Financial Markets: Bitcoin Trading As A CFD

Financial Markets: Bitcoin Trading As A CFD

The financial markets had a very interesting year in 2017, as stock rose to new record highs, the US Dollar fell to surprising levels, and the world of cryptocurrencies solidified itself into the public consciousness.  This is big news, and it has culminated in several retractions from major players in the banking and finance industries and there is strong evidence that these trends will continue in the years ahead.

One of the clearest examples of this is the fact that Bitcoin can now be traded as a CFD (Contract for Difference).  This is a well-known form of financial markets transaction that has been widely used for decades, and this helps to propel the legitimacy of the cryptocurrencies into the future.  

Reviewing the Cryptocurrencies

While improved legitimacy in Bitcoin does help the outlook for those that already have long positions in the cryptocurrencies, it does not mean that profiting from crypto investments will suddenly become easy.  This is why is it always important to conduct your due diligence and take the time to research any transaction beforehand.  

Trader reviews from other individuals that have more experience in these markets can prove to be invaluable here, as they will give you a firsthand account of the ways others have navigated these areas in the past.  The IQ option review covers all of these bases and provides some excellent insights into the essential factors that traders will need in order to construct successful positions.

CFDs and Options

Another element to consider is the type of contract that is being used to create a position in the market.  Contracts for Difference can be particularly useful, as they will allow investors to capitalize on the differences in price valuations over time.  For example, if you buy AAPL stock at $100 in June, and sell the stock for $112 in July it would be possible to collect $12 per contract traded.  

This can sum up to a large amount of profit if done correctly and so new traders should read the market research that is available from the experts.  Alternative strategies use options contracts to express a given viewpoint on the market economy.  

Here, traders can express long views on an asset by buying a CALL option that has a specific end time.  This ending time is also referred to as the ‘expiry time’ and it can be used to define the life of the market stance.  Traders that have a bearish view on a certain asset can buy PUT options with its own associated expiry time.

Bitcoin and Crypto Trades

All of these strategies can be used to express a market view in Bitcoin and all of the other cryptocurrencies.  The fact that there is not only one choice here should be viewed as encouraging any time an investor is looking to start trading in the world of digital assets. There is risk here that should be understood, so with any of these trades it is important to limit risk exposure.  

This is often done using a protective stop loss, and the introduction of Bitcoin CFD trading has helped to add liquidity into these areas and avoid market slippage.  Slippage is almost never a good thing, and it can accumulate losses very quickly.  Since this can be detrimental to a trading account these are situations that must be avoided whenever possible.

New traders should keep position sizes low and continue to conduct the properly required market research.  Lack of understanding in these markets can prove to be very costly, very quickly and so there is nothing wrong with exercising patience and reading the expert market reviews to gain broader knowledge on these topics.


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