To give you a clear and short answer – cryptocurrencies can be traded on Forex and CFD platforms. But things are not as easy as trading regular currencies, as there are a couple of things that you have to take into account before trading crypto on CFD/ Forex platforms.
Therefore, in today’s article, we’ll take a look into the things that you need to know if you want to trade cryptocurrencies using a CFD or Forex platform!
Crypto Trading on CFD/ Forex Platforms
First of all, it is worth mentioning that you won’t have a hard time finding a Forex/ CBD platform that you can trade cryptocurrencies on, as many MT4 Forex brokers offer BTC/ USD for trading, for example.
Even if crypto may be a newcomer in the trading world, Forex brokers were quick to implement it as a trading option, given its quick increase in value and popularity.
Now, let’s see how cryptocurrencies are traded on such platforms:
- Most Forex and CBD platforms trade cryptocurrency contracts for difference. Basically, the trader gets into a contract with the one providing the CFD on an underlying asset. While the derivatives are based on price movements, they do not actually involve cryptocurrency ownership exchange.
- Given that no cryptocurrencies are actually being exchanged, wallets and addresses are not used either. As such, there are no hacking risks.
- One can make a profit from cryptocurrency trading on CFD/ Forex platforms in two ways. One, if they have a Buy Position and the cryptocurrency’s sell rate increases above the opening buy rate, or if they have a Sell Position and the cryptocurrency’s buy rate falls below the opening sell rate.
Comparison with Exchange Trading
For someone used to exchange trading that wants to get into crypto trading on CFD/ Forex platforms, it is essential to know the main differences between the two types of trading.
- As mentioned, no digital cryptocurrencies are being exchanged in the transactions.
- You don’t have to own a cryptocurrency wallet to engage in trading.
- Cryptos are traded under the terms and conditions set by the CFD/ Forex provider.
- Cryptocurrency CFD trading is leveraged.
- Forex and CFD platforms allow you to trade crypto-fiat pairings (LTC/USD, BTC/USD), unlike most crypto exchanges that allow only crypto-to-crypto trading.
- Deposits and withdrawals are made using only fiat currencies.
Furthermore, a trader that has traded CFDs or Forex on any MT4 platform will understand how cryptocurrency CFDs are traded easily, as such trades are listed like any other CFD instrument within the platform.
The Bottom Line
Overall, you can trade cryptocurrencies using a Forex or CFD platform – but there are a couple of new things that you have to learn, as well as several things that you have to pay attention to.
For example, regulation changes and cyberattacks can significantly impact the movements of cryptocurrency – besides news related to hard forks. This is why you must always be up-to-date when trading cryptocurrencies via a CFD or Forex platforms, as you may never know if the market will move in your favor.