If you are considering an investment in the cryptocurrency market, you should know all the methods that are available to you to do that. Investing in cryptocurrencies or trading crypto assets are terms that you can use interchangeably. So, as you continue to read further, keep in mind that trading and investing is being used synonymously in this article. Now, how can you trade Bitcoin? Are your options limited? Or perhaps, you have a variety of options available but you do not know about them. In some cases, you have to pick one option over the other only because of the level of risk involved.
As you read on, you will know about the two methods of trading Bitcoin. The first method is the conventional and less effective one. The second one is the most effective one and can make you a millionaire if you do it right.
Trading Bitcoin the Conventional Way
The conventional way of trading bitcoin is through online exchanges. You have to know that cryptocurrencies are digital assets. They do not have any existence in the physical world so their exchanges are digital as well. When you intend to buy a particular cryptocurrency, you have to have some currency for exchange. In an ideal scenario, you will have a fiat currency such as USD, GBP, or EUR to use on the exchange. You can buy your desired cryptocurrency on the exchange with the cryptocurrency you have. Once you have bought the cryptocurrency of your choice, you can hold on to it for as long as you want.
The best thing is that you can download an application on your mobile phone if you want for trading. When choosing an exchange for trading cryptocurrencies, you should know how many crypto assets that online exchange supports. At the same time, you will have to compare the rates that different exchanges are offering. Yes, you will see different exchanges offering different rates.
Trading Bitcoin CFDs
This is the best way of trading Bitcoin and any other type of cryptocurrency that you wish to trade. At its core, bitcoin CFD trading is not different from trading bitcoins. However, when you look at the subtle differences, you realize that they combine to create a huge difference. Let’s take a look at Xtrgatescam to understand Bitcoin CFDs in detail and how they differ from conventional trading.
· CFDs Are Not Assets
The first thing you have to know about Bitcoin CFDs is that they are not assets. Yes, you will trade them like assets with a value associated with every unit, but you will not own the exact asset that you are investing in. When you say you are buying Bitcoin CFDs, it is not as though you are buying Bitcoins. You buy Bitcoin from an online exchange. In the case of CFDs, you are only buying a contract, known as the contract for difference. This contract lets you trade some units of Bitcoin but you do not own the crypto asset.
· CFDs Have Leverages Too
When you trade CFDs, the thing that you will love the most is leverage. That’s something you do not get from online exchanges when you trade Bitcoin traditionally on them. Leverage is the contribution from the online broker who you sign up with. It comes in the form of ratios, which means that the broker contributes a certain number of units of currency for every unit of currency that you invest in a particular trade. So, if you are looking at a leverage of 1:100, you will be investing only one dollar to have the broker contribute 100 dollars in your trade. However, when your trade bears fruit, you will benefit from the profit on the overall trade; hence amplifying your profits.
· You Must Maintain a Margin As Well
When trading with leverage, you will have to familiarize yourself with the concept of margin as well. This is the minimum amount that you must maintain in your account to enjoy leverage on your trade. If you do not have this amount in your account, you cannot enter the trade. It is a requirement from your broker to cover its costs. For example, if you end up with a losing trade, you have to have some money in your account to cover that loss. You can’t expect the broker to bear the loss on your behalf.
· You Can Trade Them from Anywhere
You have to note that you will be trading with online brokers. These are the places where you get to trade CFDs and ETFs. There is no chance you can trade CFDs with online exchanges. Now, you will notice after some research that there are hundreds of online brokers that provide you with the facility of trading Bitcoin CFDs. In fact, they let you trade the CFDs of many other cryptocurrencies and assets as well. Since the competition is so tough among these online brokers, they have to find ways to beat each other.
One of the ways they prove to their traders that they are better than the competition is through the trading platform. They are usually very serious with the type of trading platform they allow you to use. For that reason, you will find them offering you trading platforms for web interface, mobile phones, desktops, and tablets. In short, it does not matter which device you use because you can access the trading platform from anywhere you want in the world. In addition to that, you can access your trades from anywhere and know just about anything you want about your trading account.
Bitcoin CFDs allow you to make a lot of money from this market. However, after considering the nature of this market i.e. its volatility and huge value, most online broker offer you a small leverage on your Bitcoin trades. In most cases, they will limit you with a leverage of just 1:5. While it may seem small on the surface, this leverage is quite huge when you take into account the big value of Bitcoin.