Cryptocurrency Contracts-For-Differences Trades Offered By Valutrades

Announcements, News | January 8, 2018 By:

London broker Valutrades has added bitcoin, ethereum and Litecoin to its contracts-for-difference (CFD) trading.

Formerly known as Monex Capital, Valutrades is the UK subsidiary of Indonesian forex broker Monex Investindo Futures, which is licensed by Indonesia’s regulatory agency, BAPPEBTI. In the UK, Valutrades is registered by the Financial Conduct Authority (FCA). It offers forex, CFDs, and commodities trading through the MT4 platform.

A cryptocurrency CFD is a tradeable instrument that mirrors the movements of the asset underlying it. It allows for profits or losses to be realized when the underlying asset moves in relation to the position taken, but the actual underlying asset is never owned. Essentially, it is a contract between the client and the broker. Crypto CFDs are used by traders and investors for a number of reasons, notably for hedging and speculative purposes. With bitcoin’s sudden movements in price, physical buyers of the coin can hedge their exposure and manage their downside risk by using CFDs, as they allow both long and short trades.

Engaging in these types of transactions can carry a high risk, as trading the products and services offered by Valutrades can result in losses as well as profits. In particular, trading in leveraged products, such as CFDs, can be very speculative, and losses and profits may fluctuate violently and rapidly with fluctuations in the price of the underlying markets. The company couldn’t immediately be reached regarding the measures it is going to take to protect itself from volatile prices.

In November of last year, the UK’s Financial Conduct Authority advised that investors should be aware of the risks involved in crypto CFDs. It listed four concerns about these types of products, including price volatility, leverage, charges and funding costs, and price transparency. The regulator also noted that some companies are offering leverage of up to 50:1. Leverage multiplies your losses and potential profits, and can have a significant impact on fees. It also places investors at risk of losing more than their initial investment, meaning they could end up owing money to the company.