Cryptocurrency trading is blooming. Contemporary technology has allowed ordinary people to join a world of investments that is both lucrative and secure. If you are not very knowledgeable of how mining happens and how you can profit from holding cryptocurrency tokens, you can still participate in the industry. This can happen through trading with the assistance of a brokerage house. Cryptocurrencies can be traded under the CFD derivative with easy and almost no previous knowledge is required to do that.
What Is a CFD?
CFD stands for a contract for difference. This is a contract between you and the broker – you are in the role of the buyer and the broker is the seller. The seller agrees to repurchase the contract at the time of closing the trade and the buyer profits from the difference. If the difference is negative, the buyer generates a loss. In the case of CFDs, you get the chance to prolong the time of the contract so that you can close it when it is profitable. This holds the possible risk of generating a bigger loss, but also – a bigger profit due to a bigger difference in values.
Cryptocurrencies can be purchased at cryptocurrency exchanges and tokens can be held as investments or used for paying in different cases. If you lack the knowledge, tools or confidence to do that, you can easily start trading cryptocurrencies under the CFD derivative. For the purpose, all you need is a broker. But what makes a good broker? It all depends on your needs as an investor and the cryptocurrency you wish to trade.
Here are some of the things you should consider when choosing a crypto trading broker.
Popularity of Chosen Cryptocurrency
This is the leading thing you should consider. Cryptocurrencies like Bitcoin, Ethereum, Litecoin and Ripple (XRP) are offered by most, if not by every broker that offers crypto trading.
On the other hand, some upcoming currencies might not be offered by the brokers because they have not gained popularity yet, and their supply and demand are minimal, which does not cause significant changes in the value of a single token or a fraction of the token.
Negative Balance Protection
The Negative Balance Protection is a feature that prevents you from generating too many losses. If your investment is going bad, the platform will automatically terminate the trade – you won’t lose more than you have invested.
This is the best thing about a crypto trading broker. Because the industry is so volatile, values are constantly changing and sometimes – unexpectedly crash. That is why such a feature guarantees you will not lose fund due to market volatility.
The spread is the difference in the value of the cryptocurrency at which you buy and sell the token. It is a form of a fee that the broker takes for itself as being the one giving you the opportunity to trade cryptocurrencies under the CFD derivative on its platform.
Best Cryptocurrency Trading Brokers
There are many factors that determine which are the best crypto brokers out there. The ones described above are just a fraction of everything you need to consider. We would like to bring to your attention the brokers that have left the best impression with us and offer the most and best opportunities for trading cryptocurrencies as CFDs.
eToro Crypto Broker
The eToro broker platform is one of the top partners you can choose if you want to participate in cryptocurrency trading. It offers a secure, encrypted trading environment, user-friendly interface, and beneficial terms and conditions for trading. It offers low spreads, multiple account types, and constant customer support. With it, you can trade on Bitcoin, Ethereum, Ethereum Classic, Ripple, Litecoin, and Dash. These are the most popular and most lucrative and quickly developing cryptocurrencies.
24Option operates on an award-winning user-friendly platform that allows newbies and professionals alike to take part in the world of online trading. It is available in multiple languages and provides access to the MT4 investment platform. The broker offers medium spreads that vary according to the account type you choose to start with. The minimum deposit with which you can open a basic account is $250. This brokerage is preferred by many traders because it provides numerous educational and training materials that can help you gain confidence and additional skills to enhance trading.
IQOption is probably the broker that offers the most cryptocurrencies to trade with. There are 12 currencies to choose from – Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin, IOTA, Dash, Ethereum Classic, Monero, OmiseGo, Zcash, Santiment. This is possibly the best-developed brokerage that has been perfectly optimized to help you trade cryptocurrencies. It offers Negative Balance Protection, low spreads, and various other tools that can help you enhance the investment process and your profitability.
The three brokerages above are the leaders of the industry. But even if you choose another one for you cryptocurrency trading ambitions, make sure it has been verified as safe and is capable of providing a safe and secure environment for carrying out trades.