When it comes to trading cryptocurrencies, you have to consider whether your chosen market will go up or down in value. And interestingly, you never own the digital asset. In fact, trading is done using derivative products such as CFDs. Let’s take a look at the benefits of trading cryptocurrencies. Read on to learn more.
Volatility
Although cryptocurrency is a new market, it is quite volatile due to short-term speculative interest. The price of Bitcoin fell to $5,851 from $19,378 in 2018 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 offer traders many opportunities. However, it also comes with a lot of risk. So if you decide to explore the market, just make sure you do your research and have a risk management strategy in place.
Hours of work
Generally, the market is open for trading 24/7 because it is not regulated by any government. Moreover, transactions are made between buyers and sellers all over the world. There may be short interruptions when the infrastructure is updated.
Improved liquidity
Liquidity refers to how quickly a digital currency can be sold for cash. This feature is important as it allows for faster transaction times, better accuracy and a better price. As a rule, the market is illiquid, since financial transactions take place on different exchanges. Therefore, small transactions can make big changes in prices.
Impact on leverage
Because CFD trading is considered a leveraged product, you can open a position on what we call “margin.” In this case, the cost of the deposit is a fraction of the trade value. So you can enjoy great market access without investing a lot of money.
Losses or gains will reflect the value of the position at the time it was closed. Therefore, if you trade on margin, you can make huge profits by investing a small amount of money. However, it also increases losses, which can exceed your deposit on the trade. So make sure you take into account the total value of the position before investing in CFDs.
In addition, it is important to ensure that you follow a solid risk management strategy, which should include proper limits and stops.
Fast account opening
If you want to buy cryptocurrencies, make sure you do it through an exchange. All you need to do is sign up for an exchange account and store currency in your wallet. Keep in mind that this process can be restrictive and take a lot of time and effort. However, once the account is created, the rest of the process is pretty smooth and hassle-free.
In short, these are some of the most notable advantages of trading crypto currency here and now. I hope you find this article very useful.