Monday March 01, 2021
Bitcoin (BTC) $45,194.00   Ether (ETH) $1,422.96
  • Events
  • News
    • Blockchain Technology
    • Capital Raising
    • Crypto Exchanges
    • Crypto Payments
    • Gaming & Betting
    • Networks & Protocols
    • Security
    • Vendor Technology
    • Wallets
NEWSLETTER SIGNUP
EXCHANGE 300+ COINS
CryptoNinjas
  • Crypto & Blockchain Links
  • Real-Time Market Data
  • Bitcoin ATM Map
  • Token Offerings/Listings
No Result
View All Result
CryptoNinjas
No Result
View All Result
Home Services

Is It Financially Healthy To Trade CFDs On Crypto?

03/03/2020
A A
Is It Financially Healthy To Trade CFDs On Crypto?

Neither the CFDs (Contract for Difference) nor the cryptocurrencies are something new. If you are involved in financial trading or have a strong finance background, you may be well-aware of both the assets. But, the chances are high that you don’t know how and why cryptocurrencies are feasible to trade through CFDs. So it’s the right time for you to acquire new knowledge.

There are certain advantages and disadvantages associated with trading CFDs on crypto. Traders who deal in regular crypto and try to govern the market are mostly confused when it comes to CFDs. If you are wondering why to choose the opposite option rather than trading in regular crypto, then read the article and learn about this new trading strategy.

Crypto CFD Advantages

Before I begin to discuss a few advantages, I’d like to mention that it’s not going to be a “call to action” discussion; things are here to provide you valuable information. In the end, the decision is up to you.

Margin Trading

Only cryptocurrency CFD providers can afford to manage margin trading. The CFD trading brokers are here to guide you with trading activities under dissimilar situations. Although big exchanges have started to implement things on their platforms, one-on-one interaction with your trading brokers can guide you better and allow you to get control over uncertain risks. In 2017, when cryptocurrencies got a big hit in the markets, CFD trading brokers were there to encourage this new trading strategy. One of the exciting features of this whole new concept is that you can relish leverage on your trades via margin trading platforms. It means you will be getting additional funds on every trade you open from your brokerage. For instance, you opened a position with $200, and now you are trading bitcoin. Let’s assume that bitcoin has grown by 50%, and you will be getting $300 in the end, which makes $100 as profit. So that’s primarily the reason why traders are preferring CFD brokers while crypto prices are rising.

Liquidity

The CFDs have better liquidity. It means you can get direct cash in no time. Since CFD is a fiat currency, there is no requirement of conversion into EUR or USD. If you need cash on an instant basis, request your broker, and he will approve it. On the other hand, with crypto, you first need a wallet, then you need to send that s to wallet, and then it is being transferred to exchange. After all this process, you get to withdraw. Moreover, there are restrictions to what extent you are allowed to withdraw within a day. However, when things are linked to CFD brokerages, you hold fiat currency on your account. Plus, you can mitigate the potential risks associated with daily withdrawal limits.

Security & License

It is noted that CFD platforms are more secure because you hardly get to experience incidents like hacking and funds stealing. Contrarily, crypto exchanges are more vulnerable against misfortunate events, and high-risk is associated with keeping your assets via such a platform. That’s why people prefer cold wallets to store their assets. However, when you happen to trade crypto CFDs, your account is going to be your wallet, and there is no such threat of hacking. Moreover, you will be relieved to know that CFD brokers are licensed (legally bound by local financial regulators). It means customers can safeguard their interests with the help of local laws. There are low chances of financial damage on this platform. In case anything goes wrong, the broker is bound by law to compensate you for your loss. Just like your get to benefit on MT4 platforms.

Crypto CFD Disadvantages

Unluckily, where there are advantages, there are also a few disadvantages of crypto CFDs. Let’s just briefly discuss them.

Ownership

Since you do not deal in actual/real cryptocurrencies, when trading with crypto CFDs, you speculate on the prices. You expect to get rewards in case you are correct. In such a case, you are not in a position to direct or affect the market. Also, you get limited diversification. You don’t get the chance to diversify on spot. With crypto CFD, you first have to take out the funds and then invest somewhere else.

Higher Costs

Margin trading is not long-term. Most of the time, individuals get to close their positions after a couple of days (crypto CFDs are no different). With the CFD platform, you are always given a deadline to close your position. If you happen to fail, you can probably lose your money. However, if you are looking to extend that deadline, you will have to pay a fee (typically 1% of your position). As a result of such limitation, it is not feasible for CFD traders to enter in a long-run position by using the crypto. Because when they will be ready to close their positions, they will have already paid more in fees.

FacebookTwitterLinkedinRedditE-MailTelegram
Leave Comment

Where to Exchange

Bit2MeLeading Spanish Bitcoin ExchangeVisit
BL3P
European Bitcoin ExchangeVisit
ChangellyExchange & Buy 150+ CryptocurrenciesVisit
itBitAmerica's First Regulated Bitcoin ExchangeVisit
  • Trending
  • Latest
Glow programming language brings smart contract simplicity to Cardano

Glow programming language brings smart contract simplicity to Cardano

02/26/2021
This was avoidable – The lost Bitcoin fortunes

This was avoidable – The lost Bitcoin fortunes

02/26/2021
ZelaaPayAE deploys Pundi X's merchant crypto payment solutions for UAE

ZelaaPayAE deploys Pundi X’s merchant crypto payment solutions for UAE

02/24/2021
Anchorage raises $80M Series C, led by GIC, Singapore's sovereign wealth fund

Anchorage raises $80M Series C, led by GIC, Singapore’s sovereign wealth fund

02/25/2021
Tendermint invests in Tgrade to bolster Cosmos' growing DeFi ecosystem

Tendermint invests in Tgrade to bolster Cosmos’ growing DeFi ecosystem

02/24/2021
Crypto platform NetCents to offer users access to DeFi protocols thru Vesto

Crypto platform NetCents to offer users access to DeFi protocols thru Vesto

02/27/2021
SmartKey to integrate with GeoDB to build the blockchain-based data ecosystem

SmartKey to integrate with GeoDB to develop blockchain-based data ecosystem

02/26/2021
This was avoidable – The lost Bitcoin fortunes

This was avoidable – The lost Bitcoin fortunes

02/26/2021
Bitcoin exchange Xcoins receives In-Principle Approval for Malta's VFA license

Bitcoin exchange Xcoins receives In-Principle Approval for Malta’s VFA license

02/26/2021
Token-based commodities DEX Mettalex launches on Binance Smart Chain and Ethereum

Token-based commodities DEX Mettalex launches on Binance Smart Chain and Ethereum

02/26/2021
  • Home
  • Directory
  • Data
  • About
  • Contact
SUBSCRIBE

© 2016 - 2021 CryptoNinjas Disclosures | Privacy Policy

  • Home
  • Crypto Links
  • Market Data
  • Blockchain Tech
  • Exchanges
  • Capital Raising
  • Vendor Technology
  • Token Offerings/Listings
  • Payments
  • Wallets
  • Bitcoin ATM Map
  • Conferences & Events
  • About
  • Contact

© 2016 - 2021 CryptoNinjas Disclosures | Privacy Policy


Go to mobile version