In the early days of Bitcoin, the only way you could invest in Bitcoin was to purchase it or mine it. Nowadays, there are several options for investing, including forex Bitcoin trading. Bitcoin forex trading is a way you can invest in Bitcoin without having to buy or sell additional Bitcoin.
Learn more about BTC forex trading, including what’s involved in trading forex and how you can use Bitcoin to make trades.
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What is Forex?
Forex is short for Foreign Exchange, so whenever you hear someone talking about forex, they are talking about the foreign exchange market. With forex, you’re simply trading between currency pairs. You’re investing in the price movements of a currency.
For example, if you want to invest in the USD price movements against the Euro, you’d invest in the USD/EUR currency pair. If the Euro makes gains against USD, you’ll make money. When the Euro loses money to USD, you make money.
What is Bitcoin Forex Trading?
Bitcoin forex trading is similar to standard forex, but you are using Bitcoin for the currency pair trading. Your options for trading are based on the trading platforms you use. For example, some trading platforms only allow you to pair Bitcoin with other digital currencies. For instance, you could pair BTC with Litecoin or Ethereum, creating a BTC/LTC or BTC/ETH pairing.
Other trading platforms will allow you to pair BTC against other currencies. You can pair BTC against USD, EUR, JPY, and more. This type of broker is closer to standard forex brokers.
Are Your Really Trading in Forex or Simply Investing in Bitcoin?
Before signing up at any BTC forex trading site, you need to verify that you can actually make BTC forex trades. Some sites will claim that you are conducting Bitcoin forex trading, but you are merely buying Bitcoin like you would at Bitcoin exchanges.
If a site requires that you purchase and hold Bitcoin as your forex investment, the site is merely acting as a secondary Bitcoin exchange. Forex sites should allow you to invest fiat currencies or BTC into actual forex trades.
Also, check to see if your site offers levered trading. When you trade a digital asset with leverage, you are taking credit to make your trade. For example, if you take a $1,000 position in BTC/USD, you can use leverage to fund a large portion of the trade. However, be careful as any losses you incur will have to be repaid to the broker.
Top Bitcoin Forex Reviews
If you’re looking for a site where you can conduct legitimate BTC forex trading, you’ve come to the right place. Below are a couple of premiere sites you can use for forex Bitcoin trading.
AvaTrade — Ava Trade is a full service state-of-the-art online forex trading platform for both fiat and BTC. It offers investment options for Bitcoin and various altcoins. The only option for forex is forex Bitcoin. A free demo account is available.
Metatrader 4 —MetaTrader 4 is a perfectly designed and equipped traders’ workplace that allows trading in financial markets (Forex, CFD, and Futures). It is the most successful product of MetaQuotes, and it is one of the most popular Forex trading platforms in the world. AvaTrade now owns MetaTrader 4, but it still serves as its own separate platform.
Advantages of Bitcoin Forex Trading
Some of you may wonder an investor would pick forex Bitcoin trading over a standard forex market. Here are a few advantages to BTC forex trading:
Decentralization – One problem with standard forex investing is that central banks can heavily influence a currency’s price. Bitcoin is largely decentralized, meaning that BTC forex trades are free from the influence of central banks.
Suitable for All Investors – The great thing about Bitcoin forex trading is that you don’t need to be an expert on cryptocurrency or worry about having to buy at the perfect moment. You are merely putting in a trade based on price movements of Bitcoin BTC versus other cryptocurrencies for fiat currencies.
Low Entry Point – In some cases, you can get into BTC forex investing for just $25. The minimums for investing in forex Bitcoin are a lot lower than standard forex currency trading. Also, fees for BTC forex transactions will be lower than traditional forex trades.
Disadvantages of Bitcoin Forex Trading
All investments have risks, including Bitcoin forex trading. Let’s take a look at some of the risks you’ll take investing in forex Bitcoin:
Varying Exchange Rates – One problem with BTC forex is that the prices can vary depending on the Bitcoin exchange used and the trading volume on that exchange. Sometimes this Bitcoin price can vary by hundreds of dollars, and exchanges do not update quickly. It is a good idea to know which exchange your platform uses for trades before signing up.
Potential for High Volatility – Bitcoin is one of the most volatile investments in the world. How many people got into Bitcoin at 18,000 and watched in horror as it dropped to $5,000. The same thing can happen in the future, and sometimes it can be hard to predict. Bitcoin’s price can be influenced by a wide array of factors, including negative news stories, so be prepared for fluctuations.
No Bank Insurance – Keep in mind that forex investments are not insured by any form of financial institution. All funds are subject to risk of loss. Don’t invest with money you cannot afford to lose.
The Future in Bitcoin Forex Trading
The future of Bitcoin forex trading will depend largely on the growing acceptance of Bitcoin and other cryptocurrencies. BTC has continued to gain recognition and acceptance globally as people discover the tremendous upside in blockchain technology. This acceptance is also impacting various altcoins like Litecoin and Bitcoin Cash that serve as alternatives to Bitcoin.
The price of Bitcoin fluctuates but has continued to show a long-term upward trend. As such, smart investors have started trading Bitcoin and are dedicating portions of their portfolio to cryptocurrencies. As crypto investing gains in popularity, expect the popularity of forex Bitcoin trading to grow.
However, pay careful attention to the legal landscape of Bitcoin in your country. Countries such as the United States are targeting Bitcoin investors and making it more difficult to trade Bitcoin. This includes changes in regulatory guidelines and tax laws impacting the buying and selling of Bitcoin. Before investing, research current laws in your country.
Finally, all investments are subject to risk, and Bitcoin investing is one of the riskier investments you can make. While the risk of ruin is low, there will be fluctuations in the price of Bitcoin. That’s a reality of crypto investing.
As such, invest money you can afford to lose and develop a comprehensive strategy. Making Bitcoin forex investing part of that strategy can help you profit from the Bitcoin revolution.