Do you keep hearing about other people making a fortune by putting their money in the cryptocurrency market? It seems that everyone these days already know about Bitcoin, thanks in large part to its jaw-dropping rise in value back in December 2017. This relatively new investment vehicle has attracted millions of investors across the globe because of its rapid price surge. It only makes sense if you want to get a piece of the action. But to maximise your return on investment, it’s best to know about the two instruments you can use to make money in the cryptocurrency market.
Traditional Cryptocurrency Trading
Most beginners will be acquainted with digital coins through cryptocurrency trading. This is similar to buying assets such as stocks and bonds. Essentially, you’re exchanging your cash for the digital currency. In most cases, this comes in the form of Bitcoin or Ethereum, two of the most popular digital coins today. You can engage in day trading which involves trading the coins regularly. “Buy and Hold” is also a popular strategy, where you hold on to your coins for at least a couple of months until their prices reach a point in which you can make a significant profit.
Cryptocurrency trading is the most popular method of getting started with the digital currency market. On the one hand, it has become very accessible, with more and more cryptocurrency exchange platforms emerging in the market. Moreover, this approach doesn’t require an extensive knowledge of the market, as you can simply buy today and wait a few months before selling your assets. Day trading proves more complicated, but the volatility of the market still makes it very lucrative when done properly.
Cryptocurrency CFD Trading
If you’re not new to investing, then you should have an idea what a CFD is. It stands for a contract for difference. CFD trading doesn’t involve buying an underlying asset. Basically, you’re predicting whether the price of the asset will go up or down in the future. If you guess correctly, then you will get the difference between the current price and the future price. An incorrect prediction means you will incur losses of equal amount.
Many traders now utilise a crypto CFD trader for making short-term positions. They believe that cryptocurrency CFD trading presents a great opportunity to make money in the short term, which is made more attractive by its lower spreads. The speculative nature of the cryptocurrency market also makes predictions relatively easier compared to other assets. And to top things off, this form of trading involves a multiplier of up to X25. This means that you can invest $100 with an X25 multiplier. When calculating possible earnings or losses, it’s as if you have a $2,500 position instead of $100.
Both cryptocurrency trading and CFD trading offers investors an excellent opportunity to penetrate the market and make some serious money. There’s no reason not to use both to your advantage. Take your personal preferences into consideration as well as the market behaviour to determine which of the two proves more profitable.