In the past month cryptocurrency has made a serious leap and it seems that it is still reaching for new heights. With this crypto trend, though no trend lasts forever, crypto trading is becoming more and more popular. Today we are going to learn more about trading CFDs on cryptocurrencies on the IQ Option platform. 

It seems that everyone knows the names of big cryptocurrencies – Bitcoin, Etherium, Ripple, Litecoin and so on. Many traders have already had some experience trading these currencies, or even purchasing them to hold on a long-term basis. But what is a cryptocurrency and what is the reason for their fall or rise in value? 

Cryptos are digital currencies, which means that they don’t have a physical form like paper money. One main feature that most cryptocurrencies have is that they are not issued by a central authority, which, theoretically, makes them immune to any manipulation or government interference. Many cryptocurrencies are based on the blockchain technology where the security of transactions is ensured by confirmations. As cryptocurrencies get accepted as a payment method, their popularity as a secure, anonymous and decentralized currency grows.

As in any area, crypto trading has its own important rules and many terms that traders have to know in order to follow the market and understand the conditions well. Here are some of the most commonly used terms:

Order – an order placed on the exchange to purchase or sell the cryptocurrency

Fiat – regular money, issued and supported by a state (like for example USD, EUR, GBP and so on)

Mining –  processing and decrypting crypto transactions, with the purpose of getting new cryptocurrency 

HODL – a misspelling of “hold” that stuck around with the meaning of purchasing cryptocurrency with the intention to keep it for a long time, with the expectation of the price growing

Satoshi – 0,00000001 BTC –  the smallest part of a BTC, it can be compared to a cent in USD

Bulls – traders who believe that the price will rise and prefer to buy at low price to sell at a higher value later

Bears – traders who believe the asset price will decrease and may possibly benefit from the asset value going down.

Cryptocurrencies on IQ Option are provided as CFD-based trading. It means that when traders open deals, they make a prediction regarding the change in the price of the asset. Traders may speculate on the changes in price, however, they do not own the crypto coin itself.

Here is a step-by-step explanation of CFD crypto trading on the IQ Option platform:

1. To begin trading on cryptocurrencies, you may open the traderoom and click the plus sign at the top to find the asset list

2. Find the cryptocurrency that you are interested in and choose the amount that you wish to invest in a deal

3. Note that cryptocurrencies are traded with a multiplier.

The multiplier is an analogue of standard leverage. It provides you with the possibility of higher outcome, although it increases the possible risk of loss. 

Based on your investment and the chosen multiplier, you will see the total trading volume of your deal. The trading volume is the amount which the outcome of the deal will depend on. 

4. The last step before opening a deal is to set autoclose levels in order to adjust the deal to your preferred risk management approach

Note that a stop loss level of 50% is set to all deals automatically. It is possible to reduce this level (for instance, set it at 30%). 

If a trader wishes to increase the level, they may utilize their balance funds in order to keep the deal open longer, even after the level of -50% is reached. A trailing stop loss may also be used in order to secure certain outcomes in case of a positive price change.

5. To open a deal, a trader will need to click the Buy or Sell button, depending on the expected price change: up or down respectively

When a trader clicks one of the buttons, the details of the deal they are about to open are available: the open price, investment, multiplier, volume, point value as well as the overnight charges. This way it is possible to double check all of the information before confirming the deal.

To make a decision regarding buying or selling of the cryptocurrency, traders may use technical indicators provided on the platform, or check out the “Info” section available for every asset in the traderoom. 

This section displays the information about the current trend tendency (bearish or bullish), the summary of indicators’ signals and a lot more useful information that could assist a trader in making a well-informed decision.

You may also find the latest and most relevant updates about the asset in the “News” section. Though this section cannot replace a trader’s own analysis, it may help with forming a full picture of how the asset and the industry is doing. 

Cryptocurrencies, being the volatile assets they are, may offer many opportunities to traders, especially since they gain more and more official recognition. However, high volatility means high risk, so it is understandable that some traders may choose to abstain from actually purchasing cryptos, as it might be an expensive and extremely unstable investment. Fortunately, you can day trade crypto assets on the IQ Option platform, and it can be an option to consider for those seeking quicker results and lower investment costs. Let’s see how it works and where to begin.

