Trading with Crypto Exchanges and Crypto CFDs: Which is Better?

Cryptocurrency

CFD could be a very foreign word for a crypto trader, but for traditional market traders, it is one of the most useful assets to trade with on different markets. CFD is an abbreviation for Contracts for Difference, which are basically assets that help you “buy a price” and not the asset itself. It may sound a bit confusing, but it is still quite easy to understand once you know the basics.

The primary difference between actual cryptos and crypto CFDs is the ownership. Meaning that when you are trading on a crypto exchange, you are using actual cryptocurrencies. But when you are trading crypto CFDs on a CFD broker’s platform, you are trading with the contract, meaning that you don’t actually own cryptos. Immediately it should spark some controversy as to why you should even consider such a trade, so let’s check out the advantages and disadvantages.

Crypto CFD: Advantages

Crypto CFDs are exclusive to CFD or Forex brokers. These companies are able to offer leverage on these assets, which is the primary reason why they are so attractive. For example, if I go to this CFD broker and engage in a $100 trade for BTC CFDs, I can then use a leverage of 1:100. Basically what that leverage does is increase the volume of my trade by 100, meaning I can now trade with $10,000 instead of $100. This, in the end, may earn me more than I would with my own assets. Basically, the broker lends you funds in order to increase your trades and thus your profits as well. Crypto exchanges rarely have this feature, which is why CFDs are not as well known among the crypto community.

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