Thursday, June 20, 2024

Trading CFDs on Bitcoin: what are the advantages?

Crypto-currencies are increasingly known and appreciated. They are now part of our daily lifestyle, in particular the famous Bitcoin, the first digital currency on the market. This wave is also felt at the trading level and more CFD brokers are offering Bitcoin trading. We are going to see how trading cryptocurrencies on CFDs is advantageous and why this type of financial product is so popular.

Why trade Bitcoins with low risk CFDs?

Trading low risk CFDs is easier. Either we buy or we sell. You don’t have to bother with a wallet, you don’t have to transfer or convert either. When a position closes, the capital gain is impacted on the account capital and that’s it. If you are new to the business, visit this website for a CFD demo.What’s more, there are now a variety of trading tools that can be used such as Bitcoin Revolution.

Among the other benefits of Limited Risk CFDs, you have the flexibility to trade digital currencies up or down as you see fit. Plus, you only have one account to manage with a single broker.

With CFDs, you will be able to trade in virtual currencies with leverage. This strategy allows you to multiply your wins, but also your losses. So be careful because cryptos are very volatile assets.

Regulated brokers give you access to trading cryptocurrencies through low risk CFDs also allow you to speculate safely. This is because you cannot lose more than the total amount of your capital.

Finally, by going through CFDs with limited risk, cryptos have better liquidity. Generally, traders therefore see their orders executed at the base price they want.

The disadvantages to be taken into account

As in life, nothing is ever perfect, it does take a few small drawbacks to complete the picture. Let’s start with the wallet, also called wallet. With a limited risk CFD, you will not be able to benefit from a real cryptocurrency wallet and therefore, you will not be able to transfer your Bitcoins to another wallet, whether private or belonging to another establishment.

In addition, you will not be able to take advantage of “staking” (the process of retaining and locking funds in a wallet to assist blockchain operations). Finally, your broker will be able to set his buy and sell prices, which involves the risk of over-valuing or under-valuing the price of an asset at any time.

What is a CFD more concretely?

The CFD or Contract For Difference is a rather recent financial product in the history of the Stock Exchange. Developed by various financial engineers, the CFD market today has thousands of products available to investors.

CFDs are part of the derivatives family, like Futures. They are said to drift because they are based on an underlying asset. CFDs can be found on a large number of assets: commodities, stocks, indices, crypto-currencies, etc.

This market is constantly developing and some brokers are even specialized in this type of product. In addition, CFDs are listed on a permanent basis, that is, there is no opening and closing time.

The advantages of CFDs

CFDs have four main features: long or short positions, leverage, hedging rates and hedging.

Long or short positions

Trading CFDs allows you to trade on price movements when buying and selling. When the market increases, then you can make capital gains. In addition, it is possible to generate gains by opening a position in CFDs if the price of the underlying falls.

The leverage effect

This is one of the main strengths of CFDs. The leverage effect allows you to increase exposure without raising the full cost of opening the position. For example, if you want to open a position that corresponds to 500 Samsung shares, you will need to raise only 20% of the total cost. In contrast, with a standard order, you pay the full price.

The coverage rate

CFD trading includes two types of margins or hedges: the deposit margin which relates to opening a position and the maintenance margin which represents the required hedge if the deposit and funds are insufficient to cover losses. In order not to receive a margin call and lose your position, the coverage rate must be sufficient.


CFDs are products that can be used to cover losses in a portfolio. Indeed, if you own stocks and you think that the price will fall, you have the possibility of compensating part of the possible losses through the short sale. By opening such a position, the loss caused by the fall in the price of your stock will be offset by the profit obtained from your short CFD position.


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