These are the best sites for using bitcoin to trade CFDs and similar types of trading options:
BaseFEX offers CFDs on crypto markets and much, much more for Bitcoin and other crypto users. BaseFEX offers leverage of up to 100x.
PrimeXBT offers FX markets, commodities, indices, and cryptomarkets for Bitcoin users with leverage of up to 100x.
What is a CFD?
The difference between where a trade is entered and exited is the contract for difference (CFD). A CFD is a tradable 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. Trading CFDs has several major advantages, and these have increased the popularity of the instruments over the last several years.
If the underlying stock were to continue to appreciate and the stock reached a bid price of $25.76, the owned stock can be sold for a $50 gain or $50/$1263=3.95% profit. At the point the underlying stock is at $25.76, the CFD bid price may only be $25.74. Since the trader must exit the CFD trade at the bid price, and the spread in the CFD is likely larger than it is in the actual stock market, a few cents in profit are likely to be given up. Therefore, the CFD gain is an estimated $48 or $48/$126.30=38% return on investment. The CFD may also require the trader to buy at a higher initial price, $25.28 for example. Even so, the $46 to $48 is a real profit from the CFD, where as the $50 profit from owning the stock does not account for commissions or other fees. In this case, it is likely the CFD put more money in the trader's pocket.
CFDs provide much higher leverage than traditional trading. Standard leverage in the CFD market begins as low as a 2% margin requirement. Depending on the underlying asset (shares for example), margin requirements may go up to 20%. Lower margin requirements mean less capital outlay for the trader/investor, and greater potential returns. However, increased leverage can also magnify losses.
Most CFD brokers offer products in all the world's major markets. This means traders can easily trade any market while that market is open from their broker's platform.
CFD brokers offer many of the same order types as traditional brokers. These include stops, limits and contingent orders such as "One Cancels the Other" and "If Done". Some brokers even offer guaranteed stops. Brokers that guarantee stops either charge a fee for this service or attain revenue in some other way. Very few, if any, fees are charged for trading a CFD. Many brokers do not charge commissions or fees of any kind to enter or exit a trade. Rather, the broker makes money by making the trader pay the spread. To buy, a trader must pay the ask price, and to sell/short, the trader must take the bid price. Depending on the volatility of the underlying asset, this spread may be small or large, although it is almost always a fixed spread.