The forex market is arguably the largest, as well as the most liquid market across the world.
As if it’s not dynamic enough, bitcoin and other cryptocurrencies have added a fascinating new dimension to forex trading.
The popularity of bitcoin is growing, and anyone can be tempted to buy bitcoin and make profits from holding it.
However, for traders, they may instead be looking to profit from the short-term swings in the value of bitcoin.
By using a forex broker, cryptocurrencies can be traded as spread bets or CFDs. Therefore, instead of possessing bitcoin, a trader can speculate on the falling and rising value.
Forex brokers have now added bitcoin as an asset for trading on the forex market. The volatility of bitcoin makes it even more desirable to trade on the forex platform.
Volatility in financial trading is actually what produces opportunities for traders to benefit from the price differentials.
Benefits of Trading Bitcoin with Forex Brokers
Forex brokers offer a lot of advantages when you trade bitcoin with them. But are you aware of these advantages?
- Trading with a forex broker allows traders to trade with leverage, meaning they don’t have to pay the entire amount for the contract to hold the whole contract size. A forex platform basically reduces the trading cost of bitcoin.
- Trading with forex brokers is more straightforward. Trading bitcoin with the exchanges requires a bitcoin wallet and a bitcoin client. Unlike the exchanges which require a lot of things, trading with a forex broker only requires a brokerage account as well as access to the platform. Furthermore, the platforms can be web-based, and hence, there’s no need to download anything.
- Trading with a forex broker gives broker access to all the technical analysis tools which profit any trader. Therefore, one can conduct the analysis and determine when to exit and enter the trades.
- Also, trading with a forex broker doesn’t carry any additional expense because all the costs are included in the spread. As much as the exchanges have tighter spreads, traders usually pay volume-based commissions.
- The safety, as well as security element, is another advantage traders enjoy trading with forex brokers.
Start Trading on a Forex Platform
Now that the benefits of trading with a forex broker are crystal clear, how do you start trading with a forex broker? Here’s how to do it in three simple steps:
- Opening a trading account
- Funding the account
Opening the Account
Like the most trading process, opening an account is one of the first steps. Therefore, to start your journey of trading bitcoin with a forex broker, you’ll need to open an account.
The account should be with a forex broker offering the Bitcoin/USD pair. For instance, eToro offers bitcoin as a Contract-for-Difference (CFD) instrument for trading.
Funding the Account
After opening the account, you need to fund the account. Funding is made in any of the currencies that may be listed in the account. Usually, the US dollar is the most popular currency used.
The payment methods range from debit/credit cards, bank wires, or e-wallet options like Skrill.
The Trading Process
For instance, with the eToro platform, you can get to the bitcoin page on its OpenBook platform.
There’s an interface there with the price of bitcoin and the candlestick chart. Besides, there’s a “Trade” button at the top right corner of your screen.
The trade button opens the next page that requires you to select the bitcoin amount you’re willing to buy.
Either you choose default amounts or enter a custom amount. After that, you confirm the trade entry, and it gets in the queue.
The Bottom Line
Some forex brokers have specific trade conditions, while others allow execution of the orders once they are made.
Also, others don’t allow trading of bitcoin on weekends, and hence you should be aware before opening an account.
When trading bitcoin with forex brokers, bitcoins are not owned; instead, traders make their money from the price fluctuations.