What is Cryptocurrency CFD Trading? Table of Contents
When you search for Cryptocurrency investment, you may often encounter the word “Cryptocurrency CFDs”, as if Cryptocurrency CFD is something different from the actual Cryptocurrency.
In fact, many Cryptocurrency investors in the world are engaging in Cryptocurrency CFD trading, but not the actual Cryptocurrency exchange.
What are Cryptocurrencies?
The popularity of cryptocurrencies has grown over the years and many brokers offer a range of currencies that can be traded using CFDs.
These are essentially web-based currencies, the transactions of which are secured by cryptography.
Cryptocurrencies are not issued by a central authority and are not linked to a specific country, making them “immune” to any government interference or manipulation.
In general, Bitcoin is considered to be the first decentralized cryptocurrency, and it wasn’t even designed as such.
Bitcoin was first released as open-source software in 2009 and is now traded, distributed, and stored using a decentralized ledger system called a blockchain.
It has remained the most popular and well-known cryptocurrency, although there are now thousands of cryptocurrencies.
Although the cryptocurrency market is a daily, rapidly growing market, it is still small compared to the global currency market.
As such, it can be attractive to traders looking to be at the forefront of trading the new markets.
However, there are many risks involved in trading the new and volatile markets, and while profits can be made it is of the utmost importance to keep in mind that losses can be just as quick and substantial.
What is Cryptocurrency CFD Trading?
The basis of trading cryptocurrencies is the same as trading global currencies.
In short, it’s simply exchanging one cryptocurrency for another currency.
For example, you can trade Bitcoin for Euros or Ripples for US Dollars, etc.
The cryptocurrency market is based on the supply and demand of a particular currency.
In the absence of a central regulator, they are largely unaffected by many of the economic and political concerns affecting the prices of global currencies.
Some of the factors that affect the value of a cryptocurrency are:
- Supply and Market Cap
- The number of coins present, the speed at which they are released, destroyed or lost, the value of all coins present, and the way traders perceive them can all affect market prices.
- Prices can be influenced by how easily and to what extent the cryptocurrency can be integrated into existing infrastructures.
- Major Events
- Some examples of major events affecting cryptocurrency prices include security breaches and economic setbacks, as well as updates to laws.
Cryptocurrency CFDs are derivatives that allow you to speculate on the price movement of a cryptocurrency without owning the underlying coins.
You can buy when you think a cryptocurrency will go up or sell when you think it will go down.
The value of digital currencies tends to change very quickly and that is why we caution our clients about a number of potential risks when trading cryptocurrency CFDs – most notably the inherent volatility.
Check out the full list of cryptocurrency CFDs available to choose from on AltumBrokers’ platform.
Please click "Introduction of AltumBrokers", if you want to know the details and the company information of AltumBrokers.