How to trade cryptocurrency CFDs in the UAE?

Since creating cryptocurrencies, there has been much speculation about their validity in trading. Even though it is still unclear whether they will last or not, cryptocurrency trading in itself is a fruitful domain for traders. 

This is why we have prepared a guide to cryptocurrency CFDs trading for those interested.

What is crypto trading, and may Moslems trade it?

There are currently no rules against cryptocurrencies in Islam. However, some concerns need to be addressed. One is the risk of losing money by trading these currencies. Crypto trading has all the potential of high returns but can also involve substantial losses. The other concern is the lack of appropriate safeguards against financial crimes, which have become quite familiar with being anonymous and unregulated cryptocurrencies.

So, what exactly Is Cryptocurrency Trading?

Approaching cryptocurrency just as you would any other speculative vehicle could cause one to lose money quickly. Not understanding what you’re investing in will lead to a loss and should be considered a high-risk strategy. It’s better to treat it like gambling or throwing money at a random stock – you could make big profits, but the odds of losing are high, too.

Keep in mind that while anyone can get caught up in cryptocurrency trading (and lose their shirt), there is such a thing as genuine crypto investing if you’re looking for long-term growth instead of short-term gains. The former is far less risky than the latter. 

One must learn about cryptocurrencies before investing any money in them. They are unlike traditional currency in that they are not controlled or backed by any government entity or central bank. This means there is no government guarantee of security should the system go bust. Also, the market price is devoid of manipulation by big banks – vital for trading currencies with fiat (traditional) currency.

Advocates of cryptocurrency say that decentralization is beneficial for traders and investors. It completely eradicates the power of institutional players on financial markets and renders transactions transparent and publicly viewable on the blockchain ledger. There’s also widespread consensus that crypto trading has ushered in a new era where brokers and dealers won’t be able to hide behind their monopoly over the market and, therefore, prices.

This is what attracts many people to cryptocurrencies. As no central authority or government controls them, the price of these currencies is determined purely by demand and supply. It makes it possible for markets to react quickly when something happens since there are no complex layers of banking bureaucracy acting as an intermediary between high-level decision-makers. 

It means that any news story in the world could cause a knee-jerk reaction in currency price fluctuations. On top of all that, transactions take place in minutes (or even seconds), unlike transfers made with fiat currency which can take days to be processed through banks.

How does crypto CFD work?

Before going into action, let’s define what a crypto CFD is and how it works. 

A crypto CFD or a contract-for-difference allows you to speculate on the price rate of an asset without getting physical possession of it – only through contracts on exchanges. 

In this case, your profit depends exclusively on the difference between strike prices at entry and exit from trades (opening and closing prices), minus the financing fees.

How can you trade crypto CFDs in the UAE?

Now that we know what a crypto CFD is, let’s explore how to trade it in the UAE. The first step is to find a regulated broker that offers CFDs trading on cryptocurrencies.

Many brokers offer this service, but not all of them may be licensed to operate in your region. You must do proper due diligence and ensure that the broker you choose is authorized and regulated by the relevant authorities.

Once you have found a reputable broker, you need to open an account with them and fund it with enough money to cover your margin requirement. The margin is the money you need to put up as collateral to open a position.

Once you fund your account, you can start trading by predicting whether the price of a cryptocurrency will go up or down. 

The advantage of CFDs is that you can trade on margin, which means you can deal with a smaller amount of money and still profit.

What are the risks associated with crypto CFDs?

Like any other type of trading, there are risks associated with CFDs trading on cryptocurrencies.

One of the main risks is losing all your money if the market moves against you. This is why it is essential to always trade with caution and never invest more than you can afford to lose.

Another risk is that some brokers may not be as transparent as they should be. 

To protect yourself from such threats, it is best to choose a regulated broker who has been in business for a while and offers various educational materials and trading resources.

Where can you find more information about crypto trading?

One of the first places to start with is the broker’s website. Here, you will find helpful guides to explain how things work, what you need to know before starting and other helpful information.

Another great resource is the internet at large – there are many forums where experienced traders share their insight into what works and what doesn’t when trade cryptocurrencies. 

It’s a great way to learn more about the industry and understand what trading strategies work best for this type of asset.

There are plenty of resources out there, but it is essential to do your research as well. There may be information that contradicts what you find online, so try to make up your mind based on several sources. 

If you are skeptical about investing in cryptocurrencies, don’t hesitate to contact Saxo for stock trading advice and excellent online tools and resources.

Why is cryptocurrency CFDs trading popular?

Cryptocurrency CFDs trading has been steadily growing in popularity due to its many advantages over recent years. 

This type of trading can be beautiful for those who want to benefit from cryptocurrencies without having their money tied up in digital assets they may not be able to sell when the time comes.

CFDs also allow for leverage trading, which can magnify your profits (or losses) if the trade moves in your favour. 

Therefore, it is essential to trade with caution and only invest what you can afford to lose.

Finally, it is worth noting that cryptocurrency CFDs trading is a high-risk investment activity and should only be undertaken by those who fully understand the risks involved. For more information on this topic, please feel free to contact us at any time.