How to trade Bitcoins on Forex?

Hello, dear friends Forex traders!

The currency market is the largest and most liquid market in the world. It works 24 hours a day, 7 days a week worldwide. And today already dynamic forex expands in another dimension, offering traders working with an entirely new class of foreign currency assets, known as so-called crypto-currencies.

In the review below, we look at the basic characteristics of Bitcoin, what it is, why we need it and how to apply it. And, of course, how we can benefit by trading BTCUSD currency pair (ie Bitcoin and US dollar), we consider the features of the motion of the tool, the nuances of trading, appropriate strategies and tactics.

Indeed, many Forex brokers already accept Bitcoins as a trading currency with which you can work confidently in the foreign exchange market, assessing and forecasting their short- and long-term trends.

What is a Bitcoin?

Bitcoin (BTC) is an electronic cryptocurrency (kind of digital currency with a higher level of encryption related to its circulation), proven in a decentralized, anonymous and safe storage, transfer and acquisition. Today Bitcoin is the most popular cryptocurrency. BTC is used by many companies on Forex, offering, in turn, convenient withdrawal and conversion mechanisms.

It is important to note that the founder of Bitcoin is politically independent sales chain offering a revolutionary new and at the same time a purely digital payment system. This is the first in history decentralized currency network using all its users as the governing bodies and does not imply any central authorities or intermediaries.

In other words, Bitcoin is the currency first implemented on the “crypto currency” concept first described in 1998 by a man who calls himself Wei Dai in a network of so-called “cypherpunks”, suggesting the idea of a new kind of money, based on cryptography for the management and transactions, as opposed to a central regulatory force. The first version of Bitcoin and proof of concept were set back in 2009 by a man named Satoshi Nakamoto, whose identity is unknown until now, in spite of numerous investigations by Interpol and journalists.

Ever since the currency exchange rate increased exponentially, and its universal accessibility and openness to improvement is not in doubt: the open source code of this financial and economic project and all accompanying materials can easily be found on the Internet and so many developers can easily make their own improved version of the software for their own cryptocurrency.

Who controls the Bitcoin network?

The principal differences between the regulation of currency and cryptocurrency

Nobody controls the Bitcoin project, equally nobody owns the technology underlying e-mail functioning. Bitcoin is regulated and supported by all its users around the world. Developers improve development in the field of software, however, is not in their ability to make changes to the currency program protocol, because each user has the right to choose which programs and services they use for support.

For the same, to ensure interoperability, users must use the software that meets a special Bitcoin protocol. Bitcoin can only exist on the basis of full consensus among all users. In other words, all users and developers have a strong incentive to defend this consensus.

How does Bitcoin work?

From a user perspective, Bitcoin is nothing more than a mobile app or a computer program that provides personal Bitcoin wallet and enables users to send and receive Bitcoins. But behind the scenes, the user interface of Bitcoin network is a public register titled Blockchain. This register contains records of all transactions ever carried out, which allows establishing the authenticity of each transaction, which is protected by digital signatures corresponding to the sending address.

Is Bitcoin actually used by people?

Yes. In addition, the number of Individuals and legal entities using Bitcoin is growing steadily. They are construction companies, restaurants, real estate agencies, law firms and popular online services. Capitalization of Bitcoins today exceeds $26 billion. Bitcoins can be purchased at one of the many competing exchanges, in accordance with a beneficial for you rate against other currencies. This is how such exchanges as Coinbase, Poloniex, BTCChina, Kraken, and others - the list of the largest ones you will easily find on the web. Some institutions, such as Subway, accept bitcoins.

How is Bitcoin traded on the Forex market?

In fact, when it comes to trading, you have two options:

1. Account in Bitcoins

Here everything is clear. Some companies allow you to open trading accounts in Bitcoins. So, your balance will be equal to, for example, 1,523 Bitcoins. You’re making some kind of deal, say trade EURUSD, and the profit/loss you get in the BTC. When funds are withdrawn, for example into euros, if Bitcoin rate increases, you get an additional benefit. Well, if it didn’t - a loss.

2. And the second option - direct trade by Bitcoins, earnings at the cryptocurrency rate fluctuations.

The symbol is called Bitcoin, or BTCUSD. By default it is usually not shown, it is necessary to find it in the “Symbols”, by right-clicking in the “Market Watch” window in the terminal. List of brokers who trade Bitcoins is available at the end of the article.

Where can I watch the chart of the Bitcoin rate?

Due to the rarity of a cryptocurrency and the presence of several major exchanges, current quotes from different brokers may slightly differ. Which, by the way, gives opportunities for arbitrage.

You can see Bitcoin chart not from a broker by the following link:

https://www.investing.com/currencies/btc-usd

BTCUSD Trading Strategies

So, let’s move directly to the trading nuances of BTCUSD, ie Bitcoin.

Global trend - up

Of course, this currency pair is still too young, compared with mastodons like USDJPY, but now, without a doubt, many analysts agree with that we can talk about the global upward trend. It should be taken into account when opening long-term positions.

Trade is 24 hours a day, 7 days a week

Due to exchange features Bitcoin is really traded non-stop. Trading continues even on the weekends. However, I advise refraining from transactions on non-working days.

Follow the news

Bitcoin is very susceptible to the influence of the news. Fortunately, they have a longer effect than Non-Farms. Follow the news: if you see that some large fund has invested hundreds of millions of dollars in Bitcoins, then consider buying in the next few days. If, however, some major exchanges (as recently) were break opened or any country prohibited BTC, - consider selling.

Technical Analysis - works

And it works well. You can trade even with the usual moving average, which can be seen with the naked eye on the chart.

Forget about scalping

Due to a high spread, it is not recommended to trade at lower time frames. Consider transaction on H1 or higher.

Gaps are possible

Despite the fact that Bitcoin is traded seven days in a week, gaps are still possible with a lack of liquidity during unexpected news releases.

The activity can be anytime

Trading sessions for Bitcoins do not work. Active movements can be at any time of day, day or night. Anytime. Keep this in mind.

What strategies to trade?

Simple, trendy strategies with not too big goals. Box strategies, breakdown strategies. Timeframe – from H1 and higher. Due to the fact that Bitcoin is not too prone to speculations, it is relatively easy to sell, there are few deceptive movements. Use the most simple “book” strategy and do not forget the stop-loss and money management.

Conclusion

Today cryptocurrency is one of the fastest growing asset classes among all the others, ensuring boundless prospects and threats for the development of the entire global financial system. Many national governments are inclined to see in the highly competitive cryptocurrency potential to harm the sovereignty of the state, by displacing the national currency from the market. However, more and more companies, services and manufacturers are turning to such currencies as Bitcoin to support the growing initiative and sometimes even finding these assets yielding investment opportunities or prospects for diversification and hedging currency risks. And the question of whether or not crypto currency is a new global economic risk is acute today as it is impossible, but it’s a totally different story.

As for trading on Bitcoin rate, everything is not so difficult: the simplest technical analysis works, it is necessary to follow the news and remember significant spreads, so we try not to trade on the smaller time frames. Bitcoin is perfect to diversify your trading portfolio, as it practically does not correlate with other instruments.

Brokers, who have Bitcoins trade available

• Roboforex (deposit funds)
• InstaForex
• Alpari

Regards, Michael

ForexTraderPortal.com