crypto cfd and exchange

The difference between crypto exchanges and CFDs

You may have already heard or read about the crypto CFD trading extravaganza. It has become quite popular for veteran traders who don’t want to bother themselves with new knowledge about cryptocurrency trading. However, there is no denying that there are currently 2 distinctive ways to trade cryptos and it is becoming harder and harder to choose between them.

One of the primary differences between Crypto CFD trading and Crypto exchanges is the core audience. Now it is no secret that veterans who have been in the game for a long time would opt for a CFD trading basis because of the large volatility. But many would say that it is impossible to trade CFDs with an asset like cryptos. For the younger generation of traders, crypto exchanges are becoming the go-to way of trading them.

The primary differences

Now you’ve probably already read our article about crypto CFD trading and how it works if you haven’t we highly recommend you do so as to truly understand the details. You see when comparing crypto CFD trading platforms you’ll pretty much always get different results, but when comparing crypto exchanges the story could be completely different. Let’s get into the primary differences.


Now based on the information in our crypto CFD trading article, it’s apparent that most of the trading is done by speculating about the prices. Speculating the price of the dollar could be a lot easier, because of the volatility. You see the price of a dollar against a Euro would not increase by 10% all of a sudden, it’s just very improbable. It’s like hitting a green 0 on a roulette which only happens once every thousand tries or so, maybe even more. You get the point, fiat currencies are not very volatile, which make them an ideal asset for CFD trading.

Now cryptocurrencies have proven numerous times to be able to increase even by a 100% within a single day, which makes their predictions a nightmare. You truly need to be in sync with all of the information that comes out about a specific currency and even then you don’t have a guarantee. Although it’s possible to make a lot of profits with crypto CFDs it is just too hard to even bother with sometimes.


Although CFDs can be really profitable, it is quite hard to make a long-term guess for the price of a single cryptocurrency. Most of those guesses will be based on rumors, which don’t really increase the price in the long term, they increase it in the short-term. Now from the get-go, we have a lot more problems connected to holding on to CFDs. The problem comes from the very nature of the strategy. You don’t actually own the asset, you only have the contract in which you specified your guess, making it a lot less liquid, because of a defaulted date.

In terms of cryptocurrency exchanges, you actually purchase specific coins and store them in a third party or on-site e-Wallet. Now once you have these cryptos you can do whatever you want with them, you can use them on e-commerce stores that support cryptos or you can just hold onto them indefinitely, plus it gains a lot more liquidity because you can immediately sell them once you see the prices have grown.

Leverage Trading

Leverage trading is a godsend to every veteran trader. What actually happens during leverage trading is that you trade with more than you actually deposited. Let’s bring in a story actually. Little Timmy likes lollipops, but most importantly he likes to sell them. So what he does is he buys 1 lollipop at a small price in a shop and then sells it at a higher price in school. Now his Father gave him a proposal, everytime Timmy buys a lollipop, he will give him 5 times that amount for him to sell ( this is 5:1 leverage), which means that Timmy will get to make more money. But what happens is that Timmy may not be able to sell these lollipops because people don’t want it, making him lose money.

That was the explanation of CFD Leverage trading, every time you make a $500 trade the broker multiplies it by 5 and help you make a $2500 trade instead. 5:1 leverage is the default for crypto CFD with pretty much every broker, now the upper hand CFDs have here against crypto exchanges is that crypto exchanges don’t feature leverage trading at all. So you only get to trade with what you’ve got, limiting your profits.


In terms of security you’ll be a lot better off with crypto CFD providers as they are always held accountable to their regulators should some kind of misconduct take place. Furthermore, their systems have proven to be a lot more reliable. Also, CFD trades always happen on the local platform and not a decentralized environment like some crypto exchanges.

Crypto exchanges used to be decentralized, where pretty much no middleman was required and the transactions were always peer-to-peer. This immediately should light up the alert sound as it sounds quite sketchy in terms of security, and it is. Ever since other crypto exchanges like Coinbase started to get regulated by financial watchdogs, the decentralized crypto exchanges started to lose customers. However, the systems operating regulated crypto exchanges are still prone to hackings, which could lead to your assets completely disappearing without reimbursement.


As you can see you won’t be getting a complete package with either option. What’s left to do is just choose the one that suits you most. In crypto CFD trading platforms, you get better security and a better chance for higher profits. With crypto exchanges, you get ownership of your assets and better liquidity. Hopefully, the article was informative to you, good luck with your choice!

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