Trade Bitcoin Online | FXTRADING.com - International

Trade Bitcoin Online

Trade Bitcoin CFDs with an Australian Regulated Broker

Trade Bitcoin CFDs with a fast execution broker, based in Sydney and regulated by ASIC. Avoid the hassle of digital wallets and speculate on bitcoin in rising and falling markets, alongside forex, indices and commodities, all within the same MT4 platform.

A Primer on Bitcoin

Bitcoin is a cryptocurrency which has enjoyed a meteoric rise in fame and fortune over recent years, although it has also hit the headlines due to its high level of volatility and deep market crashes since its inception.

Whilst Bitcoin is just one of the many cryptocurrencies now available, it is considered to be the original and most successful one to date. There were arguably earlier attempts to create a digital coin, but bitcoin was the first to be successfully launched and used by the wider public.

Traded on a peer-to-peer decentralised network, bitcoin bypasses the usual regulations and protocols regular payments systems and traditional money must abide by.

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Bitcoin at The Beginning:
It’s widely accepted that Satoshi Nakamoto is Bitcoin’s founder, who claims coding work for Bitcoin began in 2007. However, many people have claimed to be Satoshi Nakamoto, and it is also suspected that this is a pseudonymous person.

On the 31st of October 2008, Satoshi released a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” and within the document it described Bitcoin as “a system for electronic transactions without relying on trust”.

In 2009, Satoshi released the first open source version of Bitcoin software on Sourceforge, and early transactions were negotiated on a bitcoin forum.  Over the next couple of years bitcoin began to grow in popularity with companies accepting them as a form of payment.

Blockchain Technology:
Alongside bitcoin, Satoshi also created blockchain technology. Whilst the two terms are often confused with one another, blockchain is a shared computer system infrastructure and forms the centralised network which bitcoin runs on. There are many other uses for blockchain technology whilst bitcoin is a digital currency which utilises blockchain.

Limited Supply, Unlimited Demand:
A specific feature with bitcoin is that its supply has been limited to 21 million bitcoins. This is unlike any other form of traditional payment. Whilst gold is limited by how much can be discovered, there is no hard limit on how much remains to be unearthed. And as we have seen in recent years, fiat currency has no limited supply as central banks effectively print more, and money can effectively be created out of thin air via the fractional reserve banking system.

Therefore, if supply is limited yet demand continues to rise, conventional logic assumes an increase in the price of bitcoin over the long-term. This helps partly explains why it has attracted so much attention and rallied to levels of around 10x gold’s peak.

Bitcoin Futures:
In December 2017, CME (Chicago Mercantile Exchange) launched the first bitcoin futures. This was an important step for speculators as it finally allowed professional traders to speculate both long and short on bitcoin, whilst also using leverage. Moreover, it helped fund managers and bitcoin miners to hedge their exposure against their digital wallets.

The irony that CME launched Bitcoin futures just weeks ahead of the record high has not been lost on many, as it effectively made the launch of bitcoin futures a contrarian indicator for bitcoin bulls. But it can also be argued that futures allowed traders to speculate short on the digital currency, and hedging also capped upside potential for bitcoin.

HODL (hold / holders):
A popular approach with bitcoin traders (or ‘believers’) is to buy and hold bitcoin as they believe prices will rise exponentially over the long term. And with this comes the term “HODL” (hold) which is said to have originated on a crypto forum, when a buy-and-hold bitcoin trader misspelt the word “hold”. The typo took off and was then embraced by the bitcoin community.

How Does Trading Bitcoin CFDs Work?

As a bitcoin CFD (contract for difference) is a derivative product, the trader is not the owner of the underlying digital currency. Yet they can speculate on bitcoins future direction in both bullish (rising) and bearish (falling) markets. This is a luxury not usually possible via a traditional bitcoin exchange.

Moreover, as our bitcoin CFD is a leveraged product, margin requirements are low which make bitcoin trading more affordable than the underlying market. Of course, leverage can magnify both profits and losses, so the astute trader would use risk management to help mitigate such risks.

And as bitcoin CFDs do not require a separate digital wallet, the trader can speculate on bitcoin CFDs alongside traditional asset classes such as forex, commodities and indices.

