When it comes to trading cryptocurrencies, you have to guess whether your chosen market will go up or down in value. And the interesting thing is that you never own the digital assets. In fact, trading is done with derivative products like CFDs. Let’s see what are the advantages of trading crypto currencies. Read on to learn more.
volatility
Although cryptocurrency is a new market, it is quite volatile due to short-term speculative interest. The price of bitcoin fell to $5,851 from $19,378 in 2018, in just one year. However, the value of other digital currencies is quite stable, which is good news.
What makes this world so exciting is the volatility of cryptocurrency values. Price movements offer many opportunities for traders. However, this comes with great risk. So, if you decide to research the market, just make sure you do your research and put together a risk management strategy.
Working hours
The market is usually open for trading 24/7 as it is not regulated by any government. Moreover, transactions are done between buyers and sellers all over the world. There may be brief downtime during infrastructure updates.
Improved liquidity
Liquidity refers to how quickly a digital currency can be sold for cash. This feature is important because it enables faster transaction times, better accuracy and better prices. In general, the market is somewhat illiquid as financial transactions take place on different exchanges. Therefore, small trades can bring big changes in prices.
Increased exposure
Since CFD trading is considered a leveraged product, you can open a position on what we call “margin”. In this case, the value of the deposit is a fraction of the trade value. So, you can enjoy high exposure to the market without investing a lot of money.
The loss or gain will reflect the value of the position at the time it was closed. Therefore, if you trade on margin, you can earn a large profit by investing a small amount of money. However, it also increases losses that can exceed your trade deposit. So be sure to consider the total value of the position before investing in CFDs.
Also, it is important to ensure that you follow a solid risk management strategy, which should include appropriate limits and stops.
Fast account opening
If you want to buy cryptocurrencies, be sure to do it through an exchange. All you have to do is sign up for an exchange account and keep the currency in your wallet. Keep in mind that this process can be restrictive and require a lot of time and effort. However, once the account is created, the rest of the process will be pretty smooth and hassle-free.
In short, these are some of the most prominent advantages of trading cryptocurrencies here and now. We hope this article will be of great help to you.