Buying/selling cryptocurrencies on an exchange is different from trading cryptocurrency CFDs on a CFD platform. The purpose of both transactions is to profit through encrypted transactions, but the process is quite different. This article will introduce how to buy and sell cryptocurrencies and how to trade cryptocurrency CFDs.
Buy and sell cryptocurrencies
Fundamentally speaking, buying and selling digital cryptocurrency means using one cryptocurrency (such as Bitcoin) to exchange it for another cryptocurrency (such as Ethereum) on the basis of buying and selling through a cryptocurrency exchange. The process includes finding cryptocurrency pairs for cryptocurrency-to-cryptocurrency exchange, or exchanging cryptocurrency for fiat currency or fiat currency for cryptocurrency. The process involves two transactions, the transaction direction is opposite, so as to complete the entire exchange cycle, and ultimately achieve the purpose of profit.
Trading places
The buying and selling of cryptocurrency is carried out on the cryptocurrency exchange. Traders need to fill out the online form first to open a trading account. Most exchanges have an Order Book, which records the objects that traders are buying and selling and where they are trading.
Deposits and withdrawals in cryptocurrency transactions
Cryptocurrency exchanges usually accept two deposit and withdrawal methods. A few exchanges (mainly in the U.S. and U.K.) accept fiat currency deposits or mixed fiat currency and cryptocurrency deposits. However, due to bank restrictions on such transactions in operating accounts, most exchanges around the world accept cryptocurrency-based deposits and withdrawals. If the exchange only accepts cryptocurrency deposits/withdrawals, traders must create a third-party wallet for cryptocurrency deposits. The most common cryptocurrency deposits include Bitcoin, Ethereum, and Litecoin.
In order to deposit funds, traders need to buy Bitcoin, Ethereum or any other cryptocurrency from a third party and transfer them to the third-party wallet. Then transfer funds from the wallet to the wallet provided by the cryptocurrency exchange as a cryptocurrency deposit. If you choose this method, you must ensure that you enter the correct wallet address during the transaction, and the cryptocurrency sent to the wrong address will not be retrieved.
Cryptocurrency transaction process
Once the exchange wallet is in the account, you can buy and sell cryptocurrencies by trading trading pairs that include your deposit. BTC and ETH are usually the mainstream trading currencies in exchanges, and it is not difficult for these two cryptocurrencies to find counterparties. You can also use limit ("profit closing") and stop loss ("loss closing") tools, or futures contracts to buy/sell your preferred cryptocurrency
Prices are for illustrative purposes only.
Trading cryptocurrency CFDs
You can also trade cryptocurrency speculatively, usually in the form of a contract for difference (CFD). In CFDs, traders do not actually own or exchange cryptocurrencies, but buy and sell contracts based on the price trend of the underlying cryptocurrency.
Where can I trade cryptocurrency CFDs?
You can trade cryptocurrency CFDs through online platforms that provide CFDs (such as Plus500). Traders need to fill out an online form to open an account. Regulatory agencies mandate that identity and residential address verification must be carried out. Funds can only be deposited into CFD trading accounts in the form of legal tender through multiple payment channels.
How to make deposits and withdrawals in cryptocurrency CFD transactions?
Brokers that provide cryptocurrency CFDs only accept deposits and withdrawals in the form of legal tender. Therefore, common payment methods include bank wire transfers, credit/debit cards and/or electronic wallets (such as PayPal, Skrill and Neteller). Since anonymous deposits are not allowed, the deposited funds must come from a channel with the account holder’s name. Third-party payment methods are not accepted. Each deposit channel has a transaction limit. Bank transfer methods usually allow unlimited deposits and withdrawals, but CFD providers may set limits on bank cards and e-wallet payment methods.
The process of cryptocurrency CFD trading
Once you deposit funds into your CFD trading account in accordance with the payment method required by the provider's website or platform, you can perform two-way cryptocurrency CFD trading operations. In other words, you can profit from price increases by buying at low prices and selling at high prices, or profit from falling prices by selling at high prices and buying at low prices. The reverse is also true, if the market moves contrary to your prediction, you will suffer a loss. You can trade at the current price, or use the futures order function to trade when the target reaches the specified price.
in conclusion
You can participate in cryptocurrency trading in two ways: buy/sell cryptocurrencies on a cryptocurrency exchange or trade cryptocurrency CFDs on the CFD online platform. If you are interested in the latter, you can open a CFD simulated trading account on the Plus500 platform in just a few minutes, and choose the cryptographic tool you want to trade from our rich trading options
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