In today’s lecture, I’ll be talking about CFD cryptocurrency trading, I will share with you how I am personally trading cryptocurrency on MetaTrader 4, why I prefer that platform, and I will share with you what exactly is CFD trading and what are the risks.
Table of contents
What is crypto CFD trading
The first important thing is to find a broker which offers crypto CFD trading. Many people make the mistake to think that crypto exchanges offer the MetaTrader platform. Well, they don’t, they usually have their own platforms or they integrate platforms like TradingView or other companies that offer charts to the exchanges. So MetaTrader 4 platform or 5 version is popular with the Forex brokers and those offer CFD trading, but nowadays cryptocurrencies obviously are super popular so those Forex brokers offer cryptocurrencies and we can trade automatically with Expert Advisors on the MetaTrader platform which I like the most when it comes to CFD crypto trading.
So to make it super clear CFD trading stands for Contract for Difference, which means that we will be trading on the value of the asset no matter if you are doing it manually or automatically.
When you open a trade, let’s say you buy Bitcoin at $60,000 and you close the position at $61,000, you’ll be profiting this $1,000. At the same time, you can sell Bitcoin without owning it previously and if you close the position at $59,000 again you will profit this $1,000. Now if the price goes against you obviously you will be handling losses.
So to make it even simpler for you, if you open an account with a broker, let’s say with $10,000, you can use that money to buy or sell Bitcoin or any other crypto they offer without owning it previously. You won’t need to go to the exchange and buy actual cryptocurrency coins from there. You will be just trading on the value of the asset and this is super important to understand for CFD crypto trading because if you open one trade with one broker, you cannot close it with a different broker.
For example, if you purchase Bitcoin on Binance you can send it to any other exchange like Wobby, Crypto.com, Kraken, or any exchange you are using and you can sell that cryptocurrency in there. But when it comes to CFD trading, when you open the trade or when you buy Bitcoin at one broker you should be closing this trade within the very same trading platform with the same broker.
How to find trusty CFD broker
Now if you have hard times finding a broker you can always look at our brokers section where we have listed some regulated brokers. I don’t like promoting any brokers, it’s a personal choice which one you will be using as long as you use a regulated Broker with small spreads and commissions you’re good to go.
For the purpose of this lecture, I’ll be using Easy Markets which is the broker that I’ve been using for crypto CFD trading. So I will go to Platforms and I will click on MetaTrader 4. Then I will register and download MT 4.
I will need to enter my email address and a password and I will click on sign up to download the platform. I’ll click on Continue and I will download the platform on my PC. It is available for iOS and Android too but keep in mind that you cannot trade with Expert Advisors on a web version or on the mobile app, at least for the moment.
So I have downloaded the platform for PC and there are a few easy steps you need to follow. Now you can click on Settings and select where you want to install the platform. But I will cancel the installation because I will be putting this platform on my virtual private server. So even my computer is switched off, I can still do algorithmic trading with the robots because they are on a VPS virtually and this is very important when you’re trading with Expert Advisors.
So let me minimize the platform that I have for the Forex robots and I will just paste over here the installation file for Easy Markets and I will just double click on it. This is in my VPS, here it is, I will click on Next and pretty much that’s it.
It’s super easy actually to install the MetaTrader platform and it will be ready in a second. I will just click on Finish and it will open right on my VPS and while it’s opening keep in mind that you can install many MetaTrader platforms with many Demo accounts on many brokers absolutely for free so you can practice and get access to the market which is super cool if you are a beginner.
Now I will open a Demo account, I will click on next, I will select a new demo account, again I will click on next. I will need to write down my name, together with my email, and then I will select my phone number. Let’s say I want to open an account with $50,000 with leverage 1:50. I will agree to subscribe to their newsletters in case they send me something interesting, I will click on next, and here is the login with the password. Make sure you always copy your login password and investor password and click on finish and I should be connected in a moment to the broker’s server.