On IQ Option, traders have the opportunity to trade CFDs on cryptocurrencies. This means that you can make a prediction about the direction of a crypto’s price and trade it within the day, instead of purchasing specific and often pricy coins and holding them, waiting for what’s to come.

Day trading with CFDs on cryptos may be a considerable endeavor, although it has its risks and limitations, too. In order to day trade CFDs on cryptocurrencies, one needs to decide on the strategy, investment capital they will be using as well as risk management tools.

Before you decide to day trade crypto, it is necessary to weigh the pros and cons of this type of trading and see why it might be appealing to some and unsuitable for others.

Pros:

• Lower costs in comparison to purchasing: there is no need to buy the coin itself and the investment amount can be much lower;
• Availability of a multiplier: traders can use a multiplier in order to trade with a larger amount than they actually own;
• Short timeframes: all deals are opened and closed within the same day, so almost no wait is required to see the outcomes;
• Many available intraday approaches;
• Flexibility with assets: traders can operate on several cryptos at the same time and open as many deals as they want.

Cons:

• Extremely volatile assets may be risky to trade on short timeframes;
• In comparison to long-term investing, the returns from day trading may be significantly lower;
• The use of multiplier increases the risk of a deal closing faster and leaving the trader with a higher loss;
• It is necessary to stay on top of financial and technical analysis every day to make the right trading decisions;
• Day trading may provoke undesirable trading behaviour like emotional trading, so strict risk management is obligatory.

Some of the well-known day trading strategies include scalping, news trading and breakout. All of these approaches are described in detail in our article 5 Most Common Trading Strategies You Need to Know. 

In order to exercise day trading strategies on CFDs on cryptos, first of all, it is important to abide by the following points:

• All deals are exercised within the same day: no positions are transferred to the next day in order to avoid overnight fees.
• Prioritize volatile assets: since your trade time is limited, aim at the cryptos you may consider most promising.
• Check the news: anything important that might swing the crypto market today? Use the knowledge to your advantage.
• Multiplier: use it to increase the volume of your trade, but do not forget that the risks are also amplified.
• Set strict limits: take profit, stop loss levels and a certain investment amount limit are the basics of strong risk management.

Example

An example of intraday trading conditions can be seen below. In this example, 30-minute candlesticks are used and a deal can be opened after a selling signal is received from the Alligator indicator. 

A stop loss is placed at the level of the previous high in order to protect the capital in case of a trend reversal. The deal is closed when the stop loss or take profit level is triggered or manually at the end of the day. As was mentioned, an intraday cryptocurrency trade is not transferred to the next day.

Conclusion 

Day trading with CFDs on cryptocurrencies may be many trader’s choice, since it has many pros: fast execution, immediate outcomes and no overnight fees. However, it is important to exercise it with caution and understand the risks associated with any strategy to day trade crypto and other assets.

Coinbase co-founder and CEO Brian Armstrong believes the US crypto strategic reserve recently announced by President Donald Trump should exclusively consist of Bitcoin (BTC).

On the social media platform X, Armstrong says having “just Bitcoin” in the US crypto strategic reserve “would probably be the best option.”

According to the Coinbase CEO, Bitcoin comes with the “simplest and [clearest] story as successor to gold” relative to other crypto assets.

“If folks wanted more variety, you could do a market-cap-weighted index of crypto assets to keep it unbiased.”

On Sunday, President Trump confirmed that the US will set up a “crypto strategic reserve” consisting of Bitcoin, Ethereum (ETH), XRP, Solana (SOL) and Cardano (ADA). Trump said that the reserve will help “elevate” the crypto industry while promising to ensure the US becomes the “crypto capital of the world.”

According to the White House artificial intelligence and crypto czar David Sacks, more information on the US Crypto Strategic Reserve will be provided during the upcoming White House Crypto Summit slated for March 7th.

Amid Armstrong’s position that Bitcoin should be the only digital asset in the US crypto strategic reserve, Ripple CEO Brad Garlinghouse says he’s glad that Trump recognizes that “we live in a multichain world.”

While noting that “[Bitcoin] maximalism is the enemy of the [crypto] industry’s progress,” Garlinghouse says he will continue to champion multichain-friendly policies in Washington.

“I’ve said this before – the crypto industry will achieve our goals (and beyond) IF WE WORK TOGETHER. Appreciate the crypto President Donald Trump’s vision of a government digital asset reserve representative of the industry.”

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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