Article sponsored by Alvexo
The emergence of cryptocurrencies is generating increasing interest among individuals who want to diversify their investment strategies. In recent years, cryptocurrencies such as bitcoin or ether have actually stood out for their strong increases in value despite the variations. As a reminder, these currencies are called “decentralized” insofar as 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 because it is encrypted, called the blockchain.
Volatility, a source of potential opportunity?
Because the rate of these currencies is very volatile, it is necessary to launch with redoubled caution. The environment may be lively, but it is risky.
It is at this stage that one can consider varying and diversifying their trading strategies. Are you uncomfortable with the risk of buying a cryptocurrency that may have no future and may disappear one day? No problem, many traders then resort to the following solution: trading called “CFD”, which consists in investing, not on the asset itself, but on the price movement of this asset, which is never bought.
How cryptocurrency CFD trading works
Then two scenarios exist. If you correctly predicted a rise or fall in one or more cryptocurrencies and the course prices followed your prediction, you will be a winner. Conversely, and symmetrically, you will lose if you expect an increase (or decrease) in prices, but they do not follow your expectation.
The limited risk account: also applies to cryptocurrency trading
In order to strictly comply with the rules, the broker Alvexo provides the “Limited Risk Account”, which bears this name because it is non-leveraged and because it includes a guaranteed “Stop Loss” to automatically block potential losses if prices go an unfavorable direction for the trader. A tool that many investors value and therefore also applies to cryptocurrencies.
Contracts For Differences (CFDs) are complex financial instruments and come with 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 need to ask yourself if you understand how CFDs work and if you can afford to risk losing your money.