Are CFDs And Futures A Way To Supercharge Crypto Day Trading?

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This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.

Contracts for differences (CFDs) are not available within the United States.

Trading cryptocurrency comes with significant risk but can be a lucrative endeavor. 

Analysts often state that the market rewards those willing to expose themselves to the high risk inherent in the market. However, the level of volatility that must be tolerated in crypto proves to be too much for some. According to analyst Willy Woo, Bitcoin BTC/USD’s volatility index has been roughly 2 to 5 times that of traditional equities. It is not uncommon for the crypto market to fall 10% on a day the S&P loses just 2%.

In the last three years, the S&P 500 returned about 50%, BTC has returned almost 900% and Ethereum ETH/USD has returned about 1,800%.

That said, it's easier said than done to avoid becoming one of the many who lose money over time or quickly.

3 Things to Keep in Mind When Starting Crypto Day Trading

1. Carefully choose the right platform. To set yourself up for success in crypto trading it is important to look at the exchange and asset liquidity of the broker. Make sure to look at how long the exchange has been in business, the number of supported cryptocurrencies, transaction fees, deposit methods, as well as trading days and hours. 
2. It's also critical to set clearly defined goals, objectives and strategies ahead of time. This can help avoid the fatal error of trading on emotion. Basic human psychology can cause you to make poor decisions, but if you take active steps you can hope to avoid this.
3. Outside of general principles and looking at specific tools, contracts for differences (CFDs) and crypto futures can offer an attractive option for traders looking for leverage and risk. These derivatives can help traders to take advantage of the volatility in the market. 

Derivatives allow you to leverage your investments so you can potentially make more with less money. They can also allow you to hedge your bets. If you are long on Bitcoin, for instance, you can protect that bet with a short CFD position.

Bitcoin Futures Explained

Much like futures traded on traditional assets, crypto futures are a way to bet on the price direction of certain cryptocurrencies without holding the underlying tokens. A futures contract is an agreement between two parties regarding the future price of an asset. Each contract has a buyer (long position) and a seller (short position).

Bitcoin CFDs Explained

A CFD is a contract executed between two parties, a buyer and a seller, which means that the seller pays the buyer the difference between the current value of an asset and its value when the contract is due. There isn’t any physical exchange of assets (which could be a physical share, currency pair or commodity) between the buyer and the seller, and neither party can claim physical ownership of the asset. 

Derivatives and other instruments are a relatively new development in the crypto market, so it is arguably important for traders to use platforms they trust. IFC Markets is one example of an online trading platform that provides users access to financial instruments. It has been in operation for over 15 years and recently launched its crypto platform, allowing traders to access CFDs and futures for Bitcoin and Ethereum.

The platform incorporates some key features that are meant to help traders maximize their investments:

• It uses a fixed spread model, allowing traders to profit off the difference between the bid and ask, while protecting from the unpredictable and volatile nature of a floating spread (ex. The platform has a minimum spread of $50 for Bitcoin).
• Traders can get started trading with small amounts, which can be ideal for beginners.
• Both long and short positions for Crypto CFDs can be opened on IFC Markets.
• 24/7 trading availability for Crypto markets 
• IFC Markets also allows for leverage, allowing traders to enter positions up to 100 times their investment.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice. CFD trading is illegal in the U.S., although European brokers allow CFD trading in U.S. assets.