CFDs were initially designed to reduce exposure to price volatility in underlying assets, but they have since gained popularity among traders as a way of participating in pure speculation. The major benefit of CFDs is that they enable traders to enter a transaction without putting up the whole amount of cash. For example, if you wanted to purchase $10,000 in Bitcoin, you would only need to deposit a tiny proportion of that amount (the margin) with your broker.
So, what are the advantages of offering crypto CFD trading services?
Crypto CFD trading platforms provide several advantages to both brokers and traders.
CFD trading services may be a goldmine for brokers. The major reason is that CFDs are traded on margin, which allows brokers to earn interest on their clients’ funds. Brokers also profit from the spread, or the difference between the bid and ask price. The greater the spread, the greater the profit for the broker. Consider five additional advantages of delivering such services.
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You can tap into a growing market and offer a unique service
Since only a few brokers provide crypto CFD trading, you may provide your customers with a unique selling advantage if you do. Many traders want to trade cryptocurrencies without owning them, and CFDs are the ideal answer. The global cryptocurrency economy is still in its early stages but expanding rapidly. The entire value of all cryptocurrencies increased from roughly $17 billion to over $600 billion in 2017. The present market value indicates it is expected to rise more in the next years. This creates a massive potential for brokers that provide crypto CFD trading services.
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You can attract new clients and leverage the volatility of crypto
Providing crypto CFD trading may help you attract new customers who want to trade cryptocurrency. It is beneficial if you are a small or mid-sized broker trying to expand your customer base. Crypto is notoriously volatile, which presents an excellent opportunity for traders who know how to exploit them. By providing crypto CFD trading, you may allow your customers to earn significant gains in a short period.
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You can improve your bottom line
Brokers may make a lot of money by offering crypto CFD trading services. The commissions and fees associated with CFD trading are generally much higher than those for traditional spot trading, which means you can increase your bottom line by offering this service.
Contracts for difference, or CFDs, are derivative contracts that eliminate the need for complete ownership of an asset class while wagering on its price movement. CFDs enable investors to use leverage to trade long and short bets.