Author:Vishal Doshi
Date:02-11-2017

Bitcoin Trading and Forex Trading

  • Forex Market is a trading center for different currencies. Bitcoin is a currency in itself. To ease the exchange of finance globally, the government of different countries is developing International Finance Markets. Big multinational companies and organizations also need a source that would ease their financial transactions at the global level.
  • Forex market includes government, commercial institutions, and corporations as traders. There are many traders from all over the world who invest in Forex market with the aim of earning profits, from the differential amount of currency pair.
  • Currency that a trader buys in the Forex Trading Market is known as Base Currency. In Forex trading market the currency rate trend very slowly, whether it’s a raise or a downfall. But, in the situations like the financial crisis in the country, change in political party of a country’s government or disintegration of the national economy causes a sudden change of either increase or decrease in prices.
  • There are more chances of winning and losing in Forex Trading Market when prices are fluctuating more and more. Here comes the concept of Bitcoin Forex trading. In Bitcoin trading when price rates of commodities speculate a lot, the Bitcoin value will get more volatile. Bitcoin can earn you huge profits as well as incur you big losses too because of its high volatility factor.
  • In Forex trading you buy and sell a currency pair. In Bitcoin trading, you deposit and withdraw your Bitcoins. But, in Forex Bitcoin Trading you have to invest your Bitcoins in particular currency pair for trading. Fluctuation in prices of Forex currencies lets you earn and lose the value of Bitcoin as compared to US Dollars.

Advantages of Bitcoin Forex trading

  • Zero cost of transaction:
    Banks and clearing agencies are not involved in recording transactions of Bitcoin Traders. Transactions of Bitcoin trade are recorded digitally on public networks. Global transfers are not liable for transaction costs in Bitcoin trading. Trade profits also improve because brokers do not charge deposit and withdrawal fees for their client’s benefits.
  • No Centralized Valuation:
    Central Banks do not alter Bitcoin values. Bitcoin valuation is not affected by changes in factors of macroeconomics and geopolitics.
  • Leverage Ratio is comparatively higher:
    In Bitcoin trading, brokers provide leverage of 1:1000 ranges to attract investors. But, it is equally risky during downfalls because the proportion of loss is also high with high leverage range.
  • Deposit amount is low:
    Some Bitcoin Forex trading brokers ask for only $25 to initiate a trade. Brokers also offer matching deposit amount for promotions.
  • The cost of trading is low:
    Bitcoin Forex Brokers take the very low trading cost to allure more and more investors.
  • Security is intact:
    You don’t need to give your details of banking or credit cards in Bitcoin Forex Trading. Hence, you need not worry about the security of your money even when you are dealing with foreign brokers.
  • Global boundaries are not a concern anymore:
    There no global boundaries for traders of Bitcoins. Only concern is the regulations of the countries trading.
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Threats of Bitcoin Forex trading

Various exchanges work in dealing of Bitcoins. So it is difficult for traders to choose the best one. A trader must find an appropriate exchange dealing in Forex Bitcoin as per his or her expectations. Exchange rates differ in different exchanges.Brokers immediately sell the Bitcoins for US Dollars as soon as they receive them from their traders and traders are revealing the Bitcoin to US Dollars rate risk from deposit to withdrawal.High volatility is the riskiest factor causing a disadvantage for traders by unregulated brokers in Bitcoin Forex trading. The broker’s digital wallet does not provide security against hackers causing risk of theft. But, there brokers having insurance protection against hacking. A trader should give preference to such brokers for the safety of his money.

Following Brokers allow Forex Bitcoin trading despite many companies’ disallowance

  • Oanda
  • Avatrade
  • Plus500

They provide CFD (Contract for Difference) services. Your capital is at a huge risk while trading with CFDs.

ufx.com 10Markets Trade360° AVATRADE
1 broker BCapitalsFx Evolve Markets Ltd. Caesar Trade
Forex.ee InstaForex Group FX Open Markets Limited Nova FX Trading
Just Forex SimpleFx SunbirdFx ProfitForex
SuperForex ZARFX Whaleclub TTCM Traders- Trust Capital Markets
‘e’ SOCIAL TRADING TRADERUSH Bit4X CFD1000
eTORO Fx Choice VenetFx Forex-Metal
FxOpen FxPRIMUS LiteForex Trader’s Trust
Trader’s Way TradingForex.com Belfrics Kraken
Coinsetter CEX.IO BTC-e

