When trading cryptocurrencies, you have to speculate whether your chosen market will go up or down in value. And the interesting thing is that you never own the digital asset. In reality, trading is done with derivative products like CFDs. Let’s take a look at the benefits of cryptocurrency trading. Read on to find out more.
Although cryptocurrency is a relatively new market, it is quite volatile because speculative interest is short-lived. The price of Bitcoin fell to $5851 in 2018 from $19,378 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 value. Price movements present many opportunities to traders. However, this has many risks. Therefore, if you decide to explore the market, be sure to do your research and put a risk management strategy in place.
Usually, the market is open for trading 24/7 because it is not regulated by any government. Moreover, transactions are made between buyers and sellers from all over the world. There may be brief outages when infrastructure updates are performed.
Liquidity refers to how quickly a digital currency can be sold for cash. This feature is important because it enables faster transaction times, better accuracy and better prices. Generally, the market is illiquid, as financial transactions take place on different exchanges. Therefore, small trades can lead to large changes in prices.
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 part of the trade value. So you can enjoy great exposure to the market without investing a lot of money.
The loss or gain will reflect the value of the position at the time of closing. Therefore, if you trade on margin, you can make huge profits by investing a small amount of money. However, it also increases losses that can exceed your deposit in one trade. Therefore, be sure to consider the full value of the position before investing in CFDs.
It is also important to ensure that you follow a sound risk management strategy, which should include appropriate limits and stops.
Fast account opening
If you want to buy cryptocurrency, make sure you do it through an exchange. All you have to do is sign up for an exchange account and store the currency in your wallet. Keep in mind that this process can be restrictive and require a lot of time and effort. However, once the account is created, the rest of the process will be quite smooth and uncomplicated.
Long story short, these are some of the prominent benefits of cryptocurrency trading in the here and now. Hopefully, you will find this article quite helpful.