As you might be already aware, bitcoin CFDs enable traders to speculate the bitcoin price without actually owning the cryptocurrency. It’s essentially about making a contract with the broker wherein your loss and profit from the activity is dependent upon the difference between closing and opening prices of bitcoin.
Bitcoin has gained tremendous popularity ever since its launch on January 3, 2009. It is in fact the most heavily and regularly traded cryptocurrency today. Having gained acceptance in multiple industries including online casinos, ecommerce etc., there is a heavy demand for bitcoin everywhere.
It’s possible to trade in bitcoin through a Contract for Difference (CFD) broker, just like any financial instrument. You can carry out a comparison between different CFD brokers online, or also go through cryptocurrency broker comparisons specifically, to locate the right broker for your needs.
Please note, you must take care of two important points while selecting a bitcoin CFD broker. First, avoid trading with a broker who isn’t associated with a regulatory body, for instance, FCA. Second, make sure that the firm you are dealing with operates from an actual office, with real staff.
On the whole, it’s very important that you trade only with a broker firm that is as fully regulated and authorised, else you will not get protection if anything goes wrong.
Advantages offered by bitcoin CFDs
Easy to trade – In case you already have a CFD account, a broker will most likely offer you access to bitcoin too. You can trade bitcoin CFDs the same way as you trade commodities, shares, forex or FTSE.
There is no owning of bitcoins involved – Considering the fact that majority of people don’t have much idea about bitcoins, when trading in them through CFDs, the real bitcoin risk is transferred to the broker. All you do is speculate on the price. When you indulge in bitcoin CFDs, there is no worrying about bitcoins getting lost or stolen.
Reputed bitcoin CFD brokers are FCA-regulated – Customer funds of FCA-regulated CFD brokers are protected by FSCS. As a result, any money held by you in the account will be refunded to you by the government (to a certain extent). This is quite unlike bitcoin exchanges which are unregulated, and don’t guarantee anything.
Trading on leverage – This means that you can receive much more exposure to trade compared to your account balance. For instance, if you’re keen on betting £ 1 a point on the possibility of bitcoin continuing to go up in price, it would imply an exposure of £10,604.42. However, all you do is just put down the initial margin payment (£ 3,693.60 in this case). When we talk about initial margin, it is the day’s significant move as expected by the bitcoin CFD broker.
It’s possible to pre-set losses and profits – By setting profit limits and stop losses, you can pre-set the price at which you’d like to register profits or the maximum loss you’re willing to take. It does away with the need of you having to constantly monitor the markets. Please note, you might need to pay extra for guaranteed stops that lock the stop price despite market crashing through it.