Trading Bitcoin CFD – benefits and how to easily start
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Cryptocurrency trading is becoming increasingly popular around the world. Bitcoin, being the most famous digital coin, has been seen frequently in the news over the past years. Did you know there’s another way of trading on the market with Bitcoin, one that doesn’t involve you owning the actual cryptocurrency? This is called Contract for difference trading, shortened CFD trading.
Bitcoin became the first successful digital money
Bitcoin was launched in 2009, as the first type of cryptocurrency in the world. Crypto is different from the money we’re used to, in the sense that it uses a database called a blockchain. This allowed Bitcoin to become the first successfully created digital currency.
Blockchain is decentralised, meaning no-one is in charge of it. The fact that the system doesn’t have any person in charge who can change entries, allows it to be completely trusted by its users.
What is Bitcoin CFD
When buying and selling cryptocurrency such as Bitcoin, you need a digital wallet to store the digital money. However, there’s another way to potentially make money from crypto without actually owning any Bitcoins. This is called Bitcoin CFD trading and is trending among investors all over the world.
CFDs, Contracts for difference, allows you to speculate on the price fluctuations of an asset. This could be something like forex, or in this case Bitcoin. It’s possible to make money both ways in the price movements. You can enter a short CFD position which means you earn money from a fall in the price or go long meaning you think the value of Bitcoin will increase.
How to start trading
There are a number of professional Bitcoin CFD brokers online. If you want to get started with trading, make sure you pick a platform with good reputation and with your desired tools and functions. On most websites, you simply create an account and make a deposit with your preferred payment option.
Some brokers let you try out trading without spending any real money at first. This is usually called a demo account and can be a safe way to get used to the system without the risk of losing money.
Benefits and risks with Bitcoin CFD
Just like other types of trading, Bitcoin CFDs comes with a number of advantages and disadvantages.
High level of risk
One could argue that the main disadvantage is the high level of risk it comes with. It’s important not to invest more than you can afford to lose. Crypto CFDs are highly speculative and also volatile, most suitable for short-term and day trading, not as a long-term investment.
Easy to start – many opportunities
One advantage of Bitcoin CFDs is that it’s easy to get started since you don’t need a crypto exchange or a digital wallet. Furthermore, you have access to the market 24/7 and are presented with many trading opportunities every day. You can also profit from prices going both up and down on the markets, and trade on margin which can increase your gains.