CFD v/s Forex

  • CFD is a short form of Contract for Differences. In CFD contract with the brokers are the real positions.
  • CFD is not a tangible asset. It is like Futures. CFD allow traders to buy or sell an asset for the existing difference in the spot price at a particular future point. When a security price either rises or falls in the future, a trader tries to trade in CFD[1].
  • In CFD, traders lock a particular price at a fixed date in future and earn profits or incur losses accordingly.
  • CFD has a variable price which corresponds to the value of the hidden stock to which it concerns. A trader can close CFD any time convenient to him.
  • Traders use CFDs to fund their short-term fluctuations, traditionally.
  • CFD is a useful tool for traders who want to safeguard their funds at a particular market position.
  • CFDs provide flexibility to hedge, leverage and tax advantage on sale or purchase of assets to which the trade is concerned.
  • CFD very popular trade in the UK and Europe economic market.

Similarities between Forex and CFD

  • The process of trade has the same implementation in Forex and CFD.
  • Easy entry and exit in both the markets.
  • Forex and CFD require same performance of research and approach towards commodity or currency prices.
  • Over-the-counter (OTC) Market is the common source of trade for both.
  • OTC Market works within the web of banks without any involvement of physical exchange.
  • CFD also charges no fees like commission fees or transaction fees, other than only trading spread. The same is the criteria in Forex.
  • Trader entitles the ownership of the concerned assets in none of the two markets.
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Distinguish between Forex and CFD

  • Forex provides only currency trading. CFD provides trading in indices, agricultural products like wheat and corn, metals products like gold and silver and energy products like gas and oil.
  • A trader has a choice of selecting different types of contracts that differ in currency type and increment value determining in the country to which the asset belongs.
  • The purchase price of CFD becomes the Base Price. The trader has not to worry about minimum and the maximum value of currency pair. He only has to concern about the currency price whether it is below or above the contract price.
  • Forex trading depends on the changes in factors of geopolitics and macroeconomics. Whereas, CFD trading depends on the factor of change in demand and supply of products and business sector trends.
  • CFD offers inbuilt leverage unlike in Forex trade.

Spot forex or forex CFD

The meaning of Spot Forex:

Spot Forex is purchase and sale of a currency pair at existing rate in the forex market including cash transactions without any interest charges. Spot Forex[2] is unregulated in USA and UK. CFD offer more commodities for trade than commodities in Spot Forex. Spot Forex offers leverage in ratio. For example, 1:100 or 1:10, whereas CFD provides 1% or 5% fixed margin. CFD is working overnight. So it charges financing costs. This finance cost includes daily charge according to the size of the contract. Financing costs of CFD are mostly in link with benchmark rates of Central banks. Traders have to spend a huge amount of your earned money, like interest rate, if their trade is open for a longer period in CFD. Spot Forex offers Demo account that helps you to practice before investing your money. CFD does not offer such Demo accounts, and traders remain unfamiliar with the concept.

List of CFD brokers with unlimited demo account

  • Alpari
    Spread EUR/USD: 2 points.
    Leverage: 1:1000
    Standard Deposit: $100
    Minimum Deposit: $1
    Country: Saint Vincent and the Grenadians
    Account Funding: Bank Transfer, Netellar, EasyPay, Credit card, RBK Money, QIWI, WebMoney, Skrill, WIRE Transfer, Yandex Money

  • ADMIRAL MARKETS
    Spread EUR/USD: 0 points
    Leverage: 1:500
    Standard Deposit: $1000
    Minimum Deposit: $200
    Country: United Kingdom
    Account Funding: Bank Transfer, Credit Card, Skrill, Netellar, WIRE Transfer

  • CITYINDEX
    Spread EUR/USD: 0 points
    Leverage: 1
    Standard Deposit: $0
    Minimum Deposit: $0
    Country: Ascension Island
    Account Funding: Bank Transfer

  • DeltaStock Spread EUR/USD: 3 points
    Leverage: 1:200
    Standard Deposit: $0
    Minimum Deposit: $100
    Country: Bulgaria
    Account Funding: Credit Card, Bank Transfer

  • E-Global
    Spread EUR/USD: 2 points
    Leverage: 1:500
    Standard Deposit: $2000
    Minimum Deposit: $20
    Country: Virgin Island British
    Account Funding: WebMony, Credit Card, Bank Transfer, Liberty Reserve

  • FIBO Group
    Spread EUR/USD: 2 points
    Leverage: 1:1000
    Standard Deposit: $500
    Minimum Deposit: 1
    Country: Virgin Island British
    Account Funding: Bank Transfer, Credit Card, Dixipay, OKPAY, WebMoney, WIRE Transfer, Yandex Money, QIWI

