Cryptocurrencies have been around for over 12 years, starting with Bitcoin in 2009, and have grown in popularity ever since. But why do we mention cryptocurrencies when we talk about Forex? In this article, we will discuss the relationship between cryptocurrency and forex trading and discuss trading access for both.
Learn about digital currencies and how they relate to the forex market:
Cryptocurrencies are a form of digital or virtual currency that can be used to buy goods, exchange other cryptocurrencies, or trade in the form of CFDs on platforms such as Plus500.You have to understand well when trading digital currencies against the difference, this is called speculation
In addition, cryptocurrencies can be paired with other cryptocurrencies and also with fiat currencies like US Dollar (USD), British Pound (GBP) and Euro (EUR), thus forming a cryptocurrency pair.
Additionally, cryptocurrencies are notoriously volatile, sometimes experiencing massive price increases or decreases in just one day. Different methods must be used to avoid any loss . Plus500 offers free risk management tools to try and cut your losses, as well as free trading videos and articles to help you make informed trading decisions.
How to trade cryptocurrencies:
There are many ways to trade cryptocurrencies, two of which are buying on a crypto exchange and trading CFDs on cryptocurrencies through a trusted CFD provider like Plus500.
Big difference between buying and selling CFD trading in cryptocurrency . You can buy cryptocurrency directly from the relevant crypto exchange, but you also have to create a cryptocurrency wallet and pay high transaction fees. Additionally, you need to store your cryptocurrency in a Crypto wallet and remember the passcode to unlock it, as well as make sure your device is protected from hacking threats that can compromise your cryptocurrencies.
On the other hand, if traders want to trade without dealing with the above factors, they can do so by trading cryptocurrency CFDs. Trading crypto CFDs allows you to speculate on the price movements of the underlying asset without owning it. This means that you will gain or lose as a result of price movements in the underlying asset. Plus500 offers Contracts for Difference (CFDs) on a range of cryptocurrency pairs and instruments such as Axie Infinity, Uniswap, Filecoin, Chainlink, Bitcoin Cash ABC, Ethereum, Bitcoin and more, all traded against the US Dollar.
Did you know that digital currency trading is like trading all foreign currencies without any difference:
There are a few things to keep in mind when trading cryptocurrencies. First, there are major cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) just as there are major fiat currencies like USD, JPY, GBP, and EUR. These major cryptocurrencies have the largest trading volume and are used as base currencies against both fiat currencies and other cryptocurrencies.
Second, trading CFDs on cryptocurrency and forex on the Plus500 CFD platform is fairly straightforward, with bid and ask prices clearly displayed. You can speculate whether the price of the reference instrument will go up or down and place the appropriate buy or sell order on cryptocurrencies, forex and more.
Important facts about cryptocurrency trading:
While there are similarities and connections between cryptocurrency and Forex, there are distinct differences that traders should be aware of. For example, cryptocurrencies tend to be more volatile than fiat currencies like the US dollar, British pound, and euro. The price of cryptocurrencies can even fluctuate greatly on a daily basis.
For example, the price of BTC has been known to fluctuate by 10% or more in a single day. And since virtually all other cryptocurrency prices correlate with the price of BTC, when BTC performs well, the entire crypto market tends to follow and vice versa. Traders should be aware that while cryptocurrencies can be popular and profitable, their high volatility can also mean that traders can experience sudden losses.
Furthermore, it should also be noted that there is still a great deal of regulatory uncertainty surrounding cryptocurrency trading and a large number of scams and fraudulent activities have been reported. Accordingly, traders should choose cryptocurrency providers with care and caution.