Are you interested in pursuing a career or side hustle trading crypto? Do you have experience trading stocks and commodities and want to diversify your portfolio? Trading Crypto CFDs is one of the most accessible ways to get started. Whether you have zero or a little experience trading, it is important to fully understand the advantages and disadvantages of all trading styles, including crypto.
What you'll learn 👉
Crypto Markets
Dubbed the crypto winter, 2022 has been a volatile year for the crypto market, with all major currencies dropping and some even collapsing, including famously LUNA and TerraUSD. However, this volatility is not all bad news, and with a bear market, there are still trading opportunities to be taken advantage of. So, what is CFD crypto trading? The difference between regular crypto trading and CFDs is that you do not need to buy or store actual virtual currency, but instead, you speculate on the price movements.
It is the preferred method of trading cryptos for those who don’t want to get involved with the technicalities of buying and storing cryptocurrency but still want to take advantage of this exciting market. Firstly, let’s examine some of the upsides of trading cryptocurrency CFDs.
Pros of Trading Crypto CFDs
Volatility
As has been clearly seen over the past year, the crypto markets are extremely volatile, meaning both an advantage and disadvantage for traders. If an FX trader takes positions prudently, there is the potential to take advantage of massive price swings, leading to more significant profit opportunities.
Low-Cost / Leverage
One of the most appealing aspects of trading crypto CFDs is that you need very little capital to start. The accessibility of CFDs is partly because brokers do not make profits from commissions but rather spreads. One of the upsides of CFD trading is the availability of high leverage, up to 50:1. However, this also makes crypto trading with leverage incredibly risky, leaving a trader open to significant potential losses.
No Crypto Wallet Management
If you are not the most tech-savvy and tend to be more risk-averse, the CFDs are an excellent method for trading crypto as it mitigates the risk of tokens being lost or your chosen exchange being hacked.
Crypto trading has long been a trading method for those transitioning from a nine-to-five job to trading and investing full-time. This is partly because the global FX markets are open around the clock, five days a week. The convenience of CFD trading makes it an ideal market for a side hustle or out-of-hours trading and taking advantage of short positions.
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Cons of Trading Crypto CFDs
As with any trading strategy, there are, of course, also disadvantages to trading crypto CFDs.
Volatility
As mentioned above, volatility can be your friend when pursuing crypto trading. On the other hand, the volatile qualities of the crypto markets expose you to greater losses. The volatility has been especially evident with the present unstable geopolitical situation and rising inflation.
Knowledge
Although CFD trading is somewhat more straightforward than making regular crypto investments, you will still need to invest some time researching cryptocurrencies and developing a strategy.
As one of the newest and rapidly expanding trading markets, there are many opportunities, but also the most volatile, so caution and discipline are essential.
