Like virtually every industry touched by the use of cryptocurrencies, the world of online forex trading is experiencing welcome enhancements as it integrates the use of bitcoin into their trading platforms.
While there is no reward without risk, bitcoin forex provides the foreign currency exchange trader with several notable advantages over fiat currencies.
Bitcoin is uniquely well-suited for use in forex trading due to its decentralized nature that makes it beholden to no financial institution or government. Bitcoin effortlessly transcends international borders and traditional means of financial oversight, making it a natural choice for a global online market like forex.
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What’s more, while the global forex market runs around the clock 24/7, so do cryptocurrencies. Unlike fiat currencies, there are no banks to be closed or after-hours financial transactions to hold things up. But the benefits of cryptocurrency usage for forex trading do not end there. As any experienced forex trader knows, you are making financial transactions on an ongoing basis. Bitcoin transactions are famously fast, and equally or more important, the transactions are relatively inexpensive. These are two great assets to any currency trader. In addition, you’re able to move bitcoins around anonymously, making it exponentially more valuable to traders who are interested in protecting their privacy.
How Forex Trading with Bitcoin Works
First let’s look at a typical forex trade. Let’s assume you have $100 in your forex account. If you believe you know of a foreign currency whose value is about to go up in relation to the U.S. dollar, you’ll probably want to buy that currency. Let’s say you think the value of the Euro is about to go up the exchange rate for the Euro is currently 1USD to .94EUR. If the value of the Euro goes up to 1USD then you have made 6% profit on your money. That’s a simple example of a basic trade on the forex market.
When it comes to bitcoin forex trading, at face value it works in a similar way to using any other type of currency: BTC has a currency value and you can buy, sell or trade it with any other currency at that value. However, as mentioned before, the true benefits of bitcoin for forex trading come in other ways.
Benefits of Using Bitcoin for Forex Trading
One of the biggest benefits of using bitcoin for forex trading is that, as opposed to fiat currencies like the United States Dollar, the British Pound or many others, there is no government or central bank that is able to step in and randomly manipulate its valuation. Decentralized cryptocurrencies like bitcoin operate entirely beyond the sphere of geopolitics or issues specific to particular countries.
We’ve already mentioned benefits of bitcoin forex like the privacy enhancements, the speed/cost of financial transactions, and removal of global boundaries but this cryptocurrency provides some other advantages more specific to trading on the forex market. One is that if you are using bitcoin, most forex brokers will often offer you high leverage, sometimes as high as 1 to 1000. While this can be an excellent money-making tool if you know what you are doing, less experienced traders must exercise caution because it can also enable you to sustain greater losses. In an effort to attract traders using bitcoin, many brokers are also offering very low trading fees and low minimum deposit amounts as incentives.
It’s important to never risk an amount of money that is beyond your comfort level. Most professionals set their limits before they begin and have the discipline to stick to those limits. Comb through the reviews of the various bitcoin forex brokerages on our site, and once you’ve made your selection, use your calls and puts wisely! Enjoy!