What Is Bitcoin CFD Trading?
You know the old saying: work hard, party hard. You can find even more entertainment than you want on sites like GGBet, but you must have a big budget to have unlimited fun. At sites like GGBet casino, the bigger your bankroll, the more games you play, and the more bonuses you get.
There are many things you can do to get this bankroll, and some of them don’t even require you to leave your home – you just need access to a computer and basic financial knowledge. Bitcoin CFD, which has become popular recently, may be one of the most efficient of these methods.
So, what is Bitcoin CFD trading, and how does it work? Below, we answer these questions for you.
What is CFD Trading?
Let’s start by explaining what CFD is because it has been on the market for a long while and much older than Bitcoin.
CFD is a financial instrument known as ‘Contract for Difference’, and it consists of a set of tools that allow speculation on the price trends of assets such as parity, indices, and commodities. The history of CFD Contracts dates back to the 90s.
In those days, it consisted of simple “bets” on the value of a particular commodity. However, with the use of the “leverage effect” in stocks, CFD contracts became much more complex and advanced.
With the development of the Forex market, today they have transformed within a market in itself (CFD Market), where financial instruments such as stock market indices, energy products, commodities, stocks and currency pairs are traded.
When a transaction is made on a product that is the subject of a CFD contract, the “expectation” about that product is purchased. Instead of physically owning that product, a position is opened on the future price of that product. In other words, you are placing a “bet” on whether the price of that product will rise or drop. And if you win this bet, you are paid handsomely.
CFD contracts have fixed maturities, which means each contract has a start and end date. A CFD contract that is due is automatically closed.
The difference between the “expiry price” and the “starting price” of the contracted asset is calculated as the investor’s profit or loss. CFD products have periodic maturities such as 1 month, 2 months and 3 months on average. All investors are informed in advance via a platform, website or e-mail.
If the positions that are open at the expiration date are not closed by the investor, they are closed at the last price at a time specified by the system.
Investors can trade all CFD assets, including all currencies, bonds, bills, stocks and parities at the same time on a single platform.
CFD investors can trade simultaneously with the whole world at instant prices, so they can benefit from investment opportunities arising in international markets too. CFD transactions also offer the investor advantages such as small initial margins and low commission rates.
What is Bitcoin CFD Trading?
As you can understand from the explanations above, there is no specific limit to the assets that can be covered by CFD trading, and any commodity whose value changes regularly can be used for this trading.
Cryptocurrencies like Bitcoin are also assets whose value is constantly increasing or decreasing, so they can be the subject of CFD trading. In this regard, there are two things to consider:
- You do not need to be a cryptocurrency owner for Bitcoin CFD. You don’t even need to know how this technology works. For example, if you are trading CFD for oil prices, you do not have to own oil, and the same is true for Bitcoin. When trading CFDs for Bitcoin, you don’t buy Bitcoin: you buy an expectation on the value of Bitcoin.
- CFD trading needs a platform. Today, the platforms open to the end-user are mostly Forex-based. So, unless you control a multi-million-dollar portfolio, you need to use a Forex platform to do Bitcoin CFD. There are many different Forex services on the market, and it is recommended to examine them in detail before making a decision.
For example, if you think Bitcoin is going to lose value, you would trade CFDs in that expectation, profiting from every price drop. But as we mentioned above, this is a bet: if the price goes up in any way, you lose.
The most important feature of Bitcoin CFD trading is that it allows the use of “leverage” like any other Forex trading. So, for example, you don’t need to have $20,000 to buy a $20,000 expectation.
You can do this with only 2,000 USD by trading with a 1:10 leverage. Although this is an advantage, you have to be careful because if you lose, you will still lose in line with the leverage ratio. In other words, your losses will be quite high if you buy the wrong expectation.