Trading with cryptocurrencies has become trendy in the last few years, and it is easy to see why. Everyone knows quite a lot of people who have made fortunes from these new assets, and now they also want to try their luck.
What makes cryptocurrencies such good assets to trade with has to be volatility. When you trade with assets such as Forex and stocks, market prices don't have significant movements, which means that if you are not making large-value trades, the profits you make will be small. On the other hand, cryptocurrencies can have a volatility of between 7%-10% throughout the day, which means that with even a small investment you can accumulate good profits at the end of a month.
For this reason, many Forex traders have started to look at cryptocurrencies as a good alternative asset to trade with. One of the best platforms that many traders are using is XM. In this guide, we will be discussing why you should trade crypto with XM.
Before we dive deeper into crypto trading with XM, let's have a quick overview of XM itself.
Founded in 2009, XM is home to more than 5 million traders from over 190 countries. Operating from Belize, XM is regulated by the Financial Service Commission and by Cyprus Securities and Exchange Commission. This makes XM a really trustworthy broker, and no trader should have any problem when trading crypto at XM. If you wish to learn more about XM read our detailed review of them.
When trading cryptocurrencies with XM, you are trading with CFDs. What this means is that, unlike most regular crypto exchanges, you are not purchasing the actual tokens, but rather just making price predictions. Some might see this as a disadvantage, but for others, it can be a better option. When trading crypto CFDs, you don't need to have a crypto wallet, make different transfers between these wallets and exchanges, and more. Here you are just trading with an asset's price movement, which is what most traders are looking for.
When trading crypto with XM, you have access to the market 24/7 which is something that is missing from Forex and stock trading. What this means is that you can trade every single day and make more profits than with Forex or stocks.
XM also offers Zero Swap trading with cryptocurrencies. What this means is that traders can leave their positions open overnight, and they don't have to pay any fees for them. This is different from Forex, where traders have to pay rollover fees when leaving their positions open overnight.
When it comes to available cryptocurrencies, XM has a good selection of them. Here is a list of some cryptocurrencies that you can trade with XM.
This is not a full list and there are more tokens available to trade, but these are the major ones. In total, there are currently 31 trading pairs available for traders. As a quote, currency traders can use fiat currencies such as USD, EUR, and GBP.
When trading crypto CFDs on XM, traders can make good profits even from small investments, but using leverage can amplify these profits even more. XM offers leverage of up to 1:250 depending on the pair you are trading and the account type you have.
When trading crypto CFDs on XM the leverage is dynamic, and it is based on the volume traded for each instrument. What this means is that, when the trading volume of an instrument increases, the margin percentage also increases. These margin calculations are done per instrument. So if a trader has open positions on multiple instruments, the margin percentage is calculated separately for each position.
XM offers its traders multiple account types, each fitted for a different type of trader. When trading with cryptocurrencies, XM differentiates them into two sections. Standard/Micro accounts and Ultra Low Standard/Micro accounts.
When using Standard/Micro accounts, traders have a slightly higher spread on each asset, but they are still low, and they have small contract sizes. When using Ultra Low Standard/Micro accounts, traders can benefit from even tighter spreads.
XM also offers the option of Islamic accounts. Using Islamic accounts to trade crypto CFDs is relatively easy when compared to most other assets, as there are no extra fees such as rollover fees. But traders still need to be careful when using Islamic accounts to trade crypto CFDs, as according to Islamic law CFD trading is considered gambling if not approached with a high amount of caution. So every trader who uses an Islamic account should control their activities very thoroughly as it's really easy to break Islamic law without even realizing it.
Trading cryptocurrency CFDs on XM can be really beneficial for most traders. As we mentioned before, when trading crypto CFDs at XM, traders don't need to have crypto wallets, make complicated transactions, and in general avoid the complexity of crypto exchanges and blockchain itself. Here all that traders need to do is market research, make their predictions, and open positions according to this research.
Another benefit of trading crypto CFDs on XM is that they are a Zero Swap product. What this means is that traders don't need to pay any rollover fees when leaving market positions open overnight. This is a great benefit, as holding overnight positions for assets like Forex comes with specific fees, which can nullify the profits you make.
Lastly, trading crypto CFDs is a great way to diversify trading activity. As we mentioned before, the Forex market does not generally see huge price movements, so traders can trade cryptocurrencies in order to make bigger profits. Also, the crypto market is open 24/7, so traders can trade non-stop. What some traders do, is they might trade on the Forex market during weekdays and transition to cryptocurrencies on weekends, as the Forex market is closed at that time.
Having so many benefits, crypto CFD trading also has its own risks. One of the biggest problems with crypto CFDs is that they are highly speculative assets. When looking at Forex and the stock market, traders can somewhat easily analyze the market, as it has some correlations with the world's financial state. Traders can look at ongoing geopolitical and financial situations and make educated predictions on the future of the market. While, when trading with cryptocurrencies, it's not as straightforward. Cryptocurrencies are not associated with the world's financial situations and geopolitical states as close as these two markets. So making educated predictions on their future prices is a challenging process.
Another risk that comes with cryptocurrency trading is also one of its biggest strengths, volatility. High volatility is good if you make the correct predictions as it will generate high profits. But if the market goes in the wrong direction, traders can quickly make big losses without having time to react to drastic market swings. This gets even worse if a trader is using a large amount of leverage.
"What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so." - Alan Greenspan
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Yes, XM supports cryptocurrency trading. Traders at XM can trade with crypto CFDs which means they are not buying actual tokens, but making predictions on price movements.
Leverage in XM can go up to 1:1000, but when it comes to cryptocurrency trading, leverage is maxed out at 1:250 depending on the pair you are trading and the account type you are using.
Leverage basically allows you to open positions that are much higher than the capital you are using to open that position.
Yes. Cryptocurrency traders at XM can use the MetaTrader 4 and also MetaTrader 5 trading platforms to trade with cryptocurrencies.
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