need to use leverage to take advantage of smaller market movements.
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