CFDs (Contracts for Difference) are special investment vehicles that fully allow traders to trade assets such as bonds, stocks, commodities, or digital currencies without necessarily having to own the underlying assets in question. Below are five (5) reasons why cryptocurrency traders should consider trading crypto CFDs instead of the underlying digital assets.
- Easy to get started
Perhaps you were not aware but it is quite easier to get started with trading crypto CFDs instead of buying and selling actual cryptocurrencies. To get started with CFD trading, you simply need to sign up for a CFD trading platform, like Oinvest. Upon signing up, you are good to go. There is just no need to learn the technical ins, and outs of securely storing cryptocurrency assets. In addition, there is no need to setup a cryptocurrency wallet. CFD trading also gives you full access to an extensive variety of markets that are not regularly available to retail investors. It allows you to speculate on the price movement of individual shares, bonds, indices, commodities, currencies, and digital currencies.
- Does not require technical crypto know-how
Newbies in the digital currency world, as well as people who do not trade cryptocurrencies can easily enter and transact with CFD trading without fear of facing technical challenges.
- Crypto CFDs enable you to go long and short
Behold, CFDs enable traders to go long and short. Here, you are able to make a reasonable amount of profit by simply speculating on price movements in either directions. That is, you can potentially profit as the market rises or as the market decreases. This is a great feature which is not usually available on cryptocurrency exchanges. A good number of Bitcoin Exchanges do not enable users to short cryptocurrencies and tokens. This is an unfortunate situation because traders can use short positions to hedge their portfolios.
- With CFD, you can trade with margin
It is important to understand that CFDs are leveraged products. In simple terms, you pay a small percentage of the total trade value to fully open your position. This is what we refer to as margin. During the process of trading, there are two types of margins: initial margin and maintenance margin. Here, the initial margin is required to open a position during trade. On the other hand, the maintenance margin allows you to keep a position open after you have incurred cost that your deposit margin and account balance cannot cover.
- CFD brokerages are regulated
Worth pointing out in this piece of writing is the fact that CFD brokers are regulated. This makes them safer to embrace and use than unregulated cryptocurrency exchanges. Behold, regulated brokers are under strict regulatory guidelines that were setup to protect you, the trader. In view of the numerous crypto exchanges that have been hacked in the last decade, there is a strong and well supported argument for trading on regulated brokerages instead.