Trading cryptocurrencies using a spread betting or CFD trading account can be much safer than investing directly in coins with a digital wallet for a number of key reasons.
When you own coins of any cryptocurrency, you'll be at the mercy of price swings that can be sudden and significantly change the value of your investment. You’ll also need to open a digital wallet, which can be difficult to set up and complicated to manage, and balance the risks of potential cyber-attacks on coin exchanges.
However when you trade cryptocurrencies as a CFD or spread bet, you'll have access to the same smart risk management tools as when you trade any of our other major assets. This can help you enjoy the same market opportunities, with less risk exposure.
In this chapter we’ll look at some of the risk management tools available to you when trading cryptocurrencies with ETX.
What tools are available to help me manage my risk exposure?
Stop Loss Orders
To attach a stop loss order to your position, simply check the stop loss option directly from the trade ticket and specify the price level you would like us to close out your position in points or PnL
If the market moves through your pre-determined price point, we’ll automatically close your position without you needing to action anything. This means you don’t have to constantly monitor your position for changes and can trade with greater peace of mind.
While stop losses give you greater protection than trading without one, remember that standard stop losses may not protect you against excessive, sudden price swings due to volatility or market gapping.
Guaranteed Stop Loss Orders
The most secure way to protect yourself against excess volatility in the cryptocurrency markets is to attach a Guaranteed Stop Loss to your order. You can do this by ticking ‘Stop’ and selecting ‘Guaranteed Stop’ from the dropdown in the trade ticket when you first open a position.
Our powerful Guaranteed Stops will always close you out at the exact level you specify, irrespective of market gapping or extreme volatility. For this reason Guaranteed Stops are particularly recommended when trading cryptocurrencies.
Trailing Stops allow you to track price movements and automatically adjust the point of your stop loss accordingly to market fluctuations. You can choose a price point above or below market value at which you would like your position to be automatically closed out. Your Trailing Stop will then follow the prevailing market trend and be activated only if the price hits your pre-determined level. This allows you to lock in profits in fast moving markets like cryptocurrencies, as well as protecting you from adverse market movement.