As the most liquid and largest market in the world, forex has developed so much in every part including the new term of trading forex with bitcoin. The adding of cryptocurrencies like bitcoin itself has added so many pros and cons and added a new dimension to forex trading.
Launched in 2009, bitcoin is one of the most talked digital assets that its price has fluctuated from time to time. However, there is no physical asset that can be the base of the price. It is being undeniable attractive to be involved in forex trading, especially for day traders.
Lately, man forex traders have begun to accept a variety of digital currencies like bitcoin. But, it has the benefits and risks you should anticipate. Trading bitcoin offers the benefits from its anonymity and the decentralized valuation system of the currency. Meanwhile, it also can be exacerbated by its extreme volatility.
Benefits
Trading forex with bitcoin can be seen as a simple like the usual exchange of foreign currency. However, unlike exchanging home currency to local, forex traders should try to make money from the continual fluctuation of the real value of one to another currency.
The growth of trading with bitcoin has created a multi-billion industry to buy and sell cryptocurrency in a large number of exchanges. Simply, bitcoin is only affected by global supply and demands metrics. It increases when the demand rises and vice-versa. By its simple system, traders can get so many benefits;
1. Decentralized valuations
It is the most sought after trading forex with bitcoin. Unlike a traditional foreign exchange, bitcoin is not tied to any central bank. This digital currency is free from macroeconomic issues and geopolitical influences, including interest rates and specific inflation from a country.
2. Higher leverage
Numerous brokers offer higher leverage for bitcoin trades. For those experienced traders, this offer means a source of more benefit ahead. However, it is quite tricky for beginners. Higher margins should be approached with more caution because it has huge potential for loses.
3. Lower deposit and cost
The amount of money to start trading forex with bitcoin is low, start from $25. Sometimes, the best forex broker also offers promotions such as matching deposit amounts and keeping brokerage costs low. You should check the broker’s legitimation first to make sure everything is under regulation.
4. Security and no boundaries
Traders don’t need to reveal the detail of credit card or bank account while trading bitcoin. It offers bigger advantages to save from financial security costs. Also, bitcoin transaction has no geographical boundaries from wherever it trades.
Risks
Mostly, trading forex with bitcoin sells and holds in the US dollar. Thus, the risk of being exposed to US dollar bitcoin must be faced even the traders don’t take any forex position after depositing. Along with that, other issues should be understood before deciding trade with bitcoin.
1. Exchange rates; rates vary on multiple exchanges. Make sure to understand which bitcoin exchange rates that will be used by your broker.
2. Volatility; historically, it is being the most anticipated part of bitcoin trading. The absence of the regulations makes higher volatility that can lead to the traders’ disadvantages. Thus, it is important to choose a trusted broker like Didimax forex broker that has been qualified enough to warrant its transparency.
3. Asset class mixing; bitcoin trading essentially introduces new currency which has unexpected profit and loss impact. It mixes different asset classes and its valuation mechanism altogether. Everything that is not locked down is potentially being at risk.
To join with bitcoin trading that gains its popularity, there are numerous aspects you should consider. It may seem easier than traditional forex trading, but it has its own risks. Most importantly, you should choose the right broker to accommodate your need in either trading forex with bitcoin or traditional currencies, Didimax is one of them.