CFD trading on a demo account
So just make it on my recording screen and here it is, okay I have opened a Demo account, Virtual account and you can see on the left side that I have the quotes. Now if you want to do crypto CFD trading, you need to look for the cryptocurrencies and usually, when you install the platform for the first time you will see just the Forex pairs. What you need to do is right-click and hit on show all.
Here it is and it will load all the assets that the broker offers. So if you don’t see Bitcoin or any other cryptos simply mean that the broker does not offer them on MetaTrader. The Bitcoin at the current moment sits at $60,200. I will right-click and go to Spread, to see how much is the spread and the current moment when Bitcoin is actually going above the $60,000 for a second time in history, the Spreads are quite high. I quite often get the question “what to do when the spread for Bitcoin is huge”. When it comes to algorithmic trading, I usually just pause the trading if the spread is above $50.
Now for the current moment with this broker, the spread is fixed to $50 which is good enough for me. But if I cannot find a broker with a spread of less than $50, I just pause trading and wait for the market to calm down a little bit. So right now I can right-click over Bitcoin and I can hit on the chart window and a new Bitcoin chart will open.
I will maximize it, I will just close the Forex pairs because I don’t need them at the moment and I’m good to go. I can trade now the Bitcoin in whatever time frame I want. So you can see just above the $60,000, I can switch to candlesticks and I can trade the Bitcoin or the other cryptos offered by the broker manually or automatically. The easiest way to go is if I right-click over the chart and hit on the One Click Trading. I will see the box where I can sell and I can buy.
So this is the CFD crypto trading. Even if I don’t have actual coins, I can fund an account, in this case, I demonstrate it with a virtual account because this is what I would suggest you do if you’re a beginner. But I can sell the Bitcoin or I can buy it just using the funds that I have in the account, no need to buy actual coins from the exchanges. I’ll be trading on the value of the asset. If I buy and the price goes up I’ll be making profits, if I sell and the price goes down I’ll be making profits as well.
Obviously, if I hit the wrong direction, I’ll be losing money from my balance. Be careful when you’re using leverage for CFD trading because it gets riskier when you open huge positions but no matter if you’re using leverage or not if you are trading a small portion of your capital you’re not risking a lot but if you open trades with all of your money it is very likely that you will blow your account. So take it easy, start with the demo account, see how it’s going and if you are happy with the results you can actually switch to Live trading. This is a personal choice and you should be always careful with that.
So I usually buy cryptocurrencies from the exchanges and actually, you can check which cryptos I buy and when I buy them and for what reason on my Patreon page and you will see an actually awesome spreadsheet where you can track automatically your portfolio. So every time I buy and sell you will get an email notification.
How I use CFD crypto trading
I use CFD crypto trading in two cases, one is when I want to short the market or when I sell Bitcoin because obviously, we cannot do that on exchanges, win some but the CFD trading is the easiest way. So if I think the market is going down just like in May 2021, I did some shorting during this period. These are always the fastest profits because the market always drops faster especially the cryptocurrency market. I did actually some shorting back in 2017 and 2018 but I do that quite carefully with a Stop Loss because it is quite important to use the Stop Loss when you’re shorting especially the Bitcoin.
The second case when I’m using CFD crypto trading is with algorithmic trading when I trade Expert Advisors because this is how I trade cryptocurrencies on MetaTrader 4 with Expert Advisors or these are the so-called robots. I have recorded plenty of online courses about that. It is quite nice because I don’t need to stay in front of the screen all the time, the robots are doing the trading by themselves and I can simply enjoy my life because I’m not enjoying anymore staying all day long in front of the screen and looking at the charts. I used to like that but not anymore.
So if you want to get some ready-to-use robots, you can check out the description below. I really thank you for reading this lecture and if you have any questions about CFD cryptocurrency trading let me know in the comments below, I’ll be super happy to answer. I thank you for reading, I love you and enjoy trading.