Trading Forex with Bitcoin | What Should You Know?
If anybody asks you which is the largest and the most liquid market in the world, your answer should be Forex. The forex market never shuts down. It runs for 24 hours a day, 7 days a week, all over the world. The forex market is known for its energetic, active, ever-changing and dynamic nature and if the current high-octane and high-power conditions of the forex market aren’t enough, cryptocurrencies, especially Bitcoin, are writing a new chapter in the current book of currency or forex trading. With the growing popularities of cryptocurrencies, mainly Bitcoin, forex brokers have started accepting Bitcoins from people who are interested to invest in currencies. So, if you are holding a few Bitcoins and waiting for their value to appreciate, but, otherwise, want to generate money a little faster, you can grow your bitcoin assets by investing a partial amount in forex trade. Before you dive in, here are a few things that you must know.
What are the Benefits of Using Bitcoin for Forex Trading?
- No Central Bank to Control Bitcoin
Bitcoin, since it is a decentralized currency, is free from the control of a central bank which could have purposefully changed its value. Hence, when you will use Bitcoins for forex trading, your investment is, actually, free from any kind of country-specific political influence or economic policies making it less risky as compared to the investment made in normal fiat currencies.
- No Deposit or Withdrawal Fee for Bitcoin Investments
Since all transactions made in bitcoin are recorded digitally on a public ledger called blockchain, there is no involvement of any kind of banks or third-party agencies in clearing the transactions. This means that, in most cases, there are no transaction costs involved in dealing with Bitcoins. That’s why even forex brokers don’t change any kind of deposit or withdrawal fee for forex investments made in Bitcoin. This usually translates into more trade profits for the investor.
- Minor Deposit Amount & Lower Brokerage Costs
Since investing using Bitcoins in the forex market is a relatively new concept, the deposit amount required to start trading can be as low as $30. However, the proper amount of care must be put in by the investor to check if the broker is genuine and regulated. Moreover, in an attempt to attract more investments into forex market with bitcoin, brokers have kept significantly low brokerage costs. This again translates to more profits for the investor.
- The Feeling of Being Secure
Since you will be dealing with bitcoin, you don’t require telling any bank account or credit card number for making any kind of withdrawal or deposit. This is, undoubtedly, a great advantage as compared to trading with fiat currencies.
- Take Advantage of High Leverage
As of now, many forex brokers are providing a high leverage, even up to 1:1000 for bitcoin trades. However, don’t get carried off by this as if you are a novice trader you can end up in huge losses instead of making profits from the same. Experienced traders can certainly benefit from the high leverage provided by the forex brokers.
- Elimination of all International Boundaries
If you are in Asia, using Bitcoin to invest in forex trading, you can even deal with a broker who might be based in the United States of America, though the broker must be willing to do so.
Things to be Taken Care of While Using Bitcoin to Invest in Forex Market
- First of all, an investor must know the exchange rates which are going to be used by the forex broker. This is because bitcoin is traded on many different exchanges and exchange rate might vary from one exchange to another.
- Unregulated brokers must be avoided at all costs. This is because they can take advantage of the high volatility involved in Bitcoins, making the investor lose a significant part of his/her money. That’s why it is always safe to make your investment with a regulated forex broker.
- Hackers can steal the Bitcoins from a broker’s digital wallet and no claim can be made thereafter provided the broker gives you insurance protection for your assets.
- As mentioned above, the forex brokers are providing high leverage to attract investors who are interested to invest in the forex market using Bitcoins. This is a big risk if the investor is a newbie who doesn’t know that much of forex trading. Hence, it is always best to learn the tips and tricks of forex trading before going on with your investment plans.
Thus, investing in Forex trading using Bitcoins is, undoubtedly, lucrative and beneficial. However, it does require a few things to be taken care of and is a significantly new concept. Hence, take your swimming lessons before diving into the actual ocean.