All the Ways to Trade CryptocurrenciesFor traders looking to trade cryptocurrencies intraday or even intraweek, the availability of CFDs across a number of brokers provides far more efficient trading conditions than trading an actual cryptocurrency via crypto exchanges.
Trading across the major cryptocurrencies has certainly evolved over the last year, with December’s record highs drawing seasoned traders across from the more traditional asset classes in search of volatility and significantly higher returns.
Notwithstanding the slow summer and local lows for all cryptocurrencies, they remain a great instrument for day trading with high potential for a long-term appreciation. That is why CFD platforms, such as SimpleFX WebTrader, are nowadays the most attractive way to trade bitcoin and altcoins.
For those still looking to buy and hold, exchanges are the best solutions. They evolved and provided flexible means of making purchases. Binance, Coinbase, HitBTC, and others allow traders to purchase crypto coins, although only on the buying side (you cannot short sell cryptos).
Cryptocurrencies exchanges provide investors to buy popular coins such as Bitcoin, Ethereum, Ripple as well as altcoins but the process and the platform is complicated, insecure and not advance. In order to fill to the gap, CFD’s brokers enter the market and provide the essential need of buying and selling cryptocurrencies instantaneously. CFD’s – contract for difference allow traders to take advantage of the crypto markets’ volatility and enjoy leveraged positions offered by the brokers.
Other elaborate ways of purchasing cryptocurrencies are more catered for those looking to acquire Bitcoin rather than altcoins, with Bitcoin ATMs having seen a rise in popularity along with trading Bitcoin on LocalBitcoin, Bitquick and even local stores.
Trading Cryptocurrencies with CFD’s
For traders looking to trade cryptocurrencies intraday or even intraweek, the availability of CFDs across a number of brokers provides far more efficient trading conditions than trading an actual cryptocurrency via crypto exchanges.
How Does Cryptocurrency CFD Work?
Crypto trading using Contract for Difference (CFD) is one of the instruments available when contracting with a platform, SimpleFX WebTrader in this case. You create a coin trading order on the platform and the broker puts it in the market in your name.
You capitalize on the difference when buying low and selling high, using several tools that would limit losses if the market trend does not go your way. In the meantime, you have the freedom to construct the order the way you want, without interference in the process.
The thing about CFD trade is the fact that you need a stable platform to trade in. SimpleFX WebTrader provides a marketplace, where you can use any type of device for trading, including browser, phone apps, or even desktop.
Contract for Difference (CFD) work as follows….
Key advantages for trading cryptocurrency CFDs over actual cryptocurrencies would include:
- Order execution is instantaneous, narrowing the gap between order and execution price.
- Purchase of CFDs can be made with fiat money, unlike purchasing actual cryptocurrencies, where some crypto exchanges require a trader to first purchase Bitcoin or Ethereum to then acquire the cryptocurrency of choice.
- Compatible digital wallets are not required.
- Traders are able to enter trades long or short, with exchanges offering as much as 500:1 leverage, neither option available when trading cryptocurrencies.
- CFD trading platforms will be far more familiar for seasoned traders, with MT4 commonly available that is also user-friendly for the more novice trader.
SimpleFX is a reputable broker that offers investors a number of platforms to trade or invest into a number of cryptocurrency CFDs, on Android phones, iPhones, tablets or the web, with the popular Metatrader 4 (MT4) platform available for desktop.
The use of more established brokers such as SimpleFX also benefits traders with advanced trading platforms and the liquidity and access to market research and technical analysis that is becoming ever more important in the crypto world.
Trading Cryptocurrencies via Crypto Exchanges
While there may be certain local regulatory requirements when opening an account on a particular exchange, as more jurisdictions have already or are looking to introduce appropriate rules and regulations including KYC and anti-money laundering procedures, the trading principals across the various exchanges are broadly similar.
Key considerations in selecting a crypto exchange include:
- Transaction fees: While fees are less material for those looking to simply buy and hold cryptocurrencies, fees become a material consideration for higher frequency traders.
- Security: Opting for an exchange with appropriate security levels that includes 2-tier log-in protocols and be listed on an HTTPS site are important to reduce the risk of being hacked.
- Location: With increasing laws across the jurisdictions, its’ advisable to identify an exchange in a local domicile, with the other consideration being what fiat currencies can be used to fund accounts and the exchange rates and fees associated with such funding methods.
- Trading Volumes and Liquidity: Certain crypto exchanges will have greater liquidity than others and may also vary depending upon the cryptocurrency pairings.
- Deposit and Withdrawal Times: The more high frequency, the more important the time it takes for deposits and withdrawals when considering the volatility across the cryptomarket. Of particular importance would be to ensure that execution price is locked in at the time of purchase or sale and not on the day that the cryptocurrencies are received or the account is funded.
- Payment Method: Payment methods vary making it important to identify an exchange that offers a suitable payment method.
For those looking to trade actual cryptocurrencies, it’s also worth noting that it is advisable to always withdraw acquired coins into a compatible digital wallet from where they can be remitted to the exchange account when it is time to sell. This may increase the time taken to buy or sell a particular cryptocurrency, but does protect the investor from possible theft.
Buying Bitcoin in Local Stores
Finally, for those looking for a different crypto experience, it is possible to buy Bitcoin from certain local stores, with prospective buyers needing to provide basic information including name, country of domicile and Bitcoin wallet address to receive their Bitcoins in no longer than 10 minutes.
The advantage of purchasing from a local store, while buying your morning coffee, is not only the anonymity that purchasing on a crypto exchange no longer offers but the simplicity of the transaction.
A number of companies facilitate in-store cash purchases of Bitcoin, including Bitit, where you are able to find the listing of stores catering for cash purchases of Bitcoin as well as purchasing with Neosurf and Cashlib cash vouchers.
While the anonymity and option to purchase with cash are the benefits, buyers will need to ensure that they have a Bitcoin compatible digital wallet set-up before proceeding.
All in all, the options available to gain exposure to the cryptocurrency market have expanded significantly and will likely continue to do so, the most important step in the investment process, therefore, is to understand which method is most appropriate for a particular investment strategy.
Cryptocurrencies markets are very difficult to predict. The prices can go up or down any day. If you want to profit from the bitcoin and other altcoins price volatility, CFD trading is your best option. You need a handy platform that provides useful intuitive tools. You also need a trading account, preferably without minimum deposits. A simple trading app makes it much easier to make a profit when an opportunity comes. If you want to try crypto CFD trading check out SimpleFX WebTrader. You can test it with a fully functional demo or a live account with some funds for start.