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Cryptocurrency Contract For Difference (CFDs) are a type of derivative instrument that allow traders to speculate on the price movements of cryptocurrencies. CFDs allow traders to profit from both rising and falling prices, and they are a popular way to trade cryptocurrencies due to their flexibility and accessibility.
When you trade cryptocurrency CFDs, you enter into an agreement with a broker to exchange the difference in the value of a cryptocurrency between the time you open a position and the time you close it. This means that you don’t have to deal with the hassle of securely storing crypto on an exchange or wallet but still get exposure to its price movements.
CFDs are a leveraged product, which means that you can trade with a small amount of capital and magnify your profits. However, leverage also increases your risk, as any losses are also magnified.
One of the advantages of trading cryptocurrency CFDs is that they can be traded 24/5, unlike traditional markets that have specific trading hours. This allows traders to take advantage of price movements that occur outside of normal trading hours.
When trading cryptocurrency CFDs it’s important to choose a reputable broker, like GO Markets, that is regulated by multiple respected financial authorities, as this will help ensure that your funds are safe and that you are trading on a fair and transparent platform.
To trade crypto, select the cryptocurrency you are interested in, enter your size and pick buy or sell depending on where you think the market will go. When you close your trade the profit or loss is booked to your account balance instantly. It’s important to manage your risk carefully and to consider using stop-loss or take profit orders to lock in profits and limit your potential losses.
Trading cryptocurrency CFDs can be a lucrative way to profit from the price movements of cryptocurrencies. However, it’s important to understand the risks involved and to have a solid trading strategy in place. Choose a reputable broker, manage your risk carefully, and always trade within your means to maximize your chances of success.
|Name||Symbol||Margin||Currency||Min. Trade Size|
Trading example: Cash CFD BTCUSD
|Quote||4500.50 / 4512.50|
|Contract size||1 Standard size|
The quote means you will sell at: 4500.50
Strategy: you believe the BTCUSD will go lower, so you sell one contract at USD 4500.50
Margin Requirements: You need to have the required margin available on your contract (see symbol specifications in MT4 platform)
Contract Size: The value of 1 see contract of BTCUSD is Price x Contract Size (4500.50 x 1 = $4500.50 USD)
Note: The contract size in monetary terms vary in accordance with market price.
BTCUSD is now quoted at 4450.50 / 4462.50
Strategy: You decide to take profit and close the position at 4462.50
Profit/Loss calculation: (opening value – closing value) x contract size = profit/loss.
Calculation: (4500.50 – 4462.50) x 1 = $38.oo USD (Profit)
Account currency: Your profit/loss will now be converted to your account currency.