Trade Cryptocurrencies or speculate on their price movements?

2017 has been a great year for cryptocurrency with market capacity starting the year at 17 Billion $ and ending it at almost 600 billion$ that's over 3500% growth in just one year! with predictions that it can reach over 2 trillion by end of 2018 it shows the potential in cryptocurrency and the continuous increase in demand.
There are over 1300 coins listed but not all of them are worth investing as some might be scams but some might turn to big unexpected profits. Ripple for example which started 2017 at 0.00652 and at the time of writing its worth 1.70$ which is over 20000% growth in one year! a 1000$ worth of ripple in january 2017 is now worth over 200000$.

So with all this growth and interest in cryptocurrency more trading options are made, so going back to the title if you should trade cryptocurrency or speculate on their price movements ( CFD ). Both of the options have pros and cons and both provide the option to buy and sell yet they are used differently depending on the market conditions so its important to find what suits you as a trader.

First lets talk about CFD, it stands for contract for difference, what you do is based on your research and knowledge you speculate on the price moments and make profit if your right but of course you lose if you're wrong, CFD's also have multiplier ( leverage ) depending on your leverage your profit/loss gets multiplied, with 1:5 leverage your profit is either multiplied by 5 times of your loss is multiplied by 5 times some brokers offer a leverage up to 1:888 but it should only be used by professionals because its very risky as a very high leverage can destroy your whole trading account. leverage is a double edged weapon but if used wisely can turn to massive profit.

Lets talk about the difference between before talking about the pros and cons
-when trading cryptos traders often buy and hold till they find the right moment to sell which can be after 1 day, week, month depending on the traders preference, but with CFD you are limited to some time as positions in CFD's have expiry dates and swap charged daily so CFD is suitable for profits in the short term.
when you buy cryptos you pay the full value of it but with CFD's you only pay a margin depending on the broker the margin can be from 15-50% of the value which gives you the opportunity to trade with more than what you have, for example Litecoin price at 300$ so if you want to open a position for Litecoin you'll pay 45-150 $ instead of paying for the whole amount of 300$. A quick example of CFD trading, say you paid 60 dollars margin for litecoin and the price was at 300$ so with that 60$ you're controlling 300$, if the price went to 350 then you made 50$ profit from your 60$ margin but if the value went to 250 then the 60$ margin made you lose 50$.

Now lets talk about the pros and cons of both options
-with crypto trading you can buy and hold for as long as you like if the value went down you can hold and sell later when the price goes up again, youre not losing money unless you sell at a lower price but with CFD's your time is limited to the expiry date of the instrument which is usually 1 week and you're charged an interest for keeping your position overnight.
-with CFD trading you only pay the margin 15-50% but with crypto trading you have to pay the full amount of whatever you want to buy.

• CFD's are leveraged which means depending on your leverage your profit/loss is multiplied, with big leverage comes bigger risks so its important to use it very wisely.
• with crypto trading you have to create a wallet then buy the crypto you want then you send it to the coin exchange ( there are also some fees charged by them. Also there's a risk of losing your cryptos from hackers as before 65 million$ worth of bitcoin was stolen from bitfinix ( popular exchange market ) but with CFD you dont have worry about all of this because you don't own the actual crypto instead its a contract from the time you open the position till the time you close it and your profit/loss is determined by the price difference between the time opening and closing.
• CFD's trading is considered less hassle compared to crypto trading.
• since you dont own the crypto itself in CFD you'll be saving the cryptocurrency transaction fees

some CFD brokers have low limits on the number of positions you can open so always do research on more than one broker and practice on demo accounts at first.

Important notice
This is not an advice to trade CFD or cryptos, always do your own research and practice before depositing real money.
CFD trading can be very risky and its not suitable for everyone and its important to always find a broker that offers negative balance protection as with some brokers your losses can exceed your deposits and sure nobody wants that!

This is my first post on steem hopefully you like it, if you have any questions ill be glad to help, my next posts will be about trading tutorials, talk about charts, technical analysis that will help with trading, tips and some CFD brokers that are considered reliable.

Feel free to show some love :)

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