Crypto trading has come a long way since its origins and is now considered by experts to be right among the more established financial instruments in the world. Of course, there may be regulatory and security concerns from certain quarters, but most online brokers offer cryptocurrency derivatives in several forms to cater to the ever-increasing demands for such products. Nowadays, you can trade a wide number of crypto assets via a traditional Forex & CFD broker, without having to worry about the security of your funds or the trading environment.
We are not going to discuss the origins of cryptocurrency or blockchain itself, but we will be taking a look at how cryptocurrency came about to be one of the most popular speculative instruments in the financial market. Cryptocurrency exchanges have been a prominent feature in crypto transactions ever since the idea was conceived, but avid speculators, investors, and traders found an opportunity to profit from the fluctuating value of several leading cryptocurrency assets by buying and selling them at different price points. As a result, the volumes of trade increased, leading to a fall in dramatic volatility, which attracted more investors and speculators.
However, the fees were quite high to buy or sell these instruments, depending on the premiums charged by independent exchanges. Slowly, conventional financial entities started investing in the market, and soon, numerous players started offering crypto derivatives that could satiate the needs of speculators. The introduction of these new brokers indeed helped in reducing the fees of crypto transactions, but there was still a huge gap in terms of the spreads and margin requirements. Ultimately, conventional Forex brokers started offering CFDs on cryptocurrencies alongside their regular products, which allowed investors to trade the crypto markets like the regular Forex and CFD instruments. Such a move paved the way for crypto trading as we know it today.
Crypto trading is all about exchanging the cryptocurrency for another or trading one cryptocurrency against a major currency. Therefore, like Forex CFD trading, cryptocurrencies are also paired against another currency, with a cryptocurrency-currency pairing being the most popular among traders. Mainstream brokers offer the following crypto assets, but some companies are also known to offer exotic products to offer a unique proposition for traders.
• Bitcoin Cash • Litecoin • Ethereum • Dogecoin • Ripple • Neo • Stellar The most-traded crypto CFD is the BTC/USD, owing to Bitcoin’s popularity, but Bitcoin Cash fork, Litecoin, Ethereum, and Ripple are also not far behind. Aside from the US Dollar, cryptocurrencies are paired against the Euro, the British Pound, and other major currencies. However, we don’t usually see cryptocurrencies paired against each other, but there are a handful of brokers facilitating such a trade. Nevertheless, for those who are starting in the world of crypto trading, we believe that the standard range of cryptocurrency CFD assets should be more than sufficient to meet your trading objectives.
There are a lot of similarities and a few differences between the traditional financial instruments and crypto-assets. For instance, conventional shares and indices can only be traded during the open market hours of their respective markets, but cryptocurrencies are traded around the clock, just like the Forex market. These assets also come in certain standard lot specifications, offer leverage, charge spreads, and have more or less the same trading conditions as a conventional instrument. Of course, the volatility and the trading volumes are quite different, as it is a relatively new market, and the process of price discovery is done through a significantly lower number of market participants. Therefore, the price movements and changes in profit/loss can also be quite massive, which traders must account for while trading the risky cryptocurrency assets.
Trading cryptocurrencies can be extremely fun and rewarding, but you should be aware of the risks. Unless you have a good idea about how the pricing of cryptocurrencies works, you should refrain from taking any untold risks. Never use high leverage and trade with money that can affect your financial situation.
You should also ensure that you choose the right crypto broker that can offer a regulated and trusted platform so that you don’t have to worry about the safety of funds. Finally, don’t trade a cryptocurrency based on hype, as it is highly imperative for you to do your proper analysis of the market before trading.