There is a difference between purchasing and selling on a platform and trading crypto CFDs on a CFD exchange. Both are done with the purpose of earning profits in the cryptocurrency market, but the procedures are entirely different. Here we shall discuss how to buy and sell cryptocurrency and trade cryptocurrency CFDs.
Buy and selling crypto
Purchase and sale of digital currencies is basically all about using fiat money or one cryptocurrency like BTC to purchase another like ETH on a cryptocurrency exchange. The procedure involves looking for the pairs of crypto-to-crypto exchange of crypto for fiat.
Trading location
The purchasing and selling of digital currencies is done on an exchange. A trader has to open an exchange account by filling in his details. Usually exchanges have an order book which states what is being bought and sold.
Deposits and Withdrawals
The exchanges usually allow deposits and withdrawals in two ways. Some exchanges of UK and US accept fiat currency deposits along with mix of fiat and cryptocurrency such as Currency.com. It is the first regulated tokenized asset platform that allows all trades in all cryptocurrencies, stocks, indices etc.
While there are other exchanges that only accept cryptocurrency deposits and withdrawals, then the trader should have a third party wallet for the cryptocurrency. In order to make the deposit, one should purchase Bitcoin, Ethereum or any other cryptocurrency from a third party and then transfer it to their third party wallet. Then you can transfer the funds from one wallet to another (of the exchange) to deposit your cryptocurrency. If you choose this method, you should make sure that you put the address of the wallet appropriately or the crypto will reach to a wrong address which is irrecoverable.
How to trade cryptocurrencies?
After the exchange wallet has received crypto or fiat money, you can purchase and sell cryptos by trading with different pairs available on the exchange. Usually BTC and ETH are the most common pair on an exchange. You can use limit orders, stop loss order, future order to reasonably buy and sell cryptos.
Trading CFDs
You can trade crypto on a speculative basis by trading on the crypto prices through contracts for differences. The actual crypto isn’t owned or exchanged by the trader. It majorly involves the purchase and sale of contracts depending on the price movement of the crypto.
Deposits and withdrawals
Brokers that provide cryptocurrency CFDs only use fiat money for deposits and withdrawals. Hence usually people wire money through debit card, credit card, PayPal, Skrill etc. Third party payments are not allowed and anonymous funding cannot be done. There are transaction limits too.
How to trade cryptocurrency CFDs?
Once the CFD trading account has been funded, you can trade crypto CFDs. You can easily earn profit by buying low and selling high. You can earn from falling prices too by selling at high and leaving low. You can trade in the present prices or use the function of future order to trade.
