You can purchase or sell cryptocurrencies directly on an exchange. Alternatively, you could trade derivatives – such as contracts for difference (CFDs) – which derive their value from an underlying market, to speculate on rising or falling prices.
To trade cryptocurrencies CFDs, start by choosing a reliable trading platform like Capital.com.
Once you’ve been verified and have deposited funds, search the cryptocurrency markets we offer on our platform. These include bitcoin (available through our BTC/USD CFD market) and ethereum (ETH/USD).
Then, decide on your trade size and apply risk-management tools like stop-loss orders* and take-profit orders.
Open your CFD position long or short and monitor it in line with fundamental and/or technical drivers. Finally, when you’ve identified an exit point, close your position.
CFDs are traded on margin. Leverage magnifies both gains and losses.
*Not all stop-losses are guaranteed.
Cryptocurrencies are highly volatile for several reasons. Firstly, the crypto market is relatively young and less liquid compared to traditional CFD markets, leading to larger potential price swings. Second, regulatory news, technological changes, and market sentiment can cause rapid shifts in demand. Lastly, the speculative nature of crypto trading can attract traders seeking quick profits, amplifying price movements. This combination of factors results in significant volatility in cryptocurrency prices.
Yes, cryptocurrencies are generally considered riskier to trade than stocks (available with Capital.com as share CFDs). While both asset classes can be volatile, cryptocurrencies often experience more extreme price fluctuations over shorter periods of time. On top of this, the crypto market is less regulated, making it more susceptible to fraud and market manipulation. These factors can contribute to a higher risk profile for cryptocurrencies compared to traditional stocks.
Although cryptocurrency CFDs such as bitcoin and ethereum are known for their volatility, other cryptocurrencies often exhibit even higher levels of price fluctuations. Dogecoin, shiba inu, and other lesser-known crypto CFDs tokens can experience extreme volatility due to lower market liquidity, speculative trading, and sudden changes in investor sentiment. It’s essential to conduct thorough research and understand the risks before trading cryptocurrencies.
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