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Long example: Bitcoin (BTCUSD)
A trader buys 3 contracts of BTCUSD (3 bitcoins) at USD $8,500

  • If the prices rise to $10,000 the trader could exit for a profit around $4,500
    • (# contracts x contract size) x (exit price – entry)
    • (3 x 1) x ($10,000 – $8,500)
  • If prices fall to $7,950 the trader could exit for a loss around -$1,650
    • (# contracts x contract size) x (exit price – entry)
    • (3 x 1) x ($7,950 – $8,500)
  • A 20% margin requirement with 5:1 leverage requires $5,100 of capital
    • (# contracts x contract size x price) / leverage
    • (3 x 1 x $8,500) / 5

 

Short example: Bitcoin (BTCUSD)
A trader sells 2 contracts of BTCUSD (2 bitcoin) at $12,985

  • If prices fall to $12,055 the trader could exit for a profit around $1,860
    • (# contracts x contract size) x (entry price – exit price)
    • (2 x 1) x ($12,985 – $12,055)
  • If the price rises to $13,400 the trader could exit for a loss around -$830
    • (# contracts x contract size) x (entry price – exit price)
    • (2 x 1) x ($12,985 – $13,400)
  • A 20% margin requirement with 5:1 leverage requires $5,194 of capital to open the trade
    • (# contracts x contract size x price) / leverage
    • (2 x 1 x $12,985) / 5

 

Costs Associated with Trading Bitcoin CFDs

Spread:
When a trade is opened you will notice that the profit will show as a negative balance. This is because the trader has paid a transactional fee to enter the trade which is derived from the spread. The spread is the difference between the bid and ask price, and spreads can be viewed on a deal ticket or the market watch within MT4.

In this example, the spread is $34.25 USD

Bitcoin (BTCUSD)
Bid / Ask:
12,765.25 / 12,799.50

In the next example, the spread is $25.50

Bitcoin (BTCUSD)
Bid / Ask:
8,256.00 / 8,281.50

 

The spread is not fixed as it is a variable rate, and its width is determined by the amount of liquidity available in relation to trading activity (volume). During periods of higher trading activity, such as the European or US sessions, we would typically expect the spread to be narrower (cheaper) as there is more liquidity available to facilitate trade between buyers and sellers. Yet the spread would usually be wider (more expensive) during periods of lower trading activity such as Asian session or public holidays.

Swap:
Swaps refer to a daily holding charge which are derived from the interbank interest rate from the currency it is traded in. As Bitcoin is traded in USD, swaps are derived from the Federal Reserve’s interest rate.

Swaps are applied to open positions at midnight (server time) and can either be a credit or a debit, depending on whether the trader is long or short and what the current swap rates are. Swap rates can be viewed within MT4 by risk-clicking over a market in the “Market Watch” window and selecting “Specifications” from the dropdown menu.

As interest rates are calculated 365 days a year, a triple swap is applied in Friday so account for the weekend when the Bitcoin CFD is closed.

Advantages of Trading Bitcoin CFDs

  • Trade long or short
  • Trade crypto on margin
  • Trade bitcoin with speculative tools
  • Expand your portfolio without switching providers
  • No requirement for a digital wallet
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Trade long and short
By trading bitcoin CFDs over the traditional digital currency the trader can speculate on both rising and falling markets.

Trade crypto on margin
Margin allows a trader to speculate on bitcoin with a fraction of the amount of the underlying market. This is an important feature given the relatively high price of a single bitcoin. Of course, the danger of margin means a trader can theoretically purchase more bitcoin than their trading balance allows which leaves them vulnerable to wiping out their account or losing more than they originally invested. This is why sensible risk management is key.

Trade bitcoin with speculative tools
Traditional cryptocurrency exchanges are catered towards people who want to transfer money, not speculate. By trading bitcoin CFDs the trader has relevant tools at their disposal such as stop orders, limit orders and trailing stops.

Expand your portfolio without switching providers
Traders of traditional CFDs can now branch out and trade crypto CFDs under the same platform as their usual markets.

No requirement for a digital wallet
There are likely traders who have been curious about cryptocurrency trading yet felt uncomfortable about opening a digital wallet and trading via unregulated brokers. Bitcoin CFDs remove the need for a digital wallet.

Why Trade Bitcoin with FXTRADING.com?

  • Trade bitcoin CFDs with a regulated broker
  • Lightening quick trade execution
  • Scalpers, EA and HFT traders welcome
  • No dealing desk
  • Zero commission bitcoin trading
  • Multiple deposit options
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Trade Bitcoin CFDs with a Regulated Broker
By choosing FXTRADING.com our clients can speculate on Bitcoin whilst also enjoying the extra protection and regulatory oversight from ASIC (Australian Security and Investment Commission).

Lightening Quick Trade Execution
Crypto exchanges can at times be slow to execute. Avoid the unnecessary delays by trading Bitcoin CFDs through our lighting fast trading environment.

Scalpers, EA and HFT Traders Welcome
Our fast trading infrastructure has been fine tuned to suit scalpers, automated and HFT traders.

No Dealing Desk
With no dealing desk, FXTRADING.com use STP (straight through processing) to facilitate your trades and not work against them.

Zero Commission Bitcoin CFD Trading
Simple pay the spread to enter bitcoin CFDs both long and short.

Multiple Deposit Options
We accept deposits in multiple currencies via popular payment methods such as Skrill, Neteller, credit card and bank wire.

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