Contract for difference trading or CFD trading is a system that that gives people the opportunity to trade or invest in an asset through a broker as a substitute of creating a position on a particular market. CFD payments are made in cash instead of delivery of physical assets or goods.

The traders of this crypto receives the difference between the future value of an asset and the current cost of an asset. Cryptocurrency CFD Trading enables the investors to cogitate on a price change of cryptocurrency (in the likes of Ethereum or Bitcoin) or the use of leverage.The investor has to put down a part of the total value of the contract or investment which means CFD is offered with leverage.

Meanwhile,the money lose in leverage is very fast because the impact of price change is multiple on both profits and losses.

Cryptocurrency CFD trading is useful in the creation of a portfolio which goes in line with market strategy, thus,it gives the investors total control over the asset which they hold. Cryptocurrency CFDs are normally offered through the use of online platforms.

CFD is a currency which is virtual and the issuance is not by the central bank or backed by government. It should be noted the a broker offers CFD to make it accessible to private users.

How To know if cryptocurrency CFDs are Suitable for my trading Strategy

  Meanwhile, one has to be sure if cryptocurrency CFDs are suitable for a trading strategy.  To be sure,the CFD must be capable of easy setting up because trading cryptocurrency directly is usual prone to technical issues. 

Also the leverage trading for trading cryptocurrency through CFDs which enables the trader to trade with more money than trader really has, thus, with the ratio 5:1 leverage what the trader need is just $500 in other to create a position which worths $2,500 in which a considerable return on investment is earned even when their us little price movements,hence, a good check on leverage trading can be used in checking the suitability of a trading strategy on CFDs.

Also, to know the suitability of CFDs, it must have a better regulation in which CFD brokers are mostly regulated by CySec and other financial watchdog with reputations like the FCA. With this, the strategy are protected from outright theft, fraud and also bad management.

Also when all transactions are carried out in second on a trading platform of a broker it gives flexibility and guarantees quick reaction by the trader to market movements unlike the cryltocurrency on the blockchain which takes hours and even sometimes days which is determined by the network capacity and the coin, as a result of this, traders can take advantage of rapid changes in the market.

Are CFDs risky Financial Products

  Cryptocurrency CFD, which is speculative investment in nature are of a very high risk,thus,they are risky financial products.

The risks involve includes price volatility in which any unexpected events or market sentiment change may lead to a sudden change in the price because cryptocurrencies value which the CFD value linked them are totally volatile.

Another risk involved is the price transparency,here, the risk of not receiving a fair or an accurate value(price) for the cryptocurrency underlying when trading is high.

Also leverage, which entails the risk of losing more than your investment,hence,one might end up owing money to the firm at the long-run.

CFDs are based on trust because cryptocurrency price manipulation by some unfair agents which as a result of this leads to avoidable losses on the client's account. CFDs are complicated instruments and they have high risk of losing capital very fast due to the leverage discussed above.

Do All Brokers Offer Cryptocurrency CFDs?

  A cryptocurrency CFD broker gives products which are derivatives to tradersDue to the nature of cryptocurrency CFDs, not all brokers offers it. 

The major broker who offer CFD are

etoro
pepperstone,
FXCM,
xtb,
OLYMP TRADE,
BITFINEX,
BINANCE,
Libertex.

How you can trade on OLYMP TRADE BROKER

Cryptocurrency can be traded on OLYMP TRADE through buying of Ether (or any other CFD products) when you predict that the price will fall in value in which you sell the ether against the US dollar.

For instance, when the present market price may be around $200 and you take the decision to buy just five contracts (which has an equivalent to 1 ETH each to create a position at the price) at the buy price of $205 which is a bit higher than the market value or price as a result of spread.

If fortunately the prediction is right and the ether value fell against the US$ ,the trade will be a gain(profit),like if their is a move in the market by 45 points in favour of you,the profit that will be gotten on the trade will be 5×45=$225. On the other hand, if their is a rose of ether value against the US$,the trade will totally be a loss.

Below are some of the images from olymp trade website to explain the demo account

The demo account attached with this article gives a better understanding on how to trade CFDs on OLYMP TRADE broker. A good look should be given to it to ensure better chances of gaining. The demo shows the likely moments when gains might occur.

@kouba01