  • GCI Online trading
    Spread EUR/USD: 2 points
    Leverage: 1:400
    Standard Deposit: $2000
    Minimum Deposit: $0
    Country: Belize
    Account Funding: Bank Transfer, Credit Card, PayPal, WebMoney, Money Bookers

  • InstaForex
    Spread EUR/USD: 3 points
    Leverage: 1:1000
    Standard Deposit: $10
    Minimum Deposit: $1
    Country: Russian Federation
    Account Funding: Bank Transfer, Credit Card, FilsPay, Netellar, QIWI, BPay.md, RBK Money, Skrill, RuRu, WIRE Transfer

  • LiteForex
    Spread EUR/USD: 3 points
    Leverage: 1:200
    Standard Deposit: $300
    Minimum Deposit: $10
    Country: Russian Federation
    Account Funding: Bank transfer, Credit Card, AlertPay, Money Bookers, WebMoney, Yandex Money

  • Profinance service
    Spread EUR/USD: 2 points
    Leverage: 1:500
    Standard Deposit: $1000
    Minimum Deposit: $0
    Country: Russian Federation
    Account Funding: Bank Transfer

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Exchange-traded fund (ETF)

ETF is an investment Fund. ETF trading is similar to that of stocks. Stock exchange does trading of ETF. ETF includes stocks, bonds, and commodities. During a trading day, ETF trading takes place in Net Asset Value.ETF has characteristics of unit investment trust as well as mutual funds. ETF trading is different from a close-end fund but has some of its characteristics. ETF provides low transaction costs and tax benefits also. ETF has more than 1800 commodities covering almost all conceivable markets and trading strategy.When ETF buys or sells the creation units, it creates an arbitrage mechanism that lowers the potential deviation between the Net Asset Value and the market price of ETF shares. The exchange distributes the Net Asset Value of the ETF shares at an interval of every 15 seconds, on the day of trading. A Transparent Portfolio of ETFs is available for investors that help them to arrange the portfolio assets to buy a creation unit.

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Etf trading-forex

  • ETF trading allows investors and traders to diversify their investment other than only in the stock market. Investors and traders can reduce their systematic risk by taking the chance of investing in ETF.
  • ETF is the most diversifying funding system in the whole world. Traders can have large advantage of changing market of macroeconomics.
  • In ETF, you have to invest your currencies in different funds. ETF management sells these funds in the form of shares to the public, similar to buy and sell procedure of stock market.
  • Major currencies in ETF are US Dollars, Euros, Canadian Dollar, British Pound, and the Japanese Yen, the Australian Dollar, the Swiss Franc and much more. Traders and investors can earn profit from the differential amount of exchange rates of these currencies.
  • Concepts like economic growth, rise, and fall in the rate of interest, yields from the stock market, change in government policies, etc. of macroeconomics are responsible for the change in prices of the stocks in the stock market. Traders and investors can take advantage of these changes in the Forex market.
  • Every individual currency is an independent economy in itself. If an economy is an exporter, it will determine the currency values. The most important work of investing in the market is predicting the next move, to earn profits. It sounds easy, but it is very difficult task.
  • Commodity prices and few currencies of any country are in correlation which directly affects the domestic industry of any country.
  • he Australian Dollar, the New Zealand Dollar, and the Canadian Dollar have the most compact correlation with the commodity prices. The Japanese Yen and the Swiss Franc has a comparatively low correlation with the commodity prices.
  • During recession all over the world, the commodity prices trend because of the difference between a faster healing and deeper declination. Investors can earn more if they understand the correlation of a particular commodity with a certain currency. They can make more intellectual trading decisions.
  • The decrease in the price of a certain commodity is not beneficial for the producer of that particular commodity, but, the customers have the benefits of substantial purchasing power.
  • From 1999 to 2008, Australia Dollar was in correlation with the precious metal Gold by 84%. Australia is the third largest gold producer in the whole world. Australian Dollar value rise with the appreciation of gold prices in the market.
  • New Zealand and Australia have a healthy economic relationship. Hence, a positive change in Australian market has a good effect on New Zealand market too. Australia exports goods of New Zealand. Because of this positive correlation, AUS/USD and NZD/USD had 96% of a positive correlation between the same time.
  • The only way to earn profits in ETF is to carefully observe the changes in both the currency market and the movements in the oil and gold market[3].
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