Cryptocurrency Trading

Cryptocurrencies are virtual or digital currencies. Since cryptocurrencies use decentralised networks based on a distributed ledger, they operate independently from Banks and Governments. However, they can still be exchanged or traded like traditional fiat currencies. They are based on Blockchain technology, which is a peer-to-peer distributed ledger technology, ensuring the integrity of transactional data without intermediaries for transactions.

What is Cryptocurrency Trading?

The term cryptocurrency originated from secure encryption techniques. When most people think of cryptocurrencies, they think of Bitcoin, which was launched in 2009. However, there are now several competitor digital currencies that can be traded, exchanged or speculated on, much like any physical currency. One of cryptocurrency’s best characteristics is that they are not allotted by a primary authority. This makes them invulnerable to manipulation or political interference. Cryptocurrency trading is also known for its transparency, divisibility, portability and resistance to inflation.

How Does Cryptocurrency Trading Work?

Cryptocurrencies are digital assets that support secure online payments that are designated in terms of digital tokens, which are not issued or financed by a central authority. A user can send cryptocurrency units, or transfer them to another user’s digital wallet. The transaction remains on hold until it’s verified through the mining process and added to the blockchain, the same way new tokens are regularly created. The blockchain serves as a transaction history for cryptocurrency units and records ownership changes over time. These transactions are stored in “blocks” that are continuously added to the top of the blockchain as transfers occur. Blockchain technology is known for its unparalleled security features that normal PC files lack.

Trading Cryptocurrency via CFDs

With ADSS, you can trade cryptocurrencies via Contracts for Difference (CFDs); hence, you don’t physically own the underlying cryptocurrency. This is because when you open a CFD position, you trade on whether the price of the cryptocurrency will rise or fall in value in relation to the US dollar. As with any CFD, if you are correct, you will profit; if you are not, you will suffer a loss accordingly. Trading via CFDs has several advantages to traditional ownership. For example, cryptocurrencies are traded via an exchange, requiring a “virtual wallet” to store them. These can be slow to acquire, restrictive to use and expensive to maintain. However, CFD trading eliminates these complications and expenses, as you get exposure to price movements without buying the underlying product.

So, having a solid understanding of the different cryptocurrencies can make trading much more straightforward using CFDs. Below, we’ve taken a closer look at what cryptocurrencies are and how you can trade cryptocurrencies via CFDs with ADSS. In addition, you can find some examples of the potential benefits of such trades and further information on how to trade CFDs with ADSS. You can trade a cryptocurrency CFD on:

  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Bitcoin Cash

Log into your ADSS trading platform to access the cryptocurrencies available for trading, all of which will be quoted against the US dollar (USD).

Understanding Cryptocurrency Trading Terms

  • Spread is the variance between the selling and buying prices of cryptocurrencies. You can either open a long position and trade at the buying price or open a short position and trade at the selling price.
  • Margin refers to the opening deposit to sustain a leveraged position. The margin is represented as a percentage of the full position, and it varies depending on the size of the trade and the broker.
  • Lots are batches of tokens that help regulate the size of trades. Some cryptocurrencies are traded in big lots, and others are very volatile, hence traded in small lots.
  • Pips are units that refer to one-digit movements in cryptocurrency prices. A single pip can be a dollar for valuable cryptocurrencies or a fraction of a cent for lower-value ones.

Advantages of Trading Cryptocurrency CFDs with ADSS

Cryptocurrencies can be transferred without the interference of a trusted third party or a mediator. However, the process is extremely secured by different forms of encryption, including public keys and private keys. Moreover, transferring cryptocurrency through a digital wallet requires minimal processing fees, saving the user wire charges typically charged by higher financial institutions. Other benefits of trading cryptocurrency CFDs include the following:

  • Flexibility on trade size – minimum 1 CFD equals 1 unit of the cryptocurrency.
  • Go long or short – capitalise on uptrends or downtrends in price.
  • Transparent pricing available to all clients on our trading platform.
  • Simple account opening and funding process.

The cryptocurrency market hours are very flexible. It is normally available 24 hours a day, seven days a week since there is no centralised authority of the market.

CFD Trading Example

If you are interested in trading cryptocurrencies via CFDs, the following examples will help explain how it works. If the selling price is $11,500 and the buying price is $11,550 for 1 bitcoin, and you believe that the bitcoin’s price will fall against the dollar, you may decide to sell 10 bitcoin contracts at $11,500 – for ease of reference, each of our CFD contracts is equivalent to transacting in 1 bitcoin.

  • Scenario A The bitcoin price falls, and our new price is $11,300/$11,350. You decide to take your profit by buying at $11,350. $11,500 – $11,350= $150 move or 150 points. Your gross profit is 10 contracts x $150 = $1,500.

 

  • Scenario B The bitcoin price rises and our new price is $11650/$11700. You decide to close your position by buying at $11,700 to limit your losses. $11,700 – $11,500= $200 move or 200 points. Your gross loss is 10 contracts x $200 = $2,000.

 

The Best Cryptocurrency Trading Platform and App with ADSS

At ADSS, you can trade cryptocurrency CFDs on Bitcoin, Ethereum, Ripple, Litecoin and Bitcoin Cash on our MT4 platform. When you trade CFDs on Cryptocurrency you trade on whether the price of the cryptocurrency will rise or fall in value in relation to the US dollar. Browse the information available on our platforms and apps below.

Powerful and Advanced MT4 Trading Platform

MT4 is one of the world’s most popular and widely implemented retail forex platforms and has been developed in collaboration with MT4’s development company, MetaQuotes. In addition to offering you extensive support, you’ll also receive a user-friendly interface and an innovative design. Selected benefits of ADSS MT4 include:

  • Programmed MT4 platform trading strategies
  • Tools for customising trade indicators
  • Automated charting – MT4 alarms and signal messages
  • Live news feeds

Risks of Trading Cryptocurrency CFDs

Trading CFDs on cryptocurrency can be high risk. Cryptocurrencies are volatile in terms of price which can lead to huge losses. Risks of trading cryptocurrency CFDs may  include sudden price swings, substantial price volatility, unreliable exchange servers and significant influences on the price of cryptocurrencies as a result of unforeseen events. Before you start trading, make sure you read through cryptocurrency additional risk warnings and conditions.

Disclaimer: Cryptocurrencies, including, without limitation, Bitcoin and Ethereum, are subject to a very high degree of uncertainty and price volatility. Investors in cryptocurrency CFDs are exposed to a number of additional risks not present in more traditional investments. These risks are set out in our Cryptocurrency CFDs – Additional Risk Warnings & Conditions, you should note that this is not an exhaustive list.

How to Trade CFDs