Cryptocurrency trade has become quite popular today, especially after the meteoritic rise of Bitcoin late last year and in the beginning of 2018. However, the question on most people’s mind, given the current volatile nature of Bitcoin, is whether you can really trade in digital assets and make a profit.
How feasible is cryptocurrency trading?
Trading in any form of currency happens when there is a price variation. You can make money when prices of different currencies vary. The same applies to cryptocurrency trading. At present, Bitcoin is, without a doubt, the largest and most popular cryptocurrency but there are many more digital currencies on the market that you can trade in. Examples of other popular cryptocurrencies include Ethereum, Litecoin, and Ripple.
Making a Profit in Crypto Trade
There are basically two ways that you can make a profit by trading in digital assets. The first way is known as the long position trading in which you make money by buying cryptocurrencies low and selling them at a higher price. Your profit will be the price difference.
The second way is known as the short position trading. In this case, you make a profit by selling high when the price drops and buying low. In a short position, you’ll be selling cryptocurrency that you had initially bought using borrowed money. You can always buy back the cryptocurrency at a cheaper price when the price drops and make a profit from the price difference. To make bigger profits, you’ll want to see bigger price variations, which is known as volatility. A high volatility means that there are bigger price movements and a bigger opportunity to earn a good profit in your trading. Volatility can also be used to measure risk.
How CFDs Help to Make a Profit in Crypto Trade
Most cryptocurrency trading platforms provide their clients with access to Contract for Difference (CFDs) on digital assets and currencies such as Bitcoin, Litecoin, and Ethereum. CFDs on cryptocurrencies have helped many individuals and small companies reap the massive benefits of the digital money revolution in many ways.
For example, accumulating digital currencies takes time, efforts, and resources. The first thing you need to do is install a digital currency wallet to store and use your coins safely. However, there’s always the potential risk of cybersecurity breach, which you cannot ignore when dealing with digital assets. This is why a majority of cryptocurrencies investors are now using CFDs, which you can trade with without actually owning the asset. CFDs allow you to trade on the value of digital currencies without directly buying or selling them.
There’s also the issue of liquidity which is often limited for some cryptocurrencies. It’s not always easy to sell certain digital currencies fast. However, with CFDs, you don’t own the underlying digital asset and you can open and close positions instantaneously.
You can also diversify your portfolio using CFDs on digital currencies. Trading digital currency CFDs with profit-trade.com, a leading crypto trade platform, is a great way to enter the trading world using funds in your preferred currency without having to deal directly with the cryptocurrencies.