NEM is one of the 10 most highly capitalized cryptocurrencies. Although this important detail is seen as something not significant because of the many cryptocurrencies available in the market, there are, however, a few that managed to have real resonance. In addition to providing key information about this specific cryptocurrency, we will explain how you can trade with NEM online using the trading platforms provided by CFD brokers and thus allow you to get profitable results on both your own upward and downward forecasts.
What is NEM?
As with most cryptocurrencies, NEM (XEM) is both a blockchain platform and a peer-to-peer cryptocurrency. This means that both the exchange system and the cryptocurrency itself are identified by the same name.
Released in 2015, NEM was developed in Java and has introduced new features in blockchain technology including the POI (Proof of Importance) algorithm, encrypted messages, multiple transactions, namespaces (a system similar to ICANN) and more.
In the commercial arena, the NEM blockchain software is called Mijin.
Its success has been recorded mainly in Japan where it has become the second most used cryptocurrency after Bitcoin.
In summary, we can say that NEM is characterized by a series of additional functions compared to the simple Bitcoin. Because of its desire to make a comparison in terms of available functions, Bitcoin can be compared to a pager while NEM to a real smartphone.
Trading with NEM
As already anticipated at the start of this article, today it is possible to consider the possibility to trade with NEM online and not to aim to obtain economic results based on the variations of NEM quotations.
In fact, it must be emphasized that, as in the case of other cryptocurrencies, NEM also has a counter value in dollars.
Let’s now discover which instruments allow trading with NEM from your home or mobile device.
The main tool used for online trading with NEM is the CFD.
The Contract for Difference or CFD is a financial instrument that replicates the performance of an asset or underlying asset. The asset is represented by another financial instrument. For example, in the case of NEM CFDs, the CFD replicates the market performance of the NEM (which therefore represents the asset).
Don’t be confused: when you trade with NEM CFDs, you don’t buy cryptocurrencies but simply trade up and down on securities (CFDs) that replicate their performance (at a certain price).
Trading takes place by opening an upward (purchase) or
downward (sale) position in order to obtain
results in proportion to the rise
or fall of the position. To start trading, you need to open a position and to finish it, you need to close it.
- If you wish to aim for profits proportional to the rise in the NEM quote, you must open a buying (also called Long) position.
- If you wish to aim for profits proportional to the fall in the NEM quote, you need to open a selling (also called Short) position.
Let’s take an example:
Considering some of the assumptions we rely on, or as a result of our own personal considerations, we expect the NEM price to rise shortly afterward.
In this case, we may open a NEM Purchase position If the forecast is correct, we will make a profit in proportion to the upward changes that will have occurred since the position was opened.
On the contrary, if these forecasts turned out to be incorrect, we would suffer a loss proportional to the same upward changes that will have occurred since the opening of the position.
How to trade with NEM on Plus500
Plus500 is one of the most important trading platforms where you can trade with NEM. Not all brokers offer a wide range of tradable cryptocurrencies, but Plus500will also include the famous Bitcoin, Ethereum, Ripple and Litecoin.
Among the most appreciated advantages of using Plus500 are its ease of use and free demo. The real account with deposit is optional and you can practice with a demo through a budget of virtual money that can be used under the same conditions as a real account.
And now let’s discuss this useful platform.
To open a NEM buying or selling position on Plus500, first, select Cryptocurrency from the Crypto category (left column) and then choose NEM in the main box on the right.
As you can see, at the same line as NEM are the Buy and Sell buttons which allow you to open a down (Sell) or up (Buy) position.
Once you click Buy or Sell, a window opens where you can set the details of your trading order:
- The amount of NEM to trade: In the box corresponding to this item, you can enter a quote of your choice or use the plus and minus keys. In addition, the amount of margin required will always be computed (as explained in the next paragraph)
- Margin required: is the actual amount of capital that the user uses for the transaction, i.e. how much money will the user invest in when the trader opens a position. In fact, CFDs are instruments subject to leverage that allows the user to use much lower amounts than those required for traditional investment. In the case of NEM trading on Plus500, the leverage is equal to 1:5, so with €100 of initial margin, you can trade with a total value of €500 of NEM.
- Stop Loss: when a stop loss order (which is executable by checking the box and defining a percentage) is set on the platform, the order will be required to automatically close the position if a certain level of loss percentage is reached. Important: We recommend to always set the stop loss.
- Stop Limit: the mechanism is the same as stop loss but it works in the opposite manner. With a stop limit, you can set a profit level that the platform will use as a reference to automatically close a position, and thus “saving” the profit.
- Operational stop: is a type of advanced and absolutely brilliant order. With this function, the platform is ordered to automatically update the level of the stop loss in case the market should move in favor of its forecast. It is, therefore, a tool for optimizing profits and limiting losses at the same time.
- Buy only when the rate is: with this order, you order the platform to open the position required only when the rate or quote reaches a certain level of your choice. If the box relative to this order appears to be not modifiable, it means that the market is closed and that only orders are accepted when the market reopens.
Once you have finished configuring the orders, in order to open the position, you just need to click the “Buy” or “Sell” button.
Note: once the position is opened, it will immediately begin to affect the available capital (provided that the market is open).
In this regard, we would like to emphasize that the profit/loss counter (prof/per) will always start with a negative figure. When the position is opened, the broker retains the spread percentage, i.e. a small percentage, as compensation for the CFD services.
From the moment the position is closed, however, it no longer has any effect on the available capital. When the trading position is closed, the maintenance margin is returned to the trader, i.e. the user and the initial net margin of profits and losses.