Looking to trade Bitcoin with contracts for difference (CFDs)? Let’s run into CFDs and find out what it is? And what is the difference between buying or selling Bitcoins with Coinbase (or any other online wallet provider) or trade Bitcoin with contracts for difference (CFDs).
Difference between Trading Bitcoins with CFDs or buy/sell with Coinbase
It is clearly understood that buying or selling Bitcoins with Coinbase or any other online wallet provider consumes a little service charges and the Bitcoins will be purchased and stored in our wallet. We can spent these coins to buy things around the internet, sell them out and more…
But how about Trading Bitcoins with CFDs… Find out below.
What is CFDs?
CFD stands for Contract For Difference. It’s an agreement among trader and broker to pay the difference between the price for an asset to each other (i.e, Gold, EUR/USD, Bitcoin, etc.) at the time when the contract took place and later price when trader decides to close the trade (in short, shut the contract).
How CFD Works?
When you open a trade buy or sell position at this time CFD applies on your trades. If the price of the stock (let’s say Bitcoin) went up by 10%, you will earn 10% on your invested amount but on the other hand, let’s suppose if the price of the same stock went down by 10%, you will loss your investment by 10%.
If you invest $1,000 CFD on Bitcoin Stock, the next day price of the same stock went up by 10%, the contract that was made between trader and broker also go up by 10%, now if you decided to close the contract then you will earn 10% on your invested amount 1000 * 0.10 = $1100. It’s simple as that. Remember the price don’t go up always.
Risk Warning: Take into account that trade Bitcoin with Contracts for Difference (CFDs), carries high risk of your investment capital.
Benefits of CFDs
- You can make profits in both sides whether the price of the stock go up or down
- Doesn’t matter if any stock worth $1000, you can invest as little as $10 to hold a position in any stock
Find out the most popular Forex trading platforms to trade Bitcoins on the basis of Contracts for Difference and how to easily buy or sell Bitcoins for trading purpose. If you have any questions regard CFDs feel free to add comment below.