The foreign exchange market is the biggest and most liquid market. It never closes, ever. The market is open 24/7 throughout the year. Even after the foreign exchange being so dynamic, cryptocurrencies like Bitcoins add a new dimension to currency trading. Forex brokers are accepting Bitcoins for trading in currencies. So should you jump into the foreign trades right now? It is better to understand the benefits and risks of Forex trading with Bitcoins.
What are the benefits of Forex Trading with Bitcoins?
- High Leverage – Most of the Forex brokers offer high leverage for Bitcoin trading in ratios of about 1:1000. An experienced trader can use to their benefit. But such margins should be approached with care as they can magnify the loss potential as well.
- Decentralized valuations – One of the major advantages of trading Forex with Bitcoins is that there is no central bank to change the Bitcoin valuations randomly. This is why Bitcoins are free from geopolitical influences and macroeconomic issues like interest rates and inflation.
- No costs for transaction – All the trades are recorded digitally on public networks without the involvement of banks. Thus no transaction costs are involved in Bitcoins even for the global transfers. Brokers pass these benefits by not imposing any withdrawal or deposit fees. Thus trade profits improve. Bitcoins are gaining popularity and there are some associated risks. We can help with everything that you want to know and all those things that you should know. Get in touch with us at https://trustedbrokerz.com/contact-us/.
- Low costs of Trading – Most Forex brokers that accept cryptocurrency have low brokerage costs to attract new clients.
- Security – There is no need to reveal the credit card details or bank account with Bitcoins. This is especially true when you are dealing with foreign brokers. This is very advantageous in terms of financial security.
- No global boundaries – Transaction through Bitcoins have removed the equation of global boundaries. Using Bitcoins, a trader from any country can trade with a trader from a very different part of the world. This is, however, subject to regulations.
What are the risks of Forex trading with Bitcoins?
- The Bitcoins trade on multiple exchanges and the exchange rates can vary. Traders must ensure that they understand which Bitcoin exchange rates Forex broker would use.
- When receiving the Bitcoin deposits from the clients, brokers sell the coins immediately and hold the amount in dollars. Even if the trader does not take a trade position immediately after the deposit, he will be exposed to the risk between the bitcoin to US dollar exchange.
- Bitcoin prices have been very volatile throughout its history. In the absence of any regulation, the unregulated brokers can use the volatility to their advantage and the disadvantage of the traders.
- The disposed bitcoins could be prone to theft by hacking from the digital wallet of the broker. You should look for brokers who have insurance protection.
- The high leverage can be risky for newbie traders who do not understand the exposure.
- Cryptocurrency is very different from foreign exchange and is in a class of its own. Forex trading with Bitcoins essentially introduces a new currency which can impact profits and losses in very unexpected ways. Any money that has not been locked down in the base currency of the trader is a risk.