Crypto CFDs: What is it and how does it work?

As cryptocurrencies evolve, investors are finding new ways to generate earnings. One such method is crypto CFD trading. The day trading strategy (or speculation in session), from the stock exchange, is now present on the crypto market. Indeed, crypto CFDs are almost similar to day trading except that they are based on cryptocurrencies rather than fiat currencies.

Admittedly, the Crypto CFDs are a bit more complex than traditional spot trading. That said, they can be very profitable if you know how to use them. In this guide, we explain everything you need to know about trading crypto CFDs as well as how they work.


  • What are crypto CFDs?
  • How do crypto CFDs work?
  • What are their advantages?
  • What are their disadvantages?
  • Crypto CFD trading vs crypto trading on exchanges
  • CFDs vs. ETFs
  • Comparison of different crypto CFD platforms
    1. eToro
    2. Pepperstone
    3. Over500
  • CFD trading takes practice and patience

What are crypto CFDs?

Crypto CFDs offer the possibility of generating interesting income by speculating on the future movements of certain cryptocurrencies, without needing to use a large part of your capital. However, just like traditional CFDs, Crypto CFDs are not without risk. This is mainly due to the fact that although you don’t need any down payment, you are still required to pay for losses.

Like traditional CFDs, this type of trading allows traders to take advantage of market fluctuations. CFDs or “contracts for difference” allow you to make predictions or speculate on the future price trajectory of a given crypto asset, for example Bitcoin. All with a relatively low initial cost.

In short, CFDs are contracts that pay the difference between the opening and closing prices. That said, the trader must correctly predict when the price is going to move. If the transaction results in a loss, he or she must pay that loss.

How do crypto CFDs work?

the crypto CFD tradingrefers to the action by which a trader makes predictions about the price movement of a cryptocurrency.

Generally, the trader must deposit a small percentage of the asset value as collateral for the transaction. For this type of trading, cryptocurrencies can be traded in pairs. Here are the token pairs you can use:

This list of trading pairs may seem limited to you, but keep in mind that the potential for gain is still significant. For someone who is taking their first steps in crypto CFD trading, it is better to use only one or two trading pairs, before then being able to try other combinations once the basics of this activity have been assimilated. .

What are their advantages?

1- Crypto CFD trading gives you offers the opportunity to generate earnings without investing a fortune. In addition, the ability to use only a small percentage of the asset value in trading is a real advantage. This is particularly interesting for those who are new to CFDs.

2- The possibility of choosing the assets with which you trade gives you control and insight into strategies which work best for CFD trading. Therefore, you have a high chance of generating good returns.

3- Although it may seem like a disadvantage, the extreme volatility of crypto assets offers many opportunities for gains. This is an element that you must know and master before investing large sums in Crypto CFDs.

4- The short-term character of the transactions of Crypto CFDs means there is less reliance on crypto assets that perform well in the long term, as may be the case if you keep your tokens instead of selling them. So, assuming you are successful in your trades, there is more opportunities to make a profit before the value of the asset declines again.

5- Unlike CFD trading on the stock market, there is no time limit for the transactions you make. Stock markets around the world have limited trading hours. Cryptocurrency trading can take place at any time of the day and never close.

What are their disadvantages?

1- Crypto CFDs are extremely volatile. Thus, you have as much chance of losing money as of gaining it.

2- Bet everything on one or two cryptocurrencies, rather than on a diversified portfolio, decreases your chances of winning. Putting all your eggs (or tokens) in one basket does not help long-term success.

3- Despite the potential for high returns, them Crypto CFDs come with costsoften higher in percentage terms than other types of crypto or other investment.

Crypto CFD trading vs crypto trading on exchanges

Now you are probably wondering what are the advantages of trading crypto CFDs over trading on a normal exchange? The answer is that although they present more risk, their main advantage is that transactions and fluctuations in value occur quickly. This differs from the lengthy process involved in buying crypto on a spot exchange. In addition, they allow you to generate earnings almost instantly, provided of course that you determine the right purchase option.

However, the downside is that if a user suffers a loss, they have to pay the difference, unlike other trading methods, which allow you to wait for the price to go up. This is one of the many risks you take when trading crypto CFDs. But with a little practice, you will mitigate these risks.

CFDs vs. ETFs

There are big differences between CFDs and ETFs, especially when it comes to risk. In effect, CFDs fall into the category of speculative trading, based on market trends and trader sentiment. On the other hand, ETFs (exchange traded funds) are assets you can invest in and who hold shares in several companies.

Some ETFs can be too focused on one company, which could lead to extreme movements in the value of your portfolio. However, the possibility of investing in many companies contributes to a more diversified portfolio, and increases your chances of winning.

On their side, CFDs give you the ability to determine which companies you invest in, depending on your personal judgment. This allows you to better choose what you think will pay you the most, whether it does or not.

Comparison of different crypto CFD platforms

In the UK, there are several laws that prohibit the trading of crypto CFDs. However, in other countries you can find platforms ideal for this type of trading. Here are some of the most used platforms for CFD trading.


eToro is one of the most comprehensive platforms for any type of crypto or traditional trading. That said, it is more focused on crypto CFD trading, rather than spot trading. So the platform offers CFDs based on 17 different assets, including Bitcoin, XRP and Dash. Known for its “zero commission” offer on trades, eToro offers crypto CFDs at relatively low costs.

The only catch is that eToro doesn’t have a desktop version, and hasn’t for seven years. However, you can still place CFDs in a web browser or in the platform’s iOS and Android apps. With its clean and simple interface, eToro is a great option for traders of all skill levels.


Pepperstone is not a well-known platform. However, it offers its own support software dedicated to traders from all walks of life. It also allows to make crypto CFD trading with twelve different cryptocurrenciesas well as three of its own clues.

Its range of software which includes MetaTrader 4, MetaTrader 5 and cTrader, meets all CFD trading needs. For example, while the two MetaTrader software correspond to different levels of expertise, cTrader automatically trades for you.


Plus500 combines most of the advantages of the other two platforms, while offering a wider choice of cryptocurrencies to trade (13 to be exact). Its “Crypto 10” index is the benchmark for crypto indices. It is the crypto equivalent of the US “S&P 500” stock index.

In terms of fees, Plus500 also takes no commission which means trading fees are minimal. If you are looking for flexibility, Plus500 is the platform for you.

CFD trading takes practice and patience

Admittedly, trading crypto CFDs comes with high risks. However, if you are patient and take the time to learn it, you can get great benefits from it. Of course, not everyone will succeed the first time. That said, choosing the right platform for your strategy, this activity can earn you much more than spot trading or hodling.

That said, crypto CFDs are not for everyone. If you are not sold on the concept or cannot tolerate the risk, you are better off choosing other crypto trading methods. This will help you learn the ropes before taking on the risks associated with CFD trading. Now it’s up to you to decide. Nevertheless, keep in mind that crypto CFDs can be a great opportunity to earn money while learning a lot about trading.


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