Buying Vs Trading Cryptocurrency: Which One Is Better?

Buying Cryptocurrency or trading crypto depends on the investor. Both have their own advantages and disadvantages that are mentioned here. You can choose accordingly.

The cryptocurrencies have a natural appeal that draws the attention of a lot of investors. What the investors find interesting in the digital currency is the chunky returns on offers. The volatility of these digital assets provides a lot of opportunities for the ones who are excessively eager to trade cryptocurrency on the price movements. If you are confused between buying cryptocurrency and trading cryptocurrency, then this article would help you out in taking the right decision. But before that, we would like to make you familiar with some of the well known asked questions and their answers regarding this.

What Are CFDs?

We all know that cryptocurrencies are digital assets or digital currencies that are designed to perform as a medium of exchange. The cryptocurrencies use the “cryptography” technology for tracking the purchases and as well as the transfers depending on the internet to guarantee their confirmed transactions and value. There are a lot of cryptocurrencies, and as you have known by now, new crypto coins are also getting introduced.

CFDs or “Contracts for Difference”, on the other hand, is an agreement that is based on an underlying asset, which is usually a share, a commodity, index or currency pair. So, when you open a trade in CFD, you basically speculate whether the value of an underlying asset will rise or fall, but you never own the asset.

Buying Vs Trading Cryptocurrency — What Is Beneficial For You?

You can decide to own individual units of cryptocurrency or trade on the price of cryptocurrency. Trading helps you to predict the price of your cryptos without even investing in them using the Crypto CFDs. The main aim of trading cryptocurrencies is to get more coins in many ways. Below are the advantages of trading Crypto with CFDs:

• If you trade on the margin, it will allow you to magnify the gains.
• You do not need to own any cryptocurrencies but can trade them.
• You do not require to open a cryptocurrency storage wallet or even deal with the cryptocurrency exchanges.
• You can easily benefit from the rising and falling markets.
• You can easily start your trade using fiat currency.
• You can trade on various platforms that are regulated by the Securities of the county you are from along with the Investments Commission.
• You can get better support from the CFD trading platforms as compared to the traditional cryptocurrency exchanges.
• You can gain access to popular cryptos of increasing range.
• Risks are reduced by “Stop-loss & take-profit” trading tools.

With all these advantages, there are associated risks as well:

• Trading on the margin could mean that losses are magnified.
• Your losses could be greater than the deposited amount.
• Trading Cryptocurrency is not suitable for the longer term.
• The cryptos and CFDs are highly volatile, and as well as speculative.

Buying and holding cryptocurrencies are also considered as:

• You can own the asset and use it whenever it is suitable.
• You can sell it for a profit depending on the value of the cryptocurrency at that particular time and market space.
• It is ideal for long-term investments.
• There is a minimal risk of losing assets until the value drops down to $0.

Purchasing cryptocurrency is solely focussed on the goal to achieve more dollars. Buying cryptocurrency would also mean that you have to wait until your wallet gets created and the purchased Bitcoins get transferred to your wallet. The process is not instant, however.

Things To Consider Before Buying And Trading Cryptocurrency

There are certain things that you need to consider before you trade your cryptocurrencies such as the trading volume, market capitalization and the digital asset analysis. If you are buying or trading the cryptocurrencies, then it is essential to check upon the market capitalization as it provides an insight into the risk level that an investment possesses. You need to also look into the trading volume as it can state whether you can run a loss or gain profit. Higher trading volume refers to easy trading or buying of the assets while on the contrary, lower trading volume would denote that there is a lack of liquidity and that the trader has to struggle a lot to buy the digital asset or invest in it. Along with this, a strong game plan is highly required that would help minimise or even stop losses.

Thus, we can conclude that there is no clear winner while comparing buying vs trading cryptocurrency. Both have their own pros and cons. It just depends on you what you prefer most and how long you are planning to play with your cryptos.