When it comes to trading cryptocurrencies, you have to guess whether the value of the market you have chosen will rise or fall. And the funny thing is you never own digital assets. In fact, trading is done with derivative products like CFDs. Let’s take a look at the benefits of trading cryptocurrencies. Read on to know more.
Although cryptocurrency is a new market, it is quite volatile due to short-term speculative interest. The price of Bitcoin has dropped from 19 19,378 in 2018 to 58 5,851, in just one year. However, the value of other digital currencies is quite stable, which is good news.
What makes this world so exciting is the volatility of cryptocurrency prices. Price movements provide many opportunities for traders. However, it brings a lot of risks as well. Therefore, if you decide to explore the market, make sure you are doing your research and put together a risk management strategy.
Typically, the market is open for 24/7 trading because it is not regulated by any government. Moreover, there are transactions between buyers and sellers all over the world. There may be short downtime when the infrastructure is updated.
Liquidity refers to how fast digital currency can be sold in cash. This feature is important because it allows for faster transaction time, better accuracy and better pricing. Generally, the market is a kind of liquid as there are financial transactions across different types of exchanges. Therefore, small business can bring big change in price.
Since CFD trading is considered a leveraged product, you can open a position on what we call “margin”. In this case, the value of the deposit is a fraction of the trade value. So, you can enjoy a great exposure in the market without investing a lot of money.
The loss or gain will reflect the value of the position at the time of its closure. Therefore, if you trade at a margin, you can make huge profits by investing a small amount of money. However, it also increases the losses that can exceed your deposit in the trade. Therefore, you should consider the total value of the position before investing in CFD.
Also, it is important to make sure that you are following a solid risk management strategy, which should include proper limits and stops.
Quick account opening
If you want to buy cryptocurrency, make sure you are doing it through an exchange. All you have to do is sign up for an exchange account and put the coin in your wallet. Keep in mind that this process can be limited and can take a good deal of time and effort. However, once the account is created, the rest of the process will be quite smooth and complex.
Long story short, these are the most notable advantages of cryptocurrency trading here and now. Hopefully, you will find this article quite helpful.