The good news is, even though bitcoin is a relatively new incomer to the forex markets, there are now plenty of forex brokers offering bitcoin. You can trade bitcoin, use it to fund your trading account, or both.
Bitcoin trading is new and exciting, but it isn’t something you should rush into without looking at the pros and cons. In this article, we are going to look at the risks and benefits, and also the different ways you can trade bitcoin.
Exercise Caution when Trading Bitcoin
Firstly, it is important to consider the risks of trading bitcoin. Right now, bitcoin is in a downward trajectory, having crashed below the $4,000 mark. Other cryptocurrencies are in hot pursuit and many experts are predicting this bear market will last well into 2019. It may, or it may not, but one thing is certain – when trading bitcoin, caution should always be at the forefront of your mind.
Different Ways to Trade Bitcoin
There are several different ways to trade bitcoin. You can trade BTC/USD with easyMarkets, using CFDs. Or, you can buy and sell bitcoin via a cryptocurrency exchange, of which there are many. However, buying or selling cryptocurrency on an exchange is a risky option. This requires that you actually own bitcoin, so you will need a cryptocurrency wallet to store your bitcoin. Security can be an issue and there have been a number of high-profile hacks in recent years. Blockchain technology security is widely regarded as safe, but it doesn’t stop enterprising hackers from stealing virtual currency. Bear that in mind before you store bitcoin in a virtual wallet.
The Benefits of Trading Bitcoin
Bitcoin is not a fiat currency and it is not tied to any one country. Therefore, it reacts differently to economic policies and world events. This makes it unique and more exciting.
Bitcoin trading can be immensely profitable. The market is very volatile, so prices fluctuate wildly on any given day. It is not uncommon to see price swings of more than 5% in a day. This makes bitcoin an attractive option.
Forex brokers offer high leverage on bitcoin trades. You can take advantage of up to 1:100 on a trade but be careful when using high margins.
Use stop losses to protect your trading account. If you are keen to chase a profit, consider using leverage. However, be aware that leverage increases your exposure to large losses. Never risk your trading account in pursuit or big profits. As many experienced traders know, the market can quickly turn against you, and in the case of cryptocurrencies, this might happen in the blink of an eye.
There are few costs when trading bitcoin. Most brokers keep their transaction costs low and if you day trade, you won’t need to pay any overnight costs.
If you decide to go ahead and trade bitcoin, use a reputable broker and start off using a demo account until you get the hang of it.