Article sponsored by Alvexo
The rise of cryptocurrencies is generating growing interest among individuals looking to diversify their investment strategies. In recent years, cryptocurrencies such as bitcoin or ether have indeed stood out for their strong increases in value, despite the variations. Recall that these currencies are called “decentralized”, 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, because encrypted database, called the blockchain.
Volatility, a source of potential opportunities?
Since the price of these currencies is very volatile, it is necessary to launch with doubled caution. The environment can be lively but it is risky.
It is at this stage that you can consider varying and diversifying your trading strategies. Do you feel uncomfortable with the risk of buying a cryptocurrency that, perhaps, has no future and could disappear one day? No problem, many traders therefore 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 purchased.
How cryptocurrency CFD trading works
So there are two scenarios. If you have correctly predicted a rise or fall in one or more cryptocurrencies and the price of the course followed your prediction, you will be the winner. Conversely, and symmetrically, you will lose if you anticipate a rise (or fall) in prices but don’t follow your expectations.
The Limited Risk Account: Also applicable to cryptocurrency trading
For reasons of strict alignment with the legislation, the broker Alvexo makes available the “limited risk account”, which bears this name because it is not leveraged and because it includes a “Stop Loss” guaranteed to automatically block potential losses, if the prices they decrease in an unfavorable direction for the trader. A tool appreciated by many investors, which therefore also applies 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.