Trading is the act of buying and selling goods at their appropriate time or its practice. In finance, “trading” describes the buying and selling of financial instruments such as bonds, stocks, commodities and currencies.
One word that has been increasingly popular in recent years is ‘crypto’. Starting from 2009, with bitcoin being the first decentralized cryptocurrency, many cryptocurrencies have followed suit. One other trendy trading alternative is forex trading. Forex has been around for a long time now to make money online by speculating on currency pairs. The idea behind this is that whilst one currency may be increasing in value, another one may be decreasing – you can make gains on both currencies if you know which way the market is going.
Forex trading has become so popular because it enables you to trade 24 hours a day, five days a week, for 52 weeks of the year. However, many traders have turned their focus to cryptocurrency in recent times, and there are now far more ways to trade it than just buying an altcoin or two!
Crypto CFDs
One of the most common (and easiest) ways people get into cryptocurrency trading is through Crypto CFDs – Contracts For Difference. These act like ‘mini’ forex trades and enable people to buy coins without actually owning them directly. A trader will simply speculate on whether they think the price of a coin will increase or decrease (hence why this type of ‘trading’ is also known as ‘contracts for difference’ or CFD trading), based on the current market price.
CFD token spreads
Another way that more experienced traders like to get involved in cryptocurrency without actually taking ownership of them is through CFD Token Spreads. Instead of speculating on whether a coin’s value will rise or fall, it’s all about speculating on the total value of tokens at a certain point in time. For example, if you think Apple shares will be worth $100 each by November the first, you would buy ‘contracts for difference’ (or CFDs) granting you rights to ‘sell’ $100 worth whenever you want. You simultaneously sell similar rights for a higher price on Kraken or some other. This is the closest thing to ‘shorting’ cryptocurrency, which would enable you to gain from a drop in value instead of increasing it!
You can use CFD Token Spreads on all types of cryptocurrencies, including ETH, LTC and XRP.
Crypto spread betting
Finally, one more CFD alternative that has been gaining popularity recently is crypto-spread betting. Crypto spread betting works the same as any other type of spread bet, but with the added benefit of working with cryptocurrency. The idea is that you bet on the price of a coin, commodity, or stock at a certain point in time. For example, if you think the price of BTC will be between $8200 and $8500 at 1 pm tomorrow, you can buy a ‘spread betting’ contract for this which guarantees your right to sell at the price you want. This acts as a hedge against any adverse changes in value to avoid losing out if the whole market falls. The key difference here is that with spread betting, you don’t have to own anything but still retain many of the benefits from doing so!
This type of cryptocurrency trading works precisely like regular CFD trading, except that it uses cryptos instead of currencies. One popular platform that offers this service is Saxo bank, which offers various other trading services such as trading CFDs and forex.
Conclusion
The cryptocurrency trading market has been highly unpredictable in recent years. However, with the overall market volatility of mainstream coins, it’s only natural. There is one thing that is certain, though: innovation in this area will continue.
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