Broker to Trading

BTC/USD is Bitcoin valued in US dollars. A Forex broker is typically a CFD provider, offering trading platforms designed for Forex and CFD trading. A number of CFD providers offer BTC/USD CFDs.

Bitcoin is a cryptocurrency which is at the heart of the Bitcoin Network. The Bitcoin Network allows peer-to-peer payments in Bitcoin to be made from wallet to wallet. Bitcoin uses Proof-Of-Work to power its network, in such as way as it does not need centralised control. Proof-Of-Work requires 'miners' to solve a computationally intensive problem to win the right to process Bitcoin transactions. By doing so, the miners can earn Bitcoin (mined in this way) and transaction fees. There is a limit of the total amount of Bitcoin to be mined, halved at intervals. This helps to create a deflationary currency which has seen its value rise over the years, punctuated by significant drops in value.

CFDs contracts are based on the value of Bitcoin across exchanges. A CFD lets the provider and the client exchange the value difference of the contract from beginning to the end of the trade. CFDs allow leverage (increasing leverage increases risk) and let the trader go long or short on the CFD. This means that the trader does not own any Bitcoin when trading a BTC/USD CFD and therefore does not need a wallet to trade it.

One reason for trading BTC/USD CFDs at a Forex provider is that they can be traded on the online trading platforms provided. For example, MT4 and MT5 may be offered. These platforms allow automated trading and offer tools for the trader who plans and executes their own trades. These platforms are optimised for Forex trading and may offer tools to be used by the trader who uses, for example, technical analysis to trade Crypto as well as news based fundamental analysis.

Another reason for trading BTC/USD CFDs at a Forex provider is that the trader can use the account structure provided for the range of markets offered by the broker. A trader who wants a BTC/USD Forex broker may also want to trade Forex, and brokers will tend to offer Forex alongside the Crypto CFD offerings (Forex is also typically traded as a CFD).

Crypto traders may wonder if they can apply the techniques used by Forex trader to BTC/USD CFD trading. There are a wide range of technical indicators used by Forex traders. However many of these indicators were in fact developed for Stocks, particularly in the US market (Forex brokers may also provide Stocks CFDs). But this does not tend to stop their appliction to the Forex market.

Thus Crypto traders could use these indicators as well, for indicating, to give an example of RSI, generalised overbought or oversold market conditions, therefore pointing to possible future outcomes in market direction. The trader can try out the tools offered by the broker on a demo account, these are offered either as a first sign-up account or to be added after a full live account sign-up. A demo account has virtual funds (not real money) and thus can be used to try out features and to practice trading on an on-going basis, without risking real money.

Fundamental analysis is a core part of Forex analysis, and there is plenty of news about BTC/USD to try and work out its potential influence on value. The provider may offer a news feed which can provide news about BTC and the wider economic landscape within which it operates as a valued asset.

Bitcoin is relatively highly valued, thus the trader may not be able to trade Bitcoin with the minimum deposit provided by the broker. This would require very small trade sizes or higher leverage, or a combination of both, which may or may not be available depending on a number of factors.