Understanding the 5 Instruments Used in Crypto Trading

2019/05/27

 

 

 

Photo by Pexels

Do you want to know the available trading tools in the crypto market today? To give you insights, we conducted a thorough investigation regarding the functions of various crypto trading platforms you can utilize. Later in the article, you’ll discover that the available crypto trading instruments are not just for bitcoin, but also other cryptocurrencies too. We have compiled the ideas, and the topics include:

  1. Crypto Trading Futures
  2. Crypto Trading CFD
  3. Crypto Trading Swaps
  4. Crypto Margin Trading
  5. Crypto Leverage Trading

Crypto Trading Instruments: Investors’ Revenue Generators

In the trading sector, investors prefer the crypto trading instrument that gives them an edge to gain more profits. The common benefits that crypto trading instruments can bring include:

  1. Investment substitute for customary trading instruments
  2. Trustworthiness and transparency of decentralized cryptocurrencies
  3. Favorable investment and divergence of risks
  4. No sway on the part of financial institutes
  5. Financial market participants’ call determines the rate

Cryptocurrencies have reached their fame because of the effectiveness of crypto trading instruments. Also, the platform that has more available functions becomes more attractive to investors. To understand the available features better, we’ll provide you with more facts — details on what cryptos trading platforms apply and how multifaceted the company made them.

Crypto Trading Instruments

1.Crypto Trading Futures

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The crypto trading future contract is one of the more sophisticated instruments infrequent to find in the crypto world today. It’s rare because of the high fluxes in the value of coins. The contracting involves traders setting a predetermined cost to be sold or purchased sometime in the future. When you become confident of your analysis of the impending tendencies in the market, you can make use of the contract.

Some of the platforms that offer “Crypto Trading Futures” are:

  1. BitMex: When it comes to practical trading functions, BitMex tops in the industry. It offers crypto trading futures wherein you can involve in contracts with the help of leveraging 100x for bitcoin.
  2. PrimeXBT: This is a platform that offers crypto trading futures with a maximum leverage of 100:1 currently. It’s available worldwide.

Good to know: Other cryptos you can utilize for futures are: Bitcoin Cash, Cardano, Litecoin, Ethereum, and Ripple.

2.Crypto Trading CFD

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The “Contracts for Difference” or CFD is prevalent within the trading market in the cryptocurrency industry. It’s an agreement with the brokerage company to make use of their volumes. The good thing about this is it can help you if you don’t have significant savings to start. You can still earn despite fluctuations.

Some of the platforms that offer “Crypto Trading CFD” are:

  1. Markets.com: Serving worldwide, Markets.com has over 2.000 assets accessible for trade, not to mention their coins. The available cryptocurrencies at this market include Ethereum, Bitcoin, Litecoin, and Ripple. Their platform allows you to begin with a demo account to get used to the available functions before switching to a premium account. The maximum leverage is 2:1.
  2. Plus500: Another platform where you can find valid CFD contracts is Plus500. Using the coins to make your tactics, it gives the option to trade CFDs on Shares, Indices, Forex and Cryptocurrencies — Ethereum, Bitcoin, Bitcoin Gold, Bitcoin Cash, Ripple, and Litecoin.

3. Crypto Trading Swaps

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The “Crypto Trading Swaps” is the most typical trading instrument in the crypto world. This function enables traders to swap around his coin with the platform-owned currency —altcoins. It is similar to “Crypto Trading Futures” in the sense that both are trading contracts that let clients switch currencies for a certain period and cost. What makes Crypto Trading Swaps distinct is the time of application.

  1. Future contracts: one-disbursement during a single day
  2. Crypto Trading swaps: can go on for more extended period wherein payments happen multiple times

Good to know: The crypto-to-crypto service fixes cryptocurrencies like ETH, BTC, and LTC for the contract.

Some of the platforms that offer “Crypto Trading Swaps” are:

  1. Binance: This is a platform that emerged as an ICO project. They created a new coin —BNB. Today, it’s a crypto-to-crypto trading bazaar, having more than 200 trading pairs and 100 accessible cryptocurrencies. Typical coins for swap contracting include Ethereum, USDT, bitcoin, and BNB.
  2. Poloniex: As US-based podium, it offers the same thing as what Binance can provide. Many coins can be accessed for trading. Typical coins for trading pairing are ETH, XMR, BTC, and USDT.

4. Crypto Margin Trading

The “Crypto Margin Trading” lets you borrow reserves from the exchange and gain profits out of it. This instrument is recommended to intermediate and advanced traders as it’s a relatively challenging type of trading. You need to fully understand how the crypto market goes to handle possible losses caused by leverage. Since it is complicated, you should experiment first with demos is you’re a beginner.

Some of the platforms that offer “Crypto Margin Trading” are:

  1. Bitfinex: When it comes to USD to BTC daily trade, Bitfinex is the largest platform across the globe. Here, you can find various functions when you engage in margin trading. This podium features more than thirty cryptocurrencies and over seventy trading pairs.
  2. Kraken: As a popular trading platform in Europe, this platform caters simple exchange and margin trading. It’s suitable for first-time, intermediate, and advanced users. The good thing about this podium is that it enables you to set cost restrictions, allowing you to control your loss or profit completely.

5. Crypto Leverage Trading

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Similar to “Crypto Margin Trading” in nature, “Crypto Leverage Trading” allows you to borrow funds when creating order but this gives you an edge to power up your order value many times, even though you don’t have the funds on hand yet. Take note that this function can lead to drastic losses, but can serve as your means to gain more significant profits as well.

Some of the platforms that offer “Crypto Leverage Trading” are:

  1. Bitfinex: As one of the biggest fiat-to-crypto trade platforms worldwide, this center allows you to use a 3:1 ratio. It’s a distinct podium because its leverage funding has a source from the peer-to-peer market within its system. Through this platform, you can provide you unused coins to earn interest.
  2. BitMex: In “Crypto Leverage Trading,” it’s recommended to start with smaller rates. BitMex supports these available options: 20x for Bitcoin, Bitcoin Cash, and Cardano; 20x for Ripple; 50x for Ethereum; and 33x for Litecoin.

One More Thing Before You Go

Both starters and experts can utilize the tools mentioned above. For beginners, it is advised to educate yourself about the market first before diving into these functions to be prepared with some risks associated with these instruments. But, you’ll have an edge if you’re a more experienced trader as you could benefit the most.

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