Crypto trading is something relatively new. Over the last 10 years, a lot of things have changed following the credit crisis. Incepted as an alternative to fiat currencies and the risks related to them there are a lot of definitions and interpretations.
Generally speaking, cryptocurrencies represent a decentralised application for payments. It is decentralised because, instead of being emitted and governed by a single country, they are supported by thousands of independent servers around the world. These servers’ main purpose is to verify the ongoing transactions and add them to the public ledger (the blockchain), and create the new coins.
Cryptocurrencies are virtual currencies that are not issued or backed by a central bank or government.
Trade Cryptocurrency CFDs
Easy access and trade instantly – Crypto CFDs can be traded in the same way you can trade commodities, shares, forex or a stock index.
You don’t need to buy any bitcoin, ether or altcoins to start investing in cryptocurrencies. Considering the fact that the majority of people don’t have much idea about cryptocurrencies when they start trading them through CFDs, the real risk is transferred to the broker. All you will be doing is speculating on its price. You don’t need to worry about a wallet getting hack or stolen. You are trading via a regulated broker and respected platform.
This is quite unlike bitcoin exchanges which are unregulated and don’t guarantee any protection of your funds held with them
It’s possible to pre-set losses and profits – By setting profit limits and stop losses, you can pre-set the price at which you’d like to book your profits or the maximum loss you’re willing to take. It does away with the need of you having to constantly monitor the markets. Please note, stop and limit orders are depended on market conditions.
Crypto wallets
When you trade via CFD broker you don’t require for one to have a crypto wallet in order to trade cryptocurrencies. You never own actual cryptocurrencies.
Risks of trading Crypto CFDs
Cryptocurrency CFDs are an extremely high-risk, speculative investment. The risks involve:
Leverage:
Leverage multiplies your losses and potential profits, and can have a significant impact on fees. It also places you at risk of losing more than your initial investment.
Price volatility:
The value of cryptocurrencies, and therefore the value of CFDs linked to them, is extremely volatile. They are vulnerable to sharp changes in price due to unexpected events or changes in market sentiment.
Costs:
Costs tend to be higher than for our other CFD products. These include the spread (the difference between the prices at which we offer to buy or sell a CFD position) and funding charges.
Price transparency:
When compared with currencies, there can be more significant variations in the pricing of cryptocurrencies used to determine the value of your CFD position.
Risk warning:
Cryptocurrencies have experienced significant price volatility which, in combination with leverage, places you at risk of suffering significant losses and potentially losing more than you have invested. You should be aware of the risks involved and fully consider whether investing in cryptocurrency CFDs is appropriate for you.
DF Markets 