Pros And Cons Of Trading Bitcoin And Its Derivatives
Like any investment, Bitcoin also comes with its own set of pros and cons. We will be discussing a few of them below
Pros Of Trading Bitcoin And Its Derivatives
- Price Changes Of Bitcoin: The rhythm of the price changes in the Bitcoin market is what makes trading so exciting, but also what makes it so risky. The constant rise and fall of prices serve as opportunities to make the most out of trading. Moreover, carefully studying and analysing price movements lets traders go long or go short, depending on whether they think price would go up or down. However, take in mind that, as with any investment, risk is always present.
- Risk Management: Like any market, the severe price fluctuations of Bitcoin and other cryptocurrencies in the digital market gives rise to risks. However, trading in Bitcoin derivatives like CFDs with us at CAPEX allows you to better manage the risks associated with the changing nature of the Bitcoin prices, by using, for example, stop-loss and take-profit orders, when such orders align with your strategy. Nevertheless, it’s important to know that trading risks can’t be completely mitigated.
- Available Market Hours: Another advantage of trading is the availability of a market that is open 24/7 all year long. The absence of a centralised body to govern and regulate the market hours makes trading further convenient.
- Liquidity Improvements: Liquidity is the measure of how quickly the conversion of cryptocurrency into cash takes place without making an impact on the market. Additionally, cryptocurrency falls under the illiquid category as even comparatively small trades make a considerable impact on the market. However, when you trade Bitcoin derivatives on platforms such as CAPEX, it potentially improves liquidity as the prices are sourced from different venues on your behalf.
- Leveraged Exposure: Trading Bitcoin derivatives such as CFDs are considered a leveraged product. It enables you to open a position with a deposit amount worth just a fraction of the total trade value. Subsequently, you gain huge exposure to a cryptocurrency market while using a comparatively lesser amount from the capital. Take in mind that trading with leverage is risky, as you could potentially multiply your losses as well.
Cons Of Trading Bitcoin And Its Derivatives
- High Inherent Risk: Bitcoin trading comes with a high inherent risk as the immanent complex design of trading processes makes valuation highly difficult.
- Over-The-Counter (OTC) Transactions
- Numerous instances state that OTC Transactions don’t necessarily follow compliance procedures all the time. Subsequently, this leads to the development of new risks and difficulties for the traders to overcome.
- Short-Term Fluctuations: Even though trading with derivatives helps mitigate the long-term risks involved, short-term fluctuations can still cause considerable losses.
- Higher Exposure To Potential Loss Of Capital: CFD trading is risky by nature due to leverage. In that sense, trading crypto CFDs requires experience and is not appropriate for beginners. As previously stated, having a greater exposure to a market means a higher exposure to potential loss of capital.
Conclusion – Trade Crypto CFDs at CAPEX
Bitcoin is a highly volatile asset prone to rapid fluctuations in price, making trading an opportunity for large returns and, at the same time, a tremendous risk. Before making any decisions, you must learn and gather more insights to trade responsibly.
We at CAPEX offer a dedicated platform that deals with trading Bitcoin derivatives like CFD Trading. Our advanced features will help mitigate some of the risks associated with trading. Furthermore, our professional seven days a week support and trading academy makes CAPEX your choice of a lifetime for Bitcoin CFDs trading. Sign up now at CAPEX to experience this exciting world of online trading.
How to Trade Bitcoin – FAQ
✔️ How safe is an investment in Bitcoin?
🔐 How can we store Bitcoin
💱 Do we need an exchange account for trading in Bitcoin CFD
