Importantly, most forex/CFD platforms trade contracts for differences in cryptocurrencies (CFDs). In other words, the trader is doing a deal with the CFD provider about an asset (such as Bitcoin). These derivatives are based on how the prices of their underlying assets change, but they don’t involve exchanging or owning the digital currency itself.
No real cryptocurrency is being traded, and there are no wallets or addresses to worry about. This also lowers the chances of hacking, which is a real risk even for the best and most reliable cryptocurrency exchanges. CFD traders can focus on how to profit from changes in the market. Markets.com is the source that comes with various stocks to trade hence becoming the best broker forex in the world.
On forex/CFD platforms, you can make money trading cryptocurrencies if you have a Buy position and the sell rate of the cryptocurrency goes up above its opening buy rate. If you have a Sell position, you can make money if the buy rate of the cryptocurrency goes down below its opening sell rate.
On the other hand, buy positions will lose money if the sell rate drops below the opening buy rate, and sell positions will lose money if the buy rate rises above the opening sell rate.
How Is Trading Crypto On Forex/CFD Platforms Different From Trading On The Exchange?
There are a few main differences between trading cryptos on a forex/CFD platform and an exchange:
- In none of the trading transactions any digital cryptos are given or taken.
- You don’t have to have a cryptocurrency wallet.
- You trade cryptocurrencies based on the rules set by the forex/CFD provider.
- Leverage is used in crypto CFD trading.
- You can also easily trade crypto-fiat pairs like BTC/USD or LTC/USD. This differs from most other cryptocurrency exchanges, where you can only trade crypto-to-crypto pairs.
- You can only use fiat currencies to make deposits and withdrawals.
How Cryptocurrency CFDs Are Bought And Sold
If you have already traded forex or CFDs on one of the popular MT4 platforms, you should be able to figure out how to trade cryptocurrency CFDs without any trouble. Most of the time, they are listed on the platform just like any other CFD instrument.
Trading a cryptocurrency on a CFD platform like markets.com requires technical and fundamental analysis, a balanced trading mindset, and a good set of risk management tools.
Risk management is important because cryptocurrency pairs are some of the most volatile assets on any CFD trading platform. Prices change by tens or hundreds of currency units every day, which is different from forex assets, which only change by a few decimal percentage points, or volatile commodity assets, like crude oil, which only change by a single currency digit every day.
Whether you make or lose money depends greatly on how well you can control your risk using technical and fundamental strategies.
Regarding cryptocurrency news, there are two sides to every story. First, there is no economic calendar, so you can’t know when news will move the market will come out. Second, the crypto news that moves the markets involves adoption, positive statements from regulators, and getting listed on a major exchange.
Look At How Prices Relate To Each Other
It would help if you looked for links between things. For instance, Bitcoin Cash ABC and Litecoin both were built with Bitcoin’s structure and are, in essence, copies of Bitcoin (also referred to as altcoins). So, the price of Litecoin tends to follow Bitcoin wherever it goes.
Conclusion
So, here are the most important things that you need to know to trade cryptocurrencies on forex or CFD platforms. So, the markets.com review suggests paying attention to the news. Anything you hear about cyberattacks or changes to regulations, as well as anything you hear about hard forks, will affect the price of cryptocurrencies.
You should also pay attention to how the prices of cryptos like LTC and BTC are linked.
