Article sponsored by Alvexo
The rise of cryptocurrencies is generating a growing interest among people who want to diversify their investment strategies. In recent years, cryptocurrencies like bitcoin or ether have really stood out for their strong growth in value, despite the differences. Recall that these currencies are called “decentralized” because they are issued by players who do not go through central banks. On the transaction side, these new assets are exchanged and stored in a secure database as it is encrypted, called the blockchain.
Volatility, a source of potential opportunities?
Since the rate of these currencies is very volatile, you need to start with double caution. The environment can be cheerful but risky.
It is at this stage that you can consider changing and diversifying your trading strategies. Are you not comfortable with the risk of buying a cryptocurrency that may have no future and may one day disappear? No problem, many traders then resort to the following solution: a trade called “CFD”, which consists of investing not in the asset itself, but in the movement of the price of this asset, which is never bought.
How Cryptocurrency CFD Trading Works
Then there are two scenarios. If you correctly predicted the rise or fall of one or more cryptocurrencies, and the prices of the course corresponded to your forecast, you will win. Conversely, and symmetrically, you will lose if you expect prices to rise (or fall) but they do not meet your expectations.
Limited risk account: also applicable to cryptocurrency trading
In order to strictly comply with the rules, Alvexo provides a “limited risk account”, which goes by this name because it does not use leverage and includes a guaranteed “stop loss” to automatically block potential losses if prices go down. in an unfavorable direction for the trader. A tool that is appreciated by many investors, so it is also applicable to cryptocurrencies.
Contracts for Differences (CFDs) are complex financial instruments and carry a high risk of losing money quickly due to leverage and may not be suitable for all investors.
76.57% of retail investor accounts lose money when trading CFDs with this provider. You have to ask yourself if you understand how CFDs work and if you can afford to risk losing your money.