Contract for difference (CFDs) with GoGet Crypto – the flexible way to trade cryptos.
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Contracts for difference (CFDs) allow you to open a contract for the difference in price of an asset, from the point of opening to when you close without a need of having another trader to do the opposite trade to match you.
CFDs are a leveraged product. This means you only have to put down a small deposit for a much larger market exposure.
Leverage comes with significant benefits and risks: your investment capital can go further, but you can also lose your deposit if the asset go in the different direction.
CFD trading allows you to take a position on the future value of cryptocurrency whether you think it will go up or down. While this means the CFD is very flexible, it also requires a high level of risk management.
It's important to remember you're trading contracts with GoGet Crypto, not physically trading in the underlying market. This means you don’t actually own any cryptocurrency.
CFD prices are quoted in two prices: the buy price and the sell price.
The sell price is the price at which you can open a short CFD
The buy price is the price at which you can open a long CFD
Sell prices will always be slightly lower than the current market price, and buy prices will be slightly higher. The difference between the two prices is referred to as the spread.
In GoGet Crypto we never charge any fees. That is why the spread is your only cost of opening the trade.
CFDs are traded in standardised contracts (lots). The size of an individual contract varies depending on the cryptocurrency being traded.
Bitcoin, for example, is traded in exchange in units of 1 coin, and its equivalent CFD contract also has a value of 1. So if you want to trade on 1 Bitcoin CFD you have to choose the size of contract as 1 BTC.
Most CFD trades have no fixed expiry on them. If you keep a daily CFD position open after the end of the trading, you’ll be charged an overnight funding charge. The cost reflects the cost of the capital we have in effect lent you in order to open a leveraged trade.
To calculate the profit or loss earned from a CFD trade, you multiply the trade size of the position by the value of each contract. You then multiply that figure by the difference in points between the price when you opened the contract and when you closed it.
Profit or loss = (“number of contracts” x “value of each contract”) x (“closing price” – “opening price”)
For a full calculation of the profit or loss from a trade, you’d also remove any charges or fees incurred. These could be e.g. overnight funding charges.
If you buy 1 contract of BitcoinUSD when it was trading at 7000 per unit, a single BTC contract is equal to a single BTC unit in exchange. So for each point of upward movement you would make 1USD.
If you sell when BitcoinUSD is worth 7100 USD per unit, your profit would be 100 USD with margin trading 1:1.
100 = (1 x 1) x (7100 - 7000)
If you sell when BitcoinUSD is worth 7100 USD per unit, your profit would be 500 USD with margin trading 1:5.
500 = (5 x 1) x (7100 - 7000)