Fundamentals of cryptocurrency trading in Africa

Cryptocurrencies bring profit to those who can foresee price dynamics. Here is how to trade them via CFDs in Nigeria and South Africa.

What is Cryptocurrency Trading?

Cryptocurrency represents a new generation of monetary systems. These are entirely virtual assets that fit in the context of cashless economies. Humans were used to physical money for thousands of years. Now, like many other sides of human existence, money is digital. 

Cryptocurrency trading does not involve any physical exchange. Today, its most popular dimension is CFDs (Contracts for Difference). Residents of South Africa and Nigeria do not need to own Bitcoin or altcoins to profit from their value. Through a CFD, you speculate on price dynamics alone. 

Benefits of CFDs

So, what makes CFDs better than crypto money itself? This question is bound to pop in your head. The key consideration is safety. All too often, transactions in digital currencies are associated with data leaks and other types of cybercrime. This prompts more and more governments to limit the circulation of crypto coins on their territory.

With CFDs, you need not worry about fraud or stringent regulations. Short for Contracts for Difference, the abbreviation denotes a special agreement with one’s broker. Clients may profit from price trends alone. No coins are bought or sold: only the instrument is traded. 

The second advantage is the leverage. Holders of CFDs may trade on margin, which means they can open positions for more than they deposit. Brokerages boost clients’ buying power with their funds according to a special ratio. The most common range is between 1:1 and 1:100. For instance, you may be able to trade $100,000 worth of crypto having just $1,000 in your account. Clients with smaller deposits use larger leverage and vice versa. 

Finally, CFDs are accessible to anyone. Entry to the physical stock exchange costs thousands of dollars. Meanwhile, CFD accounts are affordable for the general public. Learn about conditions for cryptocurrency traders in Africa to benefit from them.

Be Aware of Risks

Leverage is appealing, but it is also dangerous for rookies. Higher volume of trades corresponds to higher risks, as these go hand in hand. While large gains are everyone’s goal, do not get overly excited. Make rational decisions and determine the acceptable degree of risk per trade. A CFD trade inflated via leverage may empty your account. It must be used with caution.

Which Currencies Are Accepted

The most famous digital currency is Bitcoin. CFDs may also be linked to other contenders – so-called altcoins. These include Ethereum, Litecoin, and Ripple. As a basis for CFDs, they are all priced against the US dollar. Choose the currency you know best – it will be easier to foresee its movements. 

What CFDs Are All About

CFDs are traded through registered brokers. In Nigeria and South Africa, locals may use the services of trusted global brands. These companies act as intermediaries between their clients and the CFD market. They register accounts, provide software, and process all related operations. It is important to work with a licensed firm that is also monitored by entities like the CySEC. Usually, CFDs are offered along with other instruments: currency pairs, stocks, binary options, etc. 

Any CFD is a contract with your broker on the subject of price. Aside from digital coins, it may be linked to commodities, market indices, stocks, etc. While cryptocurrency (e.g., Ripple) is the underlying asset, it is never owned. Clients bet on trends and reap profits if their predictions come true. This could make trading sound like gambling. However, these activities are drastically different. Traders make informed decisions based on an in-depth analysis of market indicators and updates from the media. 

Brokers like FXTM allow residents of Nigeria and South Africa to buy CFDs online. They are traded via desktop and mobile terminals (e.g., MetaTrader 5). The activity is similar to currency trading in terms of core principles. Traders aim to foresee trends and open positions to benefit from the changes. 

In comparison with physical shares, CFDs represent an entirely different world. The exchange and all transactions on it are virtual. Buyers and sellers connect via software. A registered account is your pass into the realm of live CFD trades.

When to Buy and Sell

If you are familiar with Forex, CFD trades are a piece of the pie. Analyze the price dynamics for the underlying coin. Is it likely to lose or gain value? Buy more CFDs before a spike and sell them later for a profit. Alternatively, sell the instrument if it is expected to collapse. Afterward, you may purchase more lots for less. The market goes through ups and downs all the time. The thoughtful analysis pays off! 

How to Begin

Contact your local brokerage for information on their CFD accounts. These instruments may be traded on their own, or as part of diversified portfolios. CFDs on cryptocurrencies are easily accessible, and they bring tangible benefits.

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