The S&P 500 is a wonderful thing. This has especially been the case in the last ten years when it brought shareholders average returns of 13.05% per year – almost 3% more than the annualized average since its inception in 1957. Bitcoin prices, by contrast, seem to follow a different law of nature, clocking in with yearly returns as high as 74% for the same period.
The most popular crypto tokens – Bitcoin, Ether, Binance Coin, and Solana – continue to draw speculative interest from those who expect their prices to climb yet further. Take, for instance, Solana, whose devotees are driven by belief in the powers of the coin’s native blockchain, upon which transactions work like lightning and super-useful decentralized applications find a home. In the nineteen months following April 2020, crypto traders took the price of a Solana token from less than a dollar up to $260, and many analysts believe more is to come.
For those with plans to trade crypto, it’s important to go about it in the right sort of way. This means you must take your personal financial situation into account, and that you should build up your understanding of the crypto sector before opening any deals. It also means you should beware of certain acknowledged pitfalls, as we’ll explain.
Token prices have been known to lose as much as one third of their value in a single trading session. Millions of dollars in cryptocurrency stored on exchanges has been stolen by hackers, without any reliable way of getting it back. Huge crypto firms have crumbled at astonishing speed. In this article, we’ll introduce you to CFD crypto trading, explaining how it deftly avoids many of the obstacles that beset traditional crypto trading.
CFD Crypto Trading
When you trade crypto as CFDs it means you open a “buy” or “sell” deal on a cryptocurrency, for example, Solana. This implies you are making an agreement with your brokerage to settle between you the price difference in the token between time X and time Y. If you choose a “buy” deal and find that Solana prices surge in that period, your deal will be a success and your earnings will be calculated in proportion to the size of your deal. Since you don’t actually purchase any Solana, storing your cryptocurrency is a non-issue and you need not seek out an exchange to it for you.
The power of establishing your crypto deal in this way is expressed in several ways. You may equally open a “sell” deal on Solana for that period if you believe its prices are due to sink. In this case, a dip in the token’s prices between time X and Y will spell success for you. Bear markets and sudden price drops are now not perils, but opportunities, as far as you’re concerned.
Using your CFD trading app, you can fashion your deal according to your preferences with respect to stop loss and take profit orders. These will automatically close your deal when certain predetermined price levels are reached. You can also elevate your deal size exponentially with the use of leverage – a tool made possible by borrowing funds from the brokerage. This has the power to magnify your earnings many times over, but it should be used cautiously since it can also magnify your losses when the market doesn’t go your way.
CFD Trading Platforms
It’s worthwhile taking the time to think things over when choosing your CFD trading platform because it could make a big difference for you down the line. Seek out a broker that offers charting technology on its app and, better still, one that allows you to plot technical indicators directly on your charts. A good online platform will offer you a stream of market news relevant to your asset, and daily analysis of price action would certainly be nice.
A trading app’s education center can function as a great source of support for you as you go, explaining trading concepts and assisting you in developing your own strategy. It is thus advisable to find a brokerage with robust educational offerings. Remember: the aim is to get you in a groove of informed, dynamic trading, and for this you need succinct, to-the-point information.
Wrapping Up
If you have found a CFD broker who offers all the above, you can give them a try, but first confirm they are a reputable name in the business. Ensure they have an extended track record in online trading with a clean regulatory record and pleased customers. If they claim to be licensed and regulated, check that the regulatory body they mention is legitimate. If, indeed, they come out with flying colors with regard to all the above, you can stop worrying and start trading. Start off with small sums, though.
iFOREX Europe is a CFD trading brokerage with over 25 years of experience in the industry and which excels on every point mentioned above. When trading with iFOREX Europe, you can trade in the price movements of hundreds of instruments, including cryptocurrencies, shares, commodities, ETFs, forex pairs, and stock indices.
iFOREX Europe (formerly known as ‘Vestle’) is the trading name of iCFD Limited, licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC) under license # 143/11. The materials contained on this document have been created in cooperation with iFOREX Europe and should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.25% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please note: Calculations of past performance movements may represent the futures and not the underlying asset. Full disclaimer: https://www.iforex.eu/legal/analysis-disclaimer.html
