Best sites for Bitcoin CFD’s
You’re looking at what bitcoin and crypto CFDs are, but you don’t know what they are yet? Here we explain more about this financial instrument.
Bitcoin CFDs are becoming increasingly popular. A Bitcoin CFD is a financial contract for the underlying of the price of bitcoin. The meaning of CFD means ‘Contract for Difference’. This financial instrument allows you to speculate on the future price of bitcoin. Which means it is riskier than other investment opportunities, but it can also offer a higher return if you are right.
A bitcoin CFD also means that you don’t own a real bitcoin, but only a financial contract. On the other hand, this doesn’t matter if you only want to trade on the price of bitcoin and make maximum profit. It is therefore different from buying and saving bitcoin.
The advantages of a Bitcoin CFD
As mentioned above, it is a financial contract, which makes it possible for you to buy it without owning bitcoin. For some people it is too complex to trade bitcoin, so this is a possible solution. Another advantage is that you can make bigger profits because you use leverage. You can make profits when the price goes up, as well as when it goes down. Just what you prefer during your strategy. Experiences of many people also learn that it’s mainly being used by traders and not the target group which bitcoins simply want to buy and keep for the long term. When you’re choosing to trade with this financial instrument, it’s important to remember that it’s more risky. In addition to Bitcoin CFDs (also called derivatives), you can also speculate on the price of some other well-known cryptocurrencies such as Ethereum, Litecoin and Ripple.
How does Bitcoin CFD trading work exactly?
Trading bitcoin and crypto CFDs is different from buying bitcoin and keeping it on an exchange. It is entering into a contract with a broker (such as Plus500). You can opt for a long position or a short position. A long position means that you speculate on a price which rises and a short position on a price which falls. You enter into a contract as if you had bought it for that price. The risk and interesting model of CFDs is that you can use leverage. In fact, most brokers allow leverage up to 100 times, which means you can maximize profits if you get it right. What is also unique compared to the normal way of buying bitcoin is that this way you can speculate that the price is going to drop, this cannot be done by just buying it and keeping it. That’s why this way of trading is for the target group who wants to trade.
Bitcoin CFD’s experiences
Experiences are both very positive and negative, it is important to note that this is not for everyone. But only for the target group who wants to trade. Since it is a riskier instrument, it means that the chance of loss is also higher. A bitcoin always remains a bitcoin, but with CFD’s you don’t have a bitcoin but you speculate on the price. As a result, you can lose more quickly if your choices have turned out to be wrong. On the other hand, you can make much more profit if you have speculated correctly. Profits are quickly thousands of euros thanks to the leverage effect you can use.
Is trading Bitcoin and Crypto CFDs reliable?
All brokers offering this such as Plus500 are completely legitimate and comply with all legislation. It is certain that this is a completely legitimate way of trading. There are millions of people around the world who use it.
Which CFD brokers exists?
The most famous brokers in Europe are Plus500 and Option24. Both have a good reputation, a Dutch interface, good customer service and have been active for years.
Frequently asked questions about CFDs
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