User: Ukyokorie

Quote from: Ukyokorie on May 04, 2022, 07:20:59 PM

The risks of trading cryptocurrencies are mainly related to its volatility. They are high-risk and speculative, and it is important that you understand the risks before you start trading. As trader you need to understand below mentioned risks before starting you're journey as a cryptocurrency trader

1) They are volatile: unexpected changes in market sentiment can lead to sharp and sudden moves in price. It is not uncommon for the value of cryptocurrencies to quickly drop by hundreds, if not thousands of dollars.
2) They are unregulated: cryptocurrencies are currently unregulated by both governments and central banks. However, recently they have started to attract more attention. For example, there are questions about whether to classify them as a commodity or a virtual currency

3) They are susceptible to error and hacking: there is no perfect way to prevent technical glitches, human error or hacking.

4) They can be affected by forks or discontinuation: cryptocurrency trading carries additional risks such as hard forpks or discontinuation. You should familiarise yourself with these risks before trading these products. When a hard fork occurs, there may be substantial price volatility around the event, and we may suspend trading throughout if we do not have reliable prices from the underlying market.

5) They are high-risk speculative products: with spread betting and CFD trading you only need to deposit a percentage of the value of a trade to open a position. Profits and losses are based on the full value of the trade. The volatility of cryptocurrencies, combined with trading on margin, could lead to significant losses.

6) They can be affected by gapping: market volatility can cause prices to move from one level to another without actually passing through the level in between. Gapping (or slippage) usually occurs during periods of high market volatility. As a result, your stop-loss could be executed at a worse level than you had requested. This can worsen losses if the market moves against you.

7) Charges may be greater than with other asset classes: you should review all costs involved before you trade. Charges may be higher when spread betting or trading CFD cryptocurrencies. The likelihood of making a profit versus the impact of these fees should be considered.
Pricing variations: compared with currencies, there can be significant variations in the pricing of cryptocurrencies used to determine the value of spread bet and CFD positions.

Original: https://www.cmcmarkets.com/en/learn-cryptocurrencies/what-are-the-risks

Quote

The risks of trading cryptocurrencies are mainly related to its volatility. They are high-risk and speculative, and it is important that you understand the risks before you start trading.

They are volatile: unexpected changes in market sentiment can lead to sharp and sudden moves in price. It is not uncommon for the value of cryptocurrencies to quickly drop by hundreds, if not thousands of dollars.
They are unregulated: cryptocurrencies are currently unregulated by both governments and central banks. However, recently they have started to attract more attention. For example, there are questions about whether to classify them as a commodity or a virtual currency
They are susceptible to error and hacking: there is no perfect way to prevent technical glitches, human error or hacking.
They can be affected by forks or discontinuation: cryptocurrency trading carries additional risks such as hard forks or discontinuation. You should familiarise yourself with these risks before trading these products. When a hard fork occurs, there may be substantial price volatility around the event, and we may suspend trading throughout if we do not have reliable prices from the underlying market.

We will endeavour to notify you of potential blockchain forks. However, it is ultimately your responsibility to ensure you find out when these might occur.

Risks of cryptocurrency spread bets and CFDs

With CMC Markets you can trade bitcoin and ethereum via a spread bet or CFD account. This means you are exposed to slightly different risks compared to when buying these cryptocurrencies outright.

They are high-risk speculative products: with spread betting and CFD trading you only need to deposit a percentage of the value of a trade to open a position. Profits and losses are based on the full value of the trade. The volatility of cryptocurrencies, combined with trading on margin, could lead to significant losses.
They can be affected by gapping: market volatility can cause prices to move from one level to another without actually passing through the level in between. Gapping (or slippage) usually occurs during periods of high market volatility. As a result, your stop-loss could be executed at a worse level than you had requested. This can worsen losses if the market moves against you.
Charges may be greater than with other asset classes: you should review all costs involved before you trade. Charges may be higher when spread betting or trading CFD cryptocurrencies. The likelihood of making a profit versus the impact of these fees should be considered.