Leverage for Crypto / CFDs – Here’s What You Need to Know

Leveraged trading sounds too good to be true, doesn’t it?

The reality is that while it does magnify your exposure to the market and, therefore, your potential profits, it equally magnifies potential losses.

Trading crypto CFDs has proven to be a safer option than trading on exchanges, given that you don’t actually own the underlying asset and therefore don’t need to take on the worry of safe storage. Another benefit of CFDs is that you get to trade on margin or leverage.

In the simplest terms, leverage is an amount that your broker is lending you, so that you get to choose a position size larger than the total capital in your trading account.

For instance, Blackwell Global, a leading online trading platform provider, has recently launched the largest offering of crypto CFDs, where traders can choose from 15 different cryptocurrency pairs and leverage of 30:1.

Here’s what you should know before you start trading crypto CFDs.

Leverage Offers Benefits

Every broker around the world offers leverage and traders use it too because it offers various advantages, such as:

  • It minimises the amount of capital you need to invest. You only need to put in a small portion of the required amount, with the remaining being funded through leverage.
  • Leverage allows you to gain exposure to the more expensive assets that you might not have been able to afford to speculate on with your own capital alone.
  • You have the flexibility to choose the amount of leverage you want
  • You don’t need to worry about the minimum balance to be maintained in your trading account to be able to execute a trade, since the shortfall will be made up for with the leverage.

Leverage Means Higher Risk Too

Leverage is a great way to multiply your profit potential. Unfortunately, if the market moves against you, it has the ability to equally magnify your loss potential. Therefore, it is always advisable to use leverage carefully. Unless you have the knowledge and the skills and have confidence in your price movement predictions, it is best to stay with lower leverage.

Given that leverage can be a double-edged sword, the best course of action is to start small and gradually increase your position as you gain experience and skill.

This is why Blackwell Global has also launched the largest ever cryptocurrency education portal. This portal offers articles, webinars, seminars and training on using indicators and much more for both beginners and experienced traders.

Cryptocurrency is a relatively new market and one that tends to be very volatile. While the potential to gain from this volatility is immense, the potential for your trading account to be wiped out is also large.

CFDs are possibly the safest way to participate in the crypto market, especially with a regulated and trusted broker. And, when it comes to using leverage, don’t let emotions like greed or FOMO (fear of missing out) guide your decisions. Start small, get a feel for the market, master the use of indicators and gradually build your trading career.