Cryptocurrencies took over the world by transforming how people transact, invest, and trade on the web. Nowadays, many people are aware of the existence of cryptos and the opportunities they bring. The good thing is that it’s possible to trade in the crypto contract for differences (CFDs) on platforms like Metatrader 5. Likewise, buying digital currencies is another viable alternative.
Most people are familiar with the idea of buying cryptocurrencies. Trading crypto CFDs is a fairly new trend that could ignite a fresh wave of interest. This concept involves taking long or short positions based on price fluctuations of a particular cryptocurrency. As you can expect, there’s no need to own the currency.
When you decide to buy digital currencies, you own the tokens. You could take advantage of a price rise over time, depending on market conditions. In the past, people who bought Bitcoin became millionaires when its price surged dramatically. Cryptos’ volatility can mean one of two things – profits or losses.
So, what’s better – trading cryptocurrency CFDs or buying and holding cryptos?
Whatever you decide, all you need to start with is to get an MT5 download for PC link.
Here’s what you need to know.
CFDs allow you to trade an underlying asset by signing a contract with a regulated broker. This arrangement allows you to profit from predicting a cryptocurrency’s direction – up or down. By predicting correctly, you receive a profit and vice-versa if the price changes don’t go your way. The latter results in a loss of your trade money. Your broker takes a transaction fee in either case.
What’s more, you can leverage your crypto CFD trades. This concept allows you to trade several times the amount of a particular digital currency. When you do this, a difference is created compared to when you buy the currency. The downside is that risk increases in tandem with the size of the leverage.
Thankfully, crypto contract for differences come with several advantages. CFDs typically allow more flexibility in your trading via Metatrader4. And it’s easier to exit any active trades using stop loss orders. In addition, you can employ hedging strategies to minimise potential losses. Other advantages worth mentioning include liquidity and security.
Cryptocurrencies like Ethereum and Bitcoin may be highly volatile, but they provide a hard-to-ignore investment opportunity. Unlike trading crypto CFDs, buying them entails owning the tokens, allowing you to earn a profit when the value appreciates. Then you can sell the crypto if the price is higher than what you bought it for.
Check out the advantages of buying cryptos.
The potential for huge profits despite the high volatility
Although the risk is higher due to volatility, there’s a potential for huge rewards. The trick lies in choosing the right digital currency from tens of thousands available on the market today. Each currency comes with a distinct set of dynamics. Familiarising yourself with these quirks allows you to make an informed decision. Also, there are market conditions influencing price movements.
For instance, positive and negative news about a given crypto or all cryptos can trigger dramatic spikes or drops in value. Supply and demand is another critical factor that causes price movements. If you make the right move, it’s easier to earn a handsome profit once you decide to sell.
Ethereum’s value rose by 100% between July and December 2021. Just imagine the joy it brings if you were to experience the same with your chosen digital currency.
If you feel that the time has come to sell your crypto, you don’t need to wait for markets to open in the morning. The digital currency market is active around the clock. That way, you can cash in before the price drops, potentially wiping your profits. So, crypto allows you to generate returns without worrying about opening and closing times.
Blockchain technology enhances the security of your cryptos. Your tokens are firmly linked to the blockchain infrastructure. All transactions leave an indelible entry since the ledger associated with the blockchain tracks every event. On top of that, a hacker needs to access the blockchain on multiple computers to compromise it. This setup makes it hard to steal the tokens.
Unlike the traditional financial system, cryptocurrencies introduce a new level of transparency. The transactions take place without the involvement of intermediaries. You can view the blockchain from anywhere.