Day Trading of Bitcoins
Over the last few years, bitcoins have gained lots of traction. At first, early adopters of bitcoins were mostly impressed by the technology it brings in and the whole philosophy about having a currency that does not belong to any government. Media has quickly picked up on this cryptocurrency and the whole bitcoin hype has started. Lots of companies have started developing products that are associated with BTCs, every news portal had been publishing BTC-related news pieces nearly on a daily basis, and even some companies tried to bring in bitcoin technology into their own ecosystems. This has resulted in the bitcoin’s price skyrocketing and then falling sharply, once the hype was over.
Today the price of the bitcoin has become less volatile and more predictive, hence it became an even better for day traders. While this cryptocurrency still provides great changes in its value over a short amount of time, the trend seems to last longer. This is the main reason why day trading of bitcoins became a good idea. Let us tell you more about how you can do it.
There are quite a few bitcoin exchanges, places where you can buy and sell bitcoins for any supported currency. In simple words, you deposit $10,000 and get around 13.5 bitcoins. Then you wait for the price to appreciate, and exchange the bitcoins back to dollars. The advantage of this is that there are absolutely no market making, delays in the execution and conflict of interest. Also, the spreads are very low if non-existing, as they trades happen within the same exchange.
The disadvantage of this is that you cannot actually obtain any sort of the financial leverage. Hence, your earnings can only be high if your deposit is high enough. It is also worth mentioning that you may get bitcoins for other purposes than just speculation. Today it is possible to obtain many goods and services via bitcoin payments, starting from a regular latte macchiato and going as far as placing bets on your favorite football team with bitcoins.
FX & CFD Brokers
Not every broker offers trading such pairs as BTC/USD and BTC/EUR, but there are some. The main thing that you have to look into is the conditions these companies offer, as with some of them trading cryptocurrencies is quite risky. For example, if you trade with Plus500, than the whole process will feel like you are actually gambling with bitcoins than trading them. Why is that? Because this broker provides the contracts that expire every midnight. Hence, whether you want to get rid of the position or not, it will be done automatically once the clock hits the 12 am mark. Also, you cannot gear up with Plus500.
Having said that, there is some broker that can actually offer you a leverage of 10:1 or 5:1 and no daily expiration for BTC-related pairs. It is recommended to try out ForexClub and their Libertex platform for BTC/USD trading as they seem to provide some great conditions.
Many binary brands have started offering BTC pairs on their platforms. As this is a derivative, there is no actual BTC possession, a broker just needs to have the price feed. Having said that, it is not really a good idea to trade BTC/USD binary options. Why is that? The price is just unpredictable over the short-term binary option expiration periods (e.g. 1 minute – 1 day), and if you go for a longer period (1 week or 1 month), you are likely to generate higher profits when buying actual bitcoins.