Bitcoin has had an amazing run in 2017 and looks set to breach 12K before the year is out. How do you actually buy and trade bitcoin though? As a beginner, buying and trading your first Bitcoin can be a rather daunting task. Thankfully though, with Bitcoin quickly gaining more and more mainstream attention, it is now easier than ever to get started trading Bitcoin with a CFD provider.
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Despite Bitcoin being around for some time now, most traditional Bitcoin exchanges can’t seem to work out how to open a bank account. Whether this is due to the banking industry’s feelings towards Bitcoin, the crypto industry’s disdain for fiat banking, or perhaps a little of both; the end result is the same: it is difficult and expensive to buy Bitcoin with fiat currency.
When you trade Bitcoin CFDs on the other hand, this problem disappears right away. CFD providers have long-standing relationships with banking providers and will generally let you fund your account instantly with zero fees. Even if you are lucky enough to have access to a Bitcoin exchange with banking facilities in place, they generally charge deposit and credit-card fees or mark up the price of their coins to cover these expenses.
One of the biggest problems with trading Bitcoin at a traditional exchange is the commission fees. Though the spreads on the BTCUSD pair at a big Bitcoin exchange might look really tight, what isn’t so obvious is the fact you are paying 0.2% to open a trade and 0.2% to close a trade. Unlike the MT4 platform, where fees are readily visible for all of your trades, Bitcoin exchanges tend to hide this information away in account menus.
0.2% might not sound like much, but it’s actually 0.4% by the time you close the position. That means if Bitcoin is trading at $9000, it’s going to cost you $36 to open and close a trade! That’s on top of the banking fees the exchange just charged you to fund your account as well. When you trade Bitcoin with a CFD provider, the $10-$15 spread might seem a little high at first, but the lack of trading commissions and deposit fees make CFD trading cheaper by a long short.
Don’t forget the traditional Bitcoin exchange is going to try and screw you on the withdrawal too!
Automated trading is a hassle with a traditional Bitcoin exchange due to a relative lack of seamless integration when compared to the MT4 platform. MetaTrader 4 was built from the ground up with automated trading in mind and has proprietary coding and backtesting functionality built right into the platform. Existing forex bots can even be quickly modified to trading Bitcoin and other Crypto contracts and a well designed bot may just get away with an optimization run.
Someone with very little coding experience can begin designing bots with MT4, but trying to talk to an API is going to be a real struggle. In fact, you don’t even need to learn code to make automated systems for the MT4 platform as there is a range of third party modular interfaces. Building automated systems for MT4 is like playing with lego.
One of the biggest problems with the Bitcoin industry is the lack of regulation. If you are an entrepreneur trying to start a business, a lack of regulation is great, but not so much if you are a consumer who’s just been fleeced. There have already been quite a few high profile thefts and scams in the Bitcoin industry where consumers have been hung out to dry with no avenue of recourse.
CFD brokers on the other hand generally operate in well regulated jurisdictions and are subject to strict regulatory oversight regarding management of client funds. The best CFD brokers keep client fund separate from company funds in segregated accounts at AAA rated banks. The chance of your CFD broker or their bank being robbed by hackers is virtually nil. If your broker or bank did happen to get robbed and refused or was unable to reimburse you, you would have a range of avenues for recourse.
Bitcoin trading made easy
CFDs take the hassle and cost out of Bitcoin trading. Free fiat deposit and withdrawal options, transparent fees and accessible automated trading make CFDs the smart option for savvy traders.
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