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How to play Bitcoin CFDs? 5 factors contract trading tips for playing with Bitcoin CFD

2022-07-28

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Did you know that buying bitcoin through a bitcoin exchange is not the only way to invest in bitcoin. The high capital pressure required to invest in bitcoin spot (the current price of bitcoin: $22,590.7) and the need to worry about network attacks all determine that it is not suitable for all investors.

In this article, we will tell you about PlanB (Bitcoin CFDs) investing in Bitcoin and introduce you to some tips for investing in Bitcoin CFDs.

What are Bitcoin CFDs? How does it work?

A Bitcoin CFD is a financial derivative based on the movement of the Bitcoin market - buyers and sellers need to sign a contract that calculates the gains and losses of both parties based on the difference between the opening price and the closing price.

Bitcoin CFDs include short contracts and long contracts, both of which are essentially bets on whether the future price of Bitcoin is bullish or bearish.

Bitcoin's high volatility makes it the preferred choice for CFDs, as the frequent sharp swings provide traders with many opportunities to trade and generate substantial profits.

Advantages of investing in Bitcoin CFDs

safety

CFD trading allows investors to enter the crypto market painlessly, without the need for a digital wallet, investors can invest in Bitcoin on the CFD platform. Since CFDs do not require ownership of assets, it will effectively avoid the problem of investors' digital wallets being stolen.

Margin Trading

The initial investment amount required to open a CFD trade is often only a fraction of the value of the entire trade, which allows investors to invest in Bitcoin lightly. In addition, leveraged trading of CFDs will multiply any gains, further expanding profits.

flexibility

If you invest in bitcoin spot, you need to use a fixed currency, such as USD, to buy bitcoin, which usually takes a while. The Bitcoin CFD completely avoids this problem, you can use Taiwan dollars to deposit funds, or even use a credit card to start investing, without having to exchange any currency.

How to play Bitcoin CFDs ?

Although Bitcoin CFDs do not require much investment from investors, it is important to understand that the financial leverage involved in CFDs may amplify investors' profits and losses.

To illustrate with an example: Today, the price of Bitcoin is $100, I bought a CFD from a financial institution, and I think that in 5 days, the price of Bitcoin will be around $120. And 5 days later, the price of Bitcoin was $125.

And I bought 10 CFDs five days ago. If the leverage provided by the institution is 1:10, I need to invest $100. When the contract expires, I will get a profit of $250.

Where to Invest in Bitcoin CFDs

If you want to start trading Bitcoin CFDs, the first thing you need is a trading tool, which means you need to find a stable and reliable trading institution. We have compared a number of Bitcoin CFD trading institutions in Taiwan, and we believe that CM Trade is fully capable of assisting you with Bitcoin transactions.

CM Trade has three major financial licenses, which means that it is regulated by the governments of three countries. In addition, it uses segregated accounts to store investors' funds, which absolutely guarantees the safety of investors' funds. Secondly, CM Trade provides a mobile APP, which is convenient for you to start investing anytime, anywhere. The functions such as pending orders and market calendars can help investors avoid risks in a timely manner.

The cost of trading Bitcoin CFDs

If you use leveraged trading, it is roughly equivalent to borrowing money from the institution to trade, so generally institutions will charge overnight fees. How is the overnight fee calculated? Generally speaking, financial institutions will tell investors the rate of their own overnight fees. If the overnight fee is 5%, if you invest $100, you will need to pay $5/365, which is about $0.01 per day.

Second, there is a transaction cost, which is the spread, which is a percentage in pips, and "pips" represent the minimum amount that the underlying instrument needs to move before your contract's value spread changes. If you opened the CFD trade at $22,677.7 and closed the position at $22,677.8, then 0.1 is a pip. The specific required overhead can be calculated through the spread calculation formula.

5 Tips to Read Before Investing in Bitcoin CFDs

Start with a small amount

Getting started with relatively small amounts is entry-level advice in the investing world, and while market volatility can be exciting, trading Bitcoin CFDs is not easy and involves a huge amount of risk.

Research the market

The only sure way to become a successful Bitcoin CFD trader is to do your homework and understand the market. It is not an easy process as many of the practices used to evaluate other financial markets do not apply to Bitcoin, so please take the time to practice reading. Chart and identify patterns to understand your trading strategy.

If you don't know how to research the market, you can register as a member of CM Trade, and our analysts will regularly provide some valuable market reports to subscribers.

Develop strategies

Before considering opening a position, you should carefully consider which type of trader you are. This largely determines how much time you have to put in and how quickly you want to be profitable.

If you have enough time, you can try to trade multiple times a day but with little profit per trade; of course, you can also use short-term market trends to enter and exit the market within 24 hours, in 24-hour trading units; there are other types of Swing trading is based on in-depth technical analysis to capture market trends.

Different strategies apply to different groups of people, and any investor should know himself before he starts investing.

Set goals and stick to them

Bitcoin is unpredictable and more volatile than any other financial instrument, so having a plan and sticking to it is critical. Before opening a position, consider your ideal profit from the trade and the loss you can afford, and set your target and stop loss criteria from the start.

Many novice traders fall prey to greed, taking positions for further profits only to see prices plummet, while others optimistically convince themselves that the downtrend will reverse as they continue to add to their positions. These are mistakes a sophisticated investor should never make.

Beware of scammers

Since there is no central exchange and little supervision, there are endless scams in the Bitcoin market. Common scams usually include fake exchanges, phishing scams, and malware. These are just some of the scams to watch out for, and because Bitcoin trading is an open, complex, and relatively new market, new scams pop up regularly.

Our Recommended Bitcoin CFD Trading Platforms

CM Trade is a global CFD dealer headquartered in New South Wales, Australia, which is regulated by several financial institutions around the world, including the Australian Securities and Investments Commission (ASIC).

CM Trade is a well-received CFD trading institution, with ultra-low CFD spreads and commission-free services, good account opening experience and excellent customer service support, which have been recognized by a large number of users.

Other benefits include real-time trade alerts, market analysis tools, and the ability to control all of your CFDs and other trading options from a single window/account. This allows investors to easily control their entire portfolio, act in a timely manner, or evaluate your entire holdings before making a decision.

Sign up for CM Trade now and have the opportunity to get a reward of up to $30,000. Choose CM Trade to start your CFD trading, which will undoubtedly help you go longer on the road of investment.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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