A branch of cryptocurrency trading that several investors are looking into is CFDs. This branch of the financial markets has proven to be a great investment option for digital currency traders. CFD means Contract for Difference. This popular derivate trading form enables cryptocurrency traders to speculate on the fluctuating prices of investment options in the financial markets. This includes indices, shares, currencies, treasuries, and commodities. With regards to the digital currency, you can speculate on the prices of crypto coins and make a profit from your speculation without actually owning the asset.
Thus, as a cryptocurrency trader with a passion for CFDs, you are not investing in a personal asset but stand to make a profit by speculating whether an asset will rise or fall in price. If your predictions are right, then you make a profit from your speculations.
As a CFDs trader, you can invest in a particular digital currency and hope it appreciates. The difference between your investment and the price after its appreciation is your profit margin. Note that at no point during the trading does the asset belong to you. That’s the major difference between CFD trading and the traditional cryptocurrency trading where an investor owns the asset.
CFDs traders are not limited to a specific asset. They have the freedom to invest in any asset of their choice. Some of the common tradable assets for CFD traders are:
- LTC/USD: Litecoin against US dollar.
- BCH/USD: Bitcoin Cash against US dollar.
- XRP/USD: Ripple against US dollar.
- BTC/USD: Bitcoin against US dollar.
- BTC/ETH: Bitcoin against Ethereum.
- ETH/USD: Ethereum against US dollar.
There are two basic ways of trading Contract for Difference. You can either go short or go long. How?
- Go Long: A trader goes long when they expect the price of the digital currency they invest in to rise. Such a trader expects to make some profit from the price appreciation. So, they trade long. For instance, if you expect the value of Bitcoin to appreciate from $5000 per coin to $6000 per coin, you can invest in some coins and cash out when the price hits your predicted value by going long.
- Go Short: On the other hand, a trader may anticipate a drop in the price of a particular digital currency. Such a trader may open a sell position on the premises that the asset’s value will decrease. This implies that the trade is going short. In the case of the Bitcoin price mentioned above, if you believe that Bitcoin will depreciate and predict it to hit $4,500 from $5,000 per coin, you are going short. You will make a profit if it hits that price.
Hence, as a trader, you can make a profit from trading Contract for Differences regardless of the market situation. Whether assets are depreciating or appreciating, you can go short or go long and make a profit from your predictions.
Cryptocurrency CFDs Trading Steps
Trading cryptocurrency CFDs is pretty easy. The six steps below will get you started with ease:
- Learn how cryptocurrency CFDs work. Learning about how they work will increase your overall knowledge of this aspect of financial markets. The knowledge will come in handy during trading.
- Create a trading account and fund it. Your trading account allows you to trade on a platform. Without it, you are only limited to what you can do on a trading platform. After creating the account, fund it with your proposed trading amount to kick off your trading.
- Create a practical trading plan. The plan will guide you through the entire trading process and duration. Follow your plan as religiously as possible, making some necessary adjustments from time to time.
- Choose a trading platform. You need a trading platform to put your knowledge to use. Through the platform, you can invest in any cryptocurrency of your choice and trade, either by going long or short. The platform will assist when necessary to make trading a lot easier for you.
Trading cryptocurrency CFDs can be challenging if you don’t trade on the right trading site. However, if you make the right choice, trading is fun and highly rewarding. Over the years, FX Empire has proven to be a reliable trading platform for prospective traders from all walks of life. It offers such traders a trading channel that will support their dreams by supporting and educating them when necessary.
You can visit their website and create an account. Use the Sign Up menu to create your account and provide all the required information. Once you are done, credit your account with your trading amount and choose the digital currency you want to invest in.
Many are making a living from trading cryptocurrency CFDs. It is your turn to create a source of passive income by trading in this special aspect of the financial market. LegacyFX is a great platform to start from. The cryptocurrency trading platform offers you the opportunity to invest in cryptocurrency CFDs and make cool money from your trading.
The trading site provides traders with the tools they need to succeed at trading. Among other things, you will find a list of potentially profitable cryptocurrency CFDs to trade, training materials, and a list of reliable brokers to choose from if you need their professional advice. You can seize this opportunity to up your game and trade like a pro, a great way to increase your winning chances.