How to trade cryptocurrencies as a CFD instrument – The ultimate guide


If you thought that the only way to trade cryptocurrencies is through crypto exchanges, you were terribly wrong. Today, I will explain what is a CFD crypto trading, for what type of investors it is and why CFD traders can with the use of leverage get more out of their capital than regular crypto exchange investors.

Crypto CFD trading X Crypto exchanges

A contract for difference, known as a CFD, is an investment instrument that allows you to speculate on the price growth of a cryptocurrency as well as on its downfall. Not only that with a CFD you can predict whether the price will rise or drop, but you can also use leverage to maximize the potential of your investment. The leverage is a tool providing traders with the chance to earn or lose more than they would with just their own capital. Regulated cryptocurrency CFD brokers provide the leverage 2:1, which means you can earn or lose double from your investment than you would if you did not use it at all.

For whom is CFD cryptocurrency trading suitable?

Trading cryptocurrencies with CFDs is for day traders that plan to stay in a position for a couple of minutes or hours. As a crypto day trader, you do your best to make a profit on sudden price movements that occur during the day. There are a couple of reasons why CFD Crypto trading is mainly for day trading. First of all, there is the convenience of buying and selling your contracts whenever you want in a matter of milliseconds and secondly because your account is charged with swaps whenever you stay in a position overnight. Do not worry, this fee will not destroy your account if you forget to get out of your position before bed as most CFD providers have around 0.04%‎ overnight fee. Given the volatility of cryptocurrencies, this number is not a big deal for a couple of days, for long-term holding CFDs are, however, definitely not suitable.

Stop loss (SL) & Take profit (TP)

When trading crypto CFD you can set up when the trade should close itself when you are in profit – Take profit tool and when you are in loss – Stop loss tool. These features help you to limit the risk of each of your trades without the need to keep an eye on your positions all the time as you will manage when the loss is too much to bear or when the profit is sufficient.

Shorting cryptocurrencies

Most investors choose to buy cryptocurrencies as they go for a long position. While this option is great in the bull market, it is not such a good choice when the bears appear. Let’s be honest here, the current situation which the crypto market faces is not as good as it used to be and speculating on the downfall of cryptocurrencies can be also very profitable if done properly. It seems like an eternity when Bitcoin reached the benchmark of $20k, doesn’t it? Especially now, when we are happy to see it’s price hitting a third of this amount. Unlike crypto exchanges, the CFD crypto market is good for downfall speculations as well.

Conclusion – How to trade cryptocurrencies as a CFD instrument

The fact that crypto exchanges are suitable for long-term investors is undeniable. For traders who, however, want to make a profit on short time price movements, the CFD trading strategy is more convenient. With CFDs, one can very easily get in and out of a position at any time and if a trader knows how to properly use ST and TP, risks are significantly lowered even with the use

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About Author

Michael Kuchar

Michael is a cryptocurrency trader and blockchain enthusiast. He is the creator of a popular educational trading-orientated blog which primarily focuses on day trading CFDs on cryptocurrencies, forex, shares and other asset classes. Michael stands also behind one of the most popular cryptocurrency prediction system out there which has been featured on popular cryptocurrency blogs like coinspeaker, or If Michael is not trading or blogging, he is most likely studying in what other new ways we could use blockchain technology and decentralized applications to our benefit.

Disclaimer: All content found on is only for informational purposes and should not be considered as financial advice. Do your own research before making any investment. Use information at your own risk.

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