Cryptocurrencies have arguably been the most important financial innovation of the 21st century so far. But, let’s be honest about it, few of us really understand exactly what they are and how they work.
Does that matter for cryptocurrency trading online? Not particularly, but as with any financial product, it’s always better to have some understanding of what drives market movements. Like other assets, the value of cryptocurrency is driven by economic and political forces. And, as with other assets, traders use their knowledge and technical analysis to trade cryptocurrencies for profit online with brokers like ETFinance.
It’s understandable that anyone new to trading online might be disheartened at seeing the price of a popular cryptocurrency like Bitcoin, which is normally priced at several thousand euros per coin.
However, it’s important to acknowledge that cryptocurrency trading does not require you to buy the asset outright. Indeed, there are various methods that traders use, including CFDs (contract for difference) and spread betting that help them trade cryptocurrency without a huge outlay, especially at a broker like ETFinance.
Let’s say the current price of Bitcoin is €9,000.
Executing a CFD trade means you will create a contract to trade the price movement, not the price of the underlying asset. You will have to decide whether the price of Bitcoin will rise (go long) or fall (go short), and then set up your CFD accordingly.
The broker might offer an exchange price of €8,995- €9,005, and, if going long, you would come in at the higher price (€9,005). The contract for difference would see a profit realized for each unit Bitcoin rises above €9,005.
It’s worth remembering, of course, that cryptocurrencies are characterized by volatile price swings.
As mentioned, one of the main attractions with using CFDs for cryptocurrency trading is that you do not need to buy the asset outright. But these other advantages also apply to CFD trading at ETFinance:
ETFinance is a trusted online broker for trading CFDs online.
Using the MetaTrader 4 platform, you can trade stocks, currencies, commodities and stock market indices. In addition, you can use the wealth of education tools and resources to bring yourself up to speed with the latest trading techniques and strategies.
ETFinance offers generous leverage, meaning you can trade with much more clout than your account balance, and some of the most competitive terms for traders found anywhere online.