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Cryptocurrency CFD definition
A cryptocurrency CFD is a contract for difference that lets you trade the price movement of a crypto asset without owning the coin itself. It produces exposure to gains or losses based on how the price moves between when you open and close the contract, settled in cash.
When you trade a crypto CFD, you agree to exchange the difference in the asset's price from entry to exit with a CFD broker. You can go long if you expect the price to rise or short if you expect it to fall, and the position is often leveraged, so a small deposit controls a larger exposure. Because you never hold the underlying coin, there is no wallet, private key, or blockchain transfer involved; leverage also magnifies losses as well as gains, and most retail traders lose money trading CFDs.
Owning the coin on the spot market is the alternative: you buy the actual cryptocurrency, hold it in a wallet, and control it through your private keys. A crypto CFD tracks the same price but leaves the coin out, so you trade the move rather than the asset.
Cryptocurrency CFD Example
You open a long crypto CFD on 1 unit of an asset priced at 30,000 USD and close it at 31,000 USD.
Your cash-settled profit is the price difference:
31,000 - 30,000 = 1,000 USD before fees
You never held the coin or a wallet; the gain (or, had the price fallen, the loss) is settled in cash on the price move alone, and leverage would scale both outcomes.
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The information provided on this website is of a general nature only and does not constitute personal financial advice. Before acting on any information on this website, you should consider the suitability of the information in relation to your objectives, financial situation and needs. Investing in CFDs and FX Margin Contracts carries significant risks and is not suitable for all investors. You may lose more than your initial deposit. You do not own, or have, any interest in the underlying asset. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. It is important that you read and consider the disclosure document before you acquire any product listed on the website. The information and advertisements offered on this website are not intended for use by any person in any country or jurisdiction where such use would be contrary to local laws and regulations. The Products and Services offered on this website are not intended for residents of the United States, Malaysia and Thailand.
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