Most investors prefer to trade cryptocurrency because it’s very volatile. If you time the market just right, you see higher returns than you can with traditional investments.
Crypto traders want to make a profit in USD by guessing whether the price of Bitcoin goes up or down. When you do this, you have the potential to earn a lot for a small amount of capital, but that also means higher risks. If you’re interested in knowing if you should invest in bitcoin click here for more information.
What Is Cryptocurrency?
Before rushing into how to trade crypto CFDs, it’s important to know what it is. They all use blockchain technology and are decentralized. Because of that, crypto:
- Cuts most of the overhead costs that banks have
- Offers less expensive transactions
- Has inflation and finite supply information written into the code so that you don’t have to trust the Federal Reserve
Now that you know what it is, you can feel more confident trading it. To get started, follow these helpful steps:
Choose an Online Trading Platform
Most people think that they must create a crypto brokerage account to trade Bitcoin CFDs.
Visit the website, sign up for the service, and go through the verification process. Depending on how quickly your internet runs, you can be signed in and ready to trade in minutes.
Fund the Account
When you have signed up with your online trading platform, you must sign into the members’ page and fund your trading account. Most of the time, you can use bank transfers, debit cards, or credit cards to do this.
The good news is you can pick an account that you rarely use. That way, you’re not taking funds away from other financial responsibilities, such as groceries, rent, and fuel.
Choose a Strategy and Start the Trade
Some platforms allow you to pick from different cryptocurrencies, but others only focus on Bitcoin.
There are many trading indicators out there, and you should focus on various factors when selling or buying Bitcoin CFDs. New investors may want to take free online trading courses or learn as much as they can about the market before making a trade.
Experienced traders likely have their own preferred strategies. Some of the options for trading stocks or bonds can work for Bitcoin CFD trading, as well.
Many crypto traders enjoy using the Elliott Wave Theory. It focuses on the psychology of the market’s sentiment, so it works very well for speculative assets, such as Bitcoin.
Focus on Automated Trading Platforms
Trading robots help you pick a strategy that gives you excellent results based on your investment needs. You can go with an aggressive, neutral, or conservative method, make money fast, and then cash out as you see fit.
Still, these “robots” aren’t perfect. Therefore, you can’t expect to win each trade you make. Regardless, you’re trading on margin, so you spend less upfront and have the potential to earn much more than you put in. The opposite is true, though, too.
Once you’ve guessed on the rise/fall of Bitcoin, you win or lose. If you win, you can withdraw your money immediately. However, if you lose, you must pay any losses that weren’t covered with your initial deposit.
From there, you start the process over again. Fund your account with the minimum amount (or more), set your strategies and parameters, and turn on auto-trading so that the robot finds appropriate matches that meet those requirements.
Trading cryptocurrency comes in two forms: CFDs and on the exchange. Though it’s more popular now than in the past, exchanges have many more steps included.
Generally, day-traders prefer CFD trading because it’s quick, short-term, and provides plenty of satisfaction. You’ve got the potential to “win big,” but there’s more risk involved, too.