What is Cryptocurrency CFDs Trading?

A lot of traders have entered the crypto market after the crypto boom at the end of 2017, when Bitcoin hit an all time high of +$20,000 per coin. The main concerns of traders about these cryptocurrencies are that they not regulated or backed by the government. Despite this fact, the interest in cryptos didn’t diminish, but it only increased. Is crypto trading totally different from the other financial markets? Actually, the concept is not entirely new, since the exchange operations and speculation on cryptocurrency exchanges are identical to any other financial market exchanges. To make profit you need to buy low and sell high. Naturally, instrument base and principle of setting targets for trading are set in the same way as in stocks or Forex markets. As a trader, you can either invest in the physical crypto or trade crypto CFDs.

Physical crypto versus Crypto Contract For Differences

If a trader wants to invest in physical crypto, they will need to open an account with one of the many online crypto exchanges in the market and exchange their fiat for crypto. However, most exchanges don’t have the same execution speed or offer a user-friendly trading terminal as MT4. Not to mention, these exchange are not regulated nor 100% safe from hack attacks. Having those risks in mind, a trader can instead open an account with Forex4you to trade Crypto Contract For Differences (CFDs). In this case, as a trader you would not purchase the physical crypto, but trade on CFDs. This has many advantages, firstly you will trade with a regulated entity, secondly you can long or short the crypto in a quick manner, thirdly you can trade on the intuitive trading platform of Forex4you. All in all, trading crypto CFDs is more practical and similar to the actual Forex trading experience.

The Key Difference between Trading Forex and Crypto

Unlike stock or foreign exchange market volatility on cryptocurrency exchange is hundreds of times greater. Volatility determines range of price movements over a certain period of time. For example in 2013 Bitcoin rate rose by more than 5000%. Such strong price changes within one year can hardly be found on stocks of Forex markets. In order to make substantial profits on traditional financial markets, it is necessary to invest substantial funds in turnover or use high leverage. But when you deal with cryptocurrencies, making 100% profit per day without leverage is quite possible. But with the possibility of rapid profit growth, there is a chance to quickly lose your initial deposit, which brings to a conclusion that trading cryptocurrencies carries very high risk.