FXTM information and reviews
FXTM
95%
OctaFX information and reviews
OctaFX
94%
XM information and reviews
XM
93%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
91%
HFM information and reviews
HFM
89%

Trading Cryptocurrencies with OBRinvest


7 June 2021

A cryptocurrency is a fairly new asset class that was created when Satoshi Nakamoto mined the very first block of Bitcoin. Cryptocurrencies are a digital type of currency that is guaranteed by the blockchain ledger. Just like other currencies, the cryptocurrencies can be used to buy goods and services. They can also be used as an investment as well as trading CFDs on them. Unlike the traditional fiat currencies, the cryptocurrencies are not issued by any government or central bank. They are decentralized and cannot be controlled by any individual or entity. This is part of the appeal of cryptocurrencies and one of the reasons they have become so popular.

Popular Cryptocurrencies

There are literally thousands of cryptocurrencies, but only a handful are very popular for traders. That handful includes Bitcoin, which was the very first cryptocurrency. It remains the largest by market capitalization and out of the entire cryptocurrency market, Bitcoin holds over 60% of the total market cap. Other popular cryptocurrencies include:

Advantages

Cryptocurrencies have some technological hurdles to clear, but they also have many advantages. One of the biggest advantages is the low fees for large transactions. There have been transfers of hundreds of millions of dollars made for less than $1. The transfers are also extremely fast. Where a wire transfer through a bank could take several days to arrive at the recipient, a Bitcoin transfer takes no longer than 10 minutes in most cases, no matter how large or small the transaction is.

When it comes to trading the chief advantage of cryptocurrencies is the diversity of assets available to trade. There are literally thousands of different cryptocurrencies, and each one has its own use case and price history. Traders are able to specialize in cryptocurrency markets if they like.

Other benefits of cryptocurrencies include privacy, decentralization, security, and strong ownership rights.

Trading Example

Suppose you’re interested in Bitcoin and believe it will increase in value versus the U.S. dollar in the coming days. You decide to trade BTC/USD using CFDs. Currently Bitcoin is being quoted at $36,410 / $36,510. You decide to purchase 2 units opening at $36,510. This is equivalent to buying 2 BTC, so you will gain or lose $2 for every $1 that Bitcoin moves.

Cryptocurrencies CFDs Trading Risks

As you can see from the example above there are some risks involved in trading cryptocurrency CFDs. The largest risk, especially for those who are inexperienced with cryptocurrencies, is the price volatility associated with the asset class. Because cryptocurrencies and the CFDs linked to them, are so volatile it is possible to lose a large amount of money in a very short period of time.

There is also the leverage involved in CFD trading to consider. With an asset that’s already as volatile as cryptocurrencies, adding leverage can be like pouring gasoline on a fire. Great if it’s in your favour, but disastrous if it goes against you.

Finally, because cryptocurrency markets are still relatively small and unregulated there is little price transparency. Manipulation is known to occur, the lack of transparency and liquidity, can cause significant variations when pricing cryptocurrencies.

#source

Share: Tweet this or Share on Facebook


Related

Dividend announcement for stock derivatives
Dividend announcement for stock derivatives

When a company pays shareholders dividends, it reduces the company's value by the dividend amount. The dividend payout leads to the share price reduction...

1 Feb 2023

OctaFX Fraud notice January 2023
OctaFX Fraud notice January 2023

Every trader looks for a high level of security. Unfortunately, this request is not groundless. New fraud schemes appear every day, and not everyone can protect themselves...

20 Jan 2023

OctaFX collects the Best Online Broker Global 2022 accolade
OctaFX collects the Best Online Broker Global 2022 accolade

The international broker OctaFX received yet another 2022 distinction. The esteemed global media publication World Business Outlook awarded the company its "Best Online Broker Global 2022" award...

19 Jan 2023

Six evident and less obvious improvements that we are proud of in 2022
Six evident and less obvious improvements that we are proud of in 2022

2022 was a year of unprecedented changes and struggles in the financial markets. For us at OctaFX, it was a year full of hard work that helped achieve several important milestones...

13 Jan 2023

AMarkets will participate at iFX EXPO 2023
AMarkets will participate at iFX EXPO 2023

AMarkets invites you to visit booth number 92, where you will have the opportunity to meet AMarkets’ top managers, exchange experiences and participate in our prize draw...

12 Jan 2023

Dividend announcement for stock derivatives in January 2023
Dividend announcement for stock derivatives in January 2023

When a company pays dividends to shareholders, it reduces the company's value by the dividend amount. The dividend payout leads to the share price reduction..

9 Jan 2023


Editors' Picks

FXCM information and reviews
FXCM
87%
ActivTrades information and reviews
ActivTrades
86%
RoboForex information and reviews
RoboForex
85%
MultiBank Group information and reviews
MultiBank Group
84%
Libertex information and reviews
Libertex
83%
Vantage information and reviews
Vantage
83%

© 2006-2023 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.