What is Cryptocurrency CFDs trading


The Cryptocurrencies Contract for Difference Trading (CFD trading) is a method that enables individuals to trade and invest cryptocurrencies by engaging in an agreement between themselves and a broker, instead of opening a position directly on the cryptocurrencies market.

The trader and the broker agree to replicate market conditions and settle the difference amongst themselves when the position closes. CFD trading offers many advantages that don’t exist on direct trading, such as access to overseas markets, high level of leveraged trading, and short (SELL) positions for assets that traditionally do not offer that option.


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Cryptocurrencies CFDs trading and Futures Trading


Contracts for differences trading (CFDs) and Futures Trading contracts are often a point of confusion for new traders. However, there are some differences between them, such as:


Futures Trading usually has a specific expiration date, while CFDs trading doesn’t. A CFD position can be kept for as long as the terms of the contract allow, no need to settle it on a specific date. When the CFD is liquidated, the difference in price will be calculated and paid to the appropriate party.


Futures trading on open markets where the order book is visible to everyone. With CFDs trading on the other hand, traders are trading against a single broker, and there’s only his price available for trading

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CFDs trading have higher spreads than futures trading. The differentiation between the “instant buy” and “instant sell” price is higher. However, CFDs are also usually charged lower fees for their operation than futures.


Frequently asked questions about Cryptocurrency CFDs trading


  • Is there an expiration date on a Cryotocurencies CFDs trade?

    Most CFD trades are open-ended – with some exceptions such as futures and forwards. When traders want to close their position, they just simply need to put a trade in the opposite direction to the one who opened it.

  • Can trader hold a CFD position overnight?

    Yes, trader can hold CFD positions overnight. However, they’ll be charged an overnight funding charge. This fee covers the capital they’ve effectively borrowed from the broker and reflects the cost of holding their position open.

  • What are the commission rates on CFDs?

    For most CFD positions, the cost of opening a position will be covered in the spread. This means that the buy/long and sell/short prices already include any charges. However, some broker also charges for small share fee on each trade

  • Can I trade both rising and falling markets with CFDs?

    Yes, with CFDs, traders can take a position on a market that is rising or falling. If they decide to open a position in the hope that its price will rise, this is known as ‘going long.’ If they sell an asset in the hope that its price will fall, this is called ‘going short.’


Crypto Moon is not a financial advisor; contents on this site are not financial advice. All information on the Crypto Moon website is informative and not recommendations to buy or sell anything. You are responsible for your investments, only should invest money you can afford.

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