Cryptocurrency can make some investors understandably uneasy, and many are looking for alternative ways to utilise crypto in their strategies. This is where cryptocurrency CFD trading comes into play.
Discover more in our step-by-step to crypto CFD trading for beginners, and read on to find out how to trade crypto.
Discover more in our step-by-step to crypto CFD trading for beginners, and read on to find out how to trade crypto.
What is cryptocurrency CFD trading?
With CFD trading, purchasing and holding the crypto asset is not necessary. Instead, traders open a contract and speculate on how the asset’s price will move.
Does crypto have trading hours?
No, you can open and close positions anytime — each 24-hour period provides a useful marker for traders as they build their strategy.
How to start crypto trading for beginners - The basics
How do you go about trading in cryptocurrency when you are a beginner? Take a look at our step-by-step guide.
1. Sign up for your trading account
The first step to trading crypto for beginners is to set up your trading account. Signing up for an account via TMGM provides the tools and platforms you need to analyse the market and make trades.
2. Download your trading platform
The trading platform is a piece of software you will use to examine price movements and to start trading crypto on international markets.
3. Define your strategy
Crypto trading should be rational, logical, and non-emotional, so you need a strategic approach you can rely on. No strategy is set in stone, and you can always change your strategy at a later date, but it’s best to adhere to your strategy during active trades.
4. Asses marketing movements and choose a currency pair
As you browse your platform, you’ll be able to select one of a vast number of different options. These range from more established currencies like Bitcoin (BTC) and Ether (ETH) to up-and-comers like Litecoin (LTC) and Ripple (XRP) to less well-known options like Golem (GLM).
5. Open your position
This means the position is live and exposed to the ebb and flow of market forces. The volatility of these forces could provide a profit, but they are also a key source of risk, so you need to protect your trade. Stop-loss and take-profit tools keep your trade within sustainable parameters.
6. Monitor the market
Track the progress of your chosen coin market. This helps you stay on top of how your trade is doing. Aim to stick to your original strategy where possible.
7. Close your position
When the time is right, you can close your position. This will end the exposure to market forces, and you will receive your profit or absorb your losses.
Crypto trading strategies
Selecting a strategy is vital as you plan how to make money when trading crypto. While there are no guarantees, the strategy will help you to build towards your longer-term targets. Explore some common crypto trading strategies below:
| Strategy | What is it? |
Scalping |
This is a short-term strategy in which positions are opened and closed in minutes. Scalping can deliver more frequent, smaller profits. |
Day trading |
A slightly longer-term strategy, with positions closed within the same trading day, generally a few hours after opening. |
Swing trading |
Positions are kept open for several days or even longer as traders seek to take advantage of swings in the crypto market. |
Crypto trading derivatives |
Derivatives are forms of trading that “derive” their worth from an underlying asset. In this case, the underlying asset is a cryptocurrency pair. These include crypto spot trades, futures and forwards. |
Get started with crypto trading today - Sign up for a TMGM platform
Ready to dive into the crypto market? Open your TMGM account today — sign up only takes 3 minutes!
Frequently Asked Questions
This depends on how you define these terms and your trading style. Generally, the two ways to generate potential profits from cryptocurrency are:
1. Purchase your own digital currency reserve, hold this, and wait to see if it appreciates in value.
2. Open a position with a contract for difference (CFD), and wait to see if your prediction regarding the market direction was correct.
The CFD route means traders can benefit from a crypto price movement without actually investing in the currency itself. Also, with a CFD, traders can possibly profit even if the market moves downward, provided their predictions are correct.
1. Purchase your own digital currency reserve, hold this, and wait to see if it appreciates in value.
2. Open a position with a contract for difference (CFD), and wait to see if your prediction regarding the market direction was correct.
The CFD route means traders can benefit from a crypto price movement without actually investing in the currency itself. Also, with a CFD, traders can possibly profit even if the market moves downward, provided their predictions are correct.
Simple and Weighted Moving Averages (SMAs and WMAs) provide interesting insight into the movement of a crypto market. They are some of the best indicators for crypto traders to pay attention to. The SMA is just the average price over a set period, while the WMA is a little more sophisticated, considering more recent data points to be more important than older ones.
Other valuable indicators include the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD). For a more detailed look at these indicators, check out our blog.
Other valuable indicators include the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD). For a more detailed look at these indicators, check out our blog.
The main risk of crypto trading is volatility. Crypto markets can decline very quickly, causing rapid losses for investors. However, with CFDs, the trader does not own any currency but speculates which way the market is headed. Traders can also implement stop-loss measures to limit these rapid declines if they do occur.