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Date:
25th May 2020
Author:
Dalmas Ngetich

5 Reasons to Trade Crypto CFDs

There are two fundamental types of traders: the speculator and the investor. The investor has a Warren-Buffett type of trading style, playing the long game. The speculator gets into the market for its volatility, watching the asset's short-term movements as influenced by supply and demand forces. 

One key character that traders hold dear is their ability to accurately predict the direction of the market. The long-term investor studies fundamentals to ensure that his/her investment will pay off over time. The short-term trader will create a trading strategy that brings in a profit if his or her prognosis is accurate.

These same principles apply in the world of crypto. You can make money out of cryptocurrencies by storing them as an investor does. Also known as “hodling”, long-term crypto investors will only sell them when their digital asset's prices rise. Some HODLers are in the market for the long haul because they believe in the future of blockchain and of crypto. 

The crypto CFD trader on the other hand is nifty and looks to profit from price swings without necessarily burdening himself with the mechanics of securing coins. They will study a market closely, look for a pattern in movements, then make sales or purchases to enjoy the token's fall or rise in value.
A contract for difference (CFD) is the ultimate speculation tool. The derivative product allows traders to play the market without a need to possess the underlying asset(s). There are a variety of CFDs available on CryptoAltum including Indices, Forex, Gold, and Cryptocurrencies

In digital currencies trading, when you purchase a CFD, you will enter into a contract with a crypto CFD broker. You will then need to predict the price of the CFD's underlying asset and even use leverage. If your forecast is right, you will make a profit from cashing in the difference. If your projection is wrong, you will make a loss for every point that the market values move against your forecast. 

Good news is that with crypto CFD trading, you are not limited to buying only. By shorting, you sell high and buy low even with leverage for higher returns. Interestingly, with CFD trading platforms, associated fees are lower. 

At CryptoAltum, you can open long or short positions without worrying about high fees. Pricing is transparent without commissions as trades are executed instantaneously.
1. Leverage
In the crypto market, you will find several CFDs pegged to the performance of fiat currency or a different cryptocurrency. 

CryptoAltum offers over 60 crypto trading pairs including:
  • BTC/USD
  • DSH/JPY
  • ETH/BTC
  • BCH/USD
  • BCH/ETH
  • BCH/XMR
You can “go long or short” and make massive profits because of the high levels of leverage offered on these pairs. Leverage can be anywhere between 1 and 500.
Leverage can be an advantage (or disadvantage) in CFD and derivatives trading. It is an advantage of CFD trading because all you need to trade is a percentage of the contract's full value. 

Known as the margin requirement, this percentage can go as low as 0.2 percent, meaning that you can open a CFD worth $10,000 with a margin of $20. If you have honed your trading strategy, you will get a 100 percent profit from the CFD. 

You could however magnify your losses as well, meaning that you can lose much more than your margin requirements. Loss or profit in CFD trading is not based on your deposit but your position and leverage (risk). 


2. Flexibility of Trade
Since a CFD is an agreement that enforces an exchange of a position's opening and closing value, it is a very flexible form of trading. As mentioned, you can trade these contracts up or down the market. That is, short (sell) or long (buy) as per your price predictions. 

CFDs also allow access to a wide variety of assets for diversification. You will find CFDs for precious metals, Forex, or Indices under one platform. Not only can you trade over 60 different crypto pairs at CryptoAltum, but you can swap and trade Gold or Indices using crypto. 

Simply sign up for free, log in, choose your asset, trade at any hour, and enjoy the returns. Contracts are designed to imitate their actual market value and trading hours. 

You can trade index, Forex, and commodity CFDs over the 24 hours of the official five working days. If you are into Bitcoin CFD trading or any other crypto CFD, you can trade your contract every hour and day of the week.


3. Perfect for Brief Periods of Trading

CFDs are very popular derivatives for traders especially during periods of heightened volatility. A CFD for long-term investment can lead to massive losses because of the fluidity of the underlying asset's prices and because of the selected leverage. 

The best crypto CFD broker will have the capacity for high liquidity, transparent pricing, and fast trade execution. Ideally, the best trade speeds are a second or less long, an essential feature for volatile and fast-paced crypto CFD markets.


4. CFDs Do Not Have an Expiration Date
Unlike most other markets, crypto CFDs don’t have an expiry date. What’s on offer are usually Perpetual Futures which track the performance of the underlying. 

At CryptoAltum, a trader is free to close your position whenever he/she deem it fit. If a trader wants a Crypto CFD for long-term investment, he/she can place an order at the exchange without the fear that CryptoAltum will close out the position before the strategy has matured. 

The only reason a broker has to close your position (through a margin call) is an instance where the market has gone against you and the maintenance margin is almost running out. To prevent losses—especially when trading on leverage, to the exchange, the position is automatically closed.


5. Low Costs of Trading
Not only are Crypto CFDs easy to access, but they also have fewer charges levied on them, compared to other investment assets. If you trade from CryptoAltum, you will enjoy top levels of anonymity during trading, because you do not have to fill out Know Your Customer (KYC) details to open an account. 

CryptoAltum's MT5 platform accounts are also free. Besides, pricing is transparent and orders don’t draw commission or hidden charges. CryptoAltum makes their profits from their competitive ask-bid spreads which are comparably low. 

Additionally, trading crypto CFDs unlike spot trading saves in storage charges. 

Crypto CFDs open a wide door of opportunities for the trader. On the flip side, it demands time and honing of requisite trading skills. Traders should watch out for the volatility that can lead to massive losses because of leverage. 

CryptoAltum is a reliable, trustworthy, and transparent crypto CFD trading platform. They use the most reputable market makers with the best fund security measures to avert losses. By using the MT5 open source platform, the trader has access to a variety of technical analysis tools that are indispensable in the fast-paced nature of crypto trading. 

What's next?

Cryptocurrency has the attention of governments and regulators. For those seeking to flip the market or own digital assets, differentiating between exchange crypto trading and crypto CFD trading is key. 
 
Risk Disclosure: Trading cryptocurrencies or any other financial instrument involves a significant level of risk and may result in a total loss of your investment. You should consider carefully whether investing in Bitcoin or any other instrument offered by CryptoAltum is appropriate to your financial situation. CryptoAltum only accepts deposits in Cryptocurrencies. By trading with CryptoAltum you acknowledge your understanding of this risk disclosure and your agreement with the Terms and Conditions.
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