In winter 2020, cryptocurrency brokerCEX.IO Broker, part of a group of companies led by a regulatedcrypto exchange CEX.IO, announced its entry into the Russian market. We are publishing the second part of an interview with Alexander Lutskevich, in which the founder and CEO of the exchange talks about the role of cryptocurrency CFDs in the market, the pitfalls of choosing a platform for margin trading, and the specifics of Russian traders.
You can read the first part of the interviewhere.
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Your main instrument is cryptocurrency CFDs. CFDs on classic assets are already more or less known to traders, although they have been getting used to them for a long time. How are things going with crypto CFDs?
Cryptocurrency CFDs appeared when traders needed new instruments, both speculative and hedging. One spot market did not provide such opportunities.
Russian traders have already begun to look closely atCryptocurrency CFDs. The principle of operation of CFDs is the same as that of classic instruments, and there are more opportunities to earn more due to the higher volatility of cryptocurrencies compared to fiat currency pairs. For professionals, this is a simple and flexible way to implement various trading strategies.
The fact that interest in crypto CFDs will be activegrow, we are absolutely sure. Cryptocurrency CFDs are an important tool for market development due to their close relationship with the spot. This is an important difference between CFDs and popular cryptocurrency non-deliverable perpetual futures, which, as practice shows, can break with the spot market. A CFD is executed by a broker (intermediary for each transaction) on the spot market. That is, the execution price is formed by the total market liquidity. In the case of futures, it is different. The price of futures is shaped by supply and demand for expectations. This difference shows how CFDs have a positive effect on increasing liquidity in the spot market.
Yet CFDs on cryptocurrencies are not a new instrument on the market. What is the difference between what you offer?
CFDs on cryptocurrencies began to be introduced yetforex brokers a few years ago, when interest in cryptocurrencies began to grow. But these were more marketing activities, and not some serious turnover. The cryptocurrency derivatives market got real development only when those who specialized in cryptocurrency began to enter it. They were able to offer a tool that organically fits into a new stage in the development of the market - the formation of cryptocurrency derivatives.
Having been on the market for seven years, at CEX.IO we understand the needs of our customers and implement everything that we ourselves need as professionals.
This is how the advantages of the CEX.IO broker appeared.
First, by trading crypto CFDs with CEX.IO Broker, you can work with multiple trading accounts at the same time. We allow you to keep up to 10 separate trading accounts. This is very convenient for executing different trading strategies. Such a structure of the system makes it possible to understand exactly which of your strategies is more successful, brings more profit and can be scaled. This allows traders to find their own trading style, improve strategies and not mix them, pursuing different goals.
Secondly, we provide flexible managementrisks using cross-margin within trading accounts and isolated margin between accounts. This allows you to experiment and manage risks at the same time. Within the same account, cross-margin allows positions to avoid liquidation for longer if prices move against you. Due to the isolated margin between accounts, losses on one account do not affect profits on another. The client does not have to choose between cross margin and isolated margin. You can use both to your advantage. This is where broker.cex.io differs from competitors.
Thirdly, we allow you to open positions inopposite sides - that is, both short and long. This is generally unusual for traders working in classical markets (for example, forex), but it allows you to significantly expand the range of strategies used.
You announced your entry into the Russian market at the end of January - at that time there was no self-isolation in Russia amid a global pandemic. How has the activity of traders changed under the new conditions?
Since the quarantine coincided with our transition tosystemic growth, we do not undertake to assess the impact of self-isolation on trading activity in the derivatives markets. What can be said for sure: the connection between the cryptocurrency market and the stock market has increased (perhaps temporarily).
Economic stimulation programs, statementsleaders of countries on the measures taken, the reporting of public companies is immediately reflected in the stock market. The resulting fear or optimism, whipping up or relief, is reflected in the crypto market as well. For example, a publicly traded company says the results are likely not to be as bad as expected. Bitcoin is starting to rise, and there are spikes in volume on margin trading platforms.
What changes do you expect in the market in 2020?
We are waiting for new instruments to appearsatisfying a wide range of needs of market participants. We believe that there will be a condensation of liquidity in the market and, as a result, a decrease in the manipulative nature of price movements in the market due to its maturation. The "maturing" of the market will manifest itself in its even greater institutionalization - the emergence of more products aimed at institutional clients. We at CEX.IO are already converting our services for the needs of institutions. The market as a whole will move towards streamlining the rules so that the space in which we all work becomes more understandable and transparent for participants.
Read this:
CEX.IO company blog | Cryptocurrency CFD trading mechanics: what to consider in order to earn
TradeLog Blog | Show the best profitability. Battle of traders together with Bybit.com Exchange with a prize fund of 20,000 USD! Are you participating?
TVT Expert Blog | ? The cryptocurrency market is being dispersed
CEX.IO company blog | CEX.IO Broker: CFD – system-forming instrument of the cryptocurrency derivatives market
Admiral Markets Blog | Podcast "2 Traders" / Bitcoin Halving / China vs. US / Stock Market Outlook
CEX.IO company blog | For the first time, a loan secured by cryptocurrency was issued in Russia