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What Are The Benefits of Cardano Trading?

7 Min Read
Last Updated March 27th 2021

Cardano trading enables traders to speculate on whether the price of ADA will rise or fall in value, without the need of taking ownership of the digital asset.

Cardano (ADA) is a third-generation shared blockchain and platform that offers the ability to create and develop DApps. As the first blockchain to integrate a peer-reviewed academic approach into its major values, the network gained worldwide media coverage for its added innovation and strategy. ADA is one of the world’s top altcoins today.

Why Trade Cardano?

There are multiple benefits to trading Cardano. It helps experienced individuals in the crypto market to trade, regardless of whether or not they even own any of the cryptocurrency.

Trading is all about trying to determine whether the price of ADA will increase or decline in value.

The benefits of Cardano trading include:

  1. Enhanced liquidity
  2. Minimized tax costs
  3. Exposure under leverage
  4. Cardano volatility
  5. Minimalistic trading and lower risk of inflation
  6. Cardano market availability
  7. The option to go long or short

 

1. Enhanced liquidity

Liquidity is the indicator of how readily and efficiently Cardano, without changing the market price, can be exchanged into cash. Liquidity is critical because for technological research, it brings in improved pricing, quicker processing times, and improved precision.

As a top-tier digital asset and smart contracting DApp developer platform, ADA shows promise and a need to keep an eye on with the likes of Ethereum and Tron in the liquidity leaderboard. Currently, the value proposition of Cardano derives from its role as a research-driven smart contracting DApp site.

In comparison, the Shelly update test not only trains ADA for full decentralization, but also for crypto market supremacy. Cardano will optimize AlgoZ’s exchange algorithm and background knowledge for liquidity purposes via a new collaboration.

In general, since trades are distributed through several markets, the Cardano market is called illiquid, meaning that relatively minor transactions can pose an immense effect on market rates, causing unpredictable demands on ADA.

Read Also: What is Cardano? A Beginner’s Guide

2. Minimized tax costs

The ability to both spread betting and CFD trading on Cardano will provide major tax advantages over virtual currency transactions. For instance, when you trade your virtual crypto for a value higher than what you initially bought it for, you’re subject to capital gains tax (CGT). However, with spread betting, as you don’t necessarily own the asset, you remove the liability of owing tax out of the equation.

On the other hand, a contract for difference (CFD) is still liable for CGT. You should, however, mitigate your losses against your CGT liability earnings, which makes CFDs valuable for hedging. Note that Cardano trading is only open to experienced traders with spread bets and CFDs.

3. Exposure under leverage

Access to high leverage is yet another bonus of selling CFDs on Cardano. Bear in mind this refers to betting on Cardano market fluctuations and not buying through traditional crypto exchanges and purchasing real crypto assets. CFDs only watch the price of Cardano and the underlying asset isn’t necessarily owned by traders who sell CFDs.

The upside to this is that traders selling ADA CFDs can benefit from both bullish and bearish markets alike. Leverage enables traders to open even greater portfolio seizes than their trading account when returning to leverage.

It is also important to note that as an investor, you should ensure that you have an adequate plan for risk control in place, which should include the appropriate barriers in place. Leverage may magnify your gains while also double your losses if not careful. However, it can play a huge effect on the bottom line of an investor, hence why we listed it as an upside to Cardano trading.

4. Cardano volatility

Even though the Cardano market is relatively new, due to large volumes of short-term trading activity, it has encountered considerable volatility. For example, Cardano is 16.39 times more volatile than DOW (Dow Jones Industrial Average). 96 percent of entire equities and investments are less volatile than Cardano and the volatility of Cardano’s historical regular returns over the last 30 days is greater than 96 percent of all global equities and portfolios relative to the total stock markets, according to Macroaxis.

Check Out: Cardano Price Prediction

5. Minimalistic trading and lower risk of inflation

Market trading for stocks involves having to provide certain credentials or warrants for the ability to actually trade. To exchange a company’s stock or shares, you must also go through a broker. Yet, buying for Cardano is simple and elegant. You simply purchase or sell ADA from exchanges and place your new assets in your wallet. Unlike the traditional way of paying for stock exchange orders, which are known to be time-consuming, Cardano transfers are usually immediate.

Cardano is also resistant to inflation, unlike other traditional currencies which are governed by centralized institutions. The blockchain technology behind ADA is limitless, and there’s no reason to think about its value losing long-term.

6. Cardano market availability

The Cardano market is commonly open for trading at your disposal 24 hours a day, seven days a week. This is thanks to no centralized market governance taking over control of market hours, unlike usual stock exchanges. On cryptocurrency exchanges worldwide, ADA transactions will occur directly between individual traders. Although the industry is transitioning to infrastructural improvements, otherwise known as ‘forks’, there may be downtimes at certain times for maintenance purposes. 

7. The option to go long or short

Cardano still has a meaning, much like the price of a stock. This way, after the market value has risen, you could make money by selling  (Shorting) your ADA coins. You call it going long when you buy ADA currency and expect the price to increase. However, when you deal with the price of Cardano, and you take advantage of prices that are both dropping and increasing in price, this is referred to as going low.

There are several exchanges where you’ll have the ability to go long or short with Cardano where at the same time, a rising or dropping pattern can be expected. You’ll still be able to go long or short on most websites where you can do margin trading.

Don't Miss: Ethereum vs Cardano: Which Crypto Should You Buy in 2021

Should I Buy or Trade Cardano?

It’s important to understand the discrepancies between buying and trading Cardano before you make a solid decision. Using CFDs will allow for assessing your profitability in investing in ADA with higher levels of risk involved. It’s crucial to take into consideration certain factors such as volatility, tax liabilities, and your decision to go long or short before stepping your foot on the gas pedal. If you want to know in detail about Cardano, take a look at this Cardano guide.

You might be interested in buying Cardano if…

  • You want to take full ownership of the Cardano amount you buy
  • You’re happy to pay the entire value of the asset upfront
  • You don’t mind paying capital gains tax on any profits
  • You don’t mind waiting for an exchange account before you can buy or sell
  • You don’t mind introductory limits or maximum deposits
  • It is fine for you to pay additional fees for deposits or withdrawals
  • You want to earn staking rewards for holding Cardano

You might be interested in trading Cardano if…

  • You want to speculate on the price of Cardano without owning it
  • You want to leverage your position so that you only place a portion of the cost upfront
  • You want to take advantage of the tax benefits of spread betting or CFD trading with Cardano
  • You want to start trading straight away
  • You don’t like maximum deposit limits
  • You don’t like paying deposits or withdrawal fee

 

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Virtual currencies are highly volatile. Your capital is at risk.

Key Points:

  • The benefits of Cardano trading include enhanced liquidity, minimized tax costs, exposure under leverage, Cardano volatility, minimalistic trading and lower risk of inflation, Cardano market availability, and the option to go long or short.
  • Cardano (ADA) is a third-generation shared blockchain and platform that offers the ability to create and develop DApps.
  • Trading is all about trying to determine whether the price of ADA will increase or decline in value.
  • Cardano is 16.39 times more volatile than DOW (Dow Jones Industrial Average)
  • The Cardano market is commonly open for trading at your disposal 24 hours a day, seven days a week.
  • Minor transactions can pose an immense effect on market rates, causing unpredictable demands on ADA.
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