Bitcoin CFD Trading Tutorial

Would you like to know how to trade the crypto currency Bitcoin via CFD securely in just a few steps? – Then this is the right page for you! I will show you how to trade Bitcoin CFDs in the following sections. This has enormous advantages over traditional trading on the crypto-currency exchanges and is a regulated and secure trade. Find out in a few minutes how you can invest in Bitcoins.

The enormous advantages of Bitcoin CFDs

CFDs (Contracts for Difference) are a regulated financial product that allows a trader to invest in any market with even small capital and leverage. The contract for difference is offered by a broker and has the characteristic that one can invest in rising and falling prices.

The first advantage is that this financial product is regulated and licensed. When trading, you only own this contract, so a wallet is not necessary. So trading is safer for the investor. In addition, a lever can be used optionally to maximize profits. Many CFD brokers also offer a professional trading platform, which allows analysis and good handling.

In summary, CFDs have several advantages over classic Bitcoin trading. Trading CFDs on crypto currencies is very easy for any trader. Trading accounts can be opened in a few minutes and the investment can begin.

The advantages of trading Bitcoin CFDs:

  • Regulated and secure financial product
  • Simple account opening and operation
  • Optional use of a lever
  • Investment in falling prices possible
  • Comprehensive service from CFD Broker and professional platforms
  • No wallet necessary
  • Select a reputable and secure Bitcoin CFD provider

For Bitcoin trading with CFDs, a reputable and secure provider must first be selected. This includes that the broker is officially regulated and licensed. In the table below you get an overview of my top 3 tested providers that offer a German service. Optionally a free demo account can be created to test trading with virtual credits.

Bitcoin CFD Trading instruction:

In the following section I would like to give you detailed instructions on how to trade Bitcoins very easily via CFDs.

Quick Start Guide:

  • Open a trading account with one of the recommended providers (upper table)
  • Optionally use a free demo account to test the platform
  • Deposit money into your trading account
  • Buy (long) or sell (short) Bitcoins via CFD

What can the Bitcoin platforms offer?

The Bitcoin trading platform for CFDs is offered free of charge by the broker. There are no additional costs for you. However, the trading platform can vary from provider to provider. In principle, however, the trade execution is always the same.

The platforms are available for every device. You can use your computer or smartphone. This has the advantage that you can access your Bitcoin portfolio at any time. In addition to many helpful tools of the trading platforms for analysis, the brokers also offer separate training material that can help you with trading.

The advantages of the Bitcoin CFD trading platforms:

  • One login for each device
  • Built-in support and service functions
  • Numerous indicators and tools for analysis
  • New market news about crypto currencies
  • Fast trading with just one click
  • Invest also in falling prices
  • Transparent fee structure

Charting and analysis

In the CFD trading platforms you have almost infinite possibilities to analyze the Bitcoin Chart. You can use different chart settings or time units. Whether you want to open a short-term position or a long-term position, the platform can be configured individually.

Free indicators are available and can be duplicated directly on the chart. Depending on your preferences, settings can be made here according to strategy. Among other things, drawing tools are also available, allowing technical analysis to be performed.

Facts about charting:

  • The platforms can be individually adapted to your strategy
  • Use different chart settings
  • Customizable indicators and drawing tools
  • Opening an account – Practice first in the demo account

I recommend that you first open a Bitcoin demo account and test the trading platform. CFD brokers offer a completely free demo account with virtual funds. You trade without risk and only with play money. This imitates trading with real money.

Opening an account is very simple and fast. Enter your personal data and verify the account. The provider will ask you for further data and will guide you through the account opening process.

How to open your first Bitcoin Trade

In the following picture you see the typical order mask in the Etoro trading platform. Click on new order or on buy/sell in your trading platform. Before doing so, you must of course select the Bitcoin Chart. The amount indicates the position size. In this case the Bitcoin is traded in USD $. Smaller positions of $50 can also be opened for example.

The positions can also be hedged by a Stop Loss and Take Profit. These are automatic tools to close the position at a certain price. The trader must then decide whether to buy or sell. Your position is opened directly in the market.

Quick guide:

  • Select the Bitcoin as your trading symbol
  • Choose a suitable volume for your position (you can use a lever)
  • A direct market execution or limit order is possible
  • Protect your position with a Stop Loss
  • Invest in rising or falling prices

How to hedge your positions in Bitcoin CFD:

In the trading platform you can set a Stop Loss and Take Profit. These are price marks for a loss and a profit. The Stop Loss automatically closes your position at a certain price in loss and the Take Profit closes your position at a certain price in profit. These tools allow you to carry out optimal risk management.

  • Stop Loss automatically closes your position at a loss
  • The Take Profit automatically closes your position in profit

The use of a lever in Bitcoin CFD

Bitcoin CFD Brokers offer trading with or without leverage. The provider BDSwiss, for example, has a maximum leverage of 1:25 and with eToro you can trade Bitcoin without leverage.

The use of leverage allows you to open larger positions in the market. You need less capital in the form of a margin for a $10,000 trading position.

Example calculation with 1:50 leverage:

A trader adds 1000€ to his account and wants to trade Bitcoin speculatively. The account has a 1:50 leverage on crypto currencies. A maximum position size of 50,000€ in Bitcoin would be possible (1000€ x 50 leverage = 50,000€). However, this would immediately result in a margin call and the broker would automatically stop you, as the security deposit of 1000€ was immediately used up.

Intelligently, the trader wants to trade exactly one Bitcoin. The current price is currently 9000€ from one Bitcoin. He opens the position with a volume of 1.00. This is possible due to the high leverage of 1:50. A lower margin of only 180€ is required from the CFD broker (9000€ / 50 leverage = 180€).

In summary, the leverage allows you to open higher positions. However, the current price fluctuation of the high position will directly affect your account balance. If the price would drop from 9000€ to 8000€ and the trader would buy. Then his account would be close to 0, so the leverage must be used wisely and the trader should not open too large positions.

The risks of leveraged Bitcoin trading

Using a lever can be very risky. Overall, it always depends on the trader and what risk he is willing to take. You should not overestimate yourself and therefore practice in the demo account before. Furthermore, there is the fear of an obligation to make additional contributions. Since Bitcoin is very illiquid, in the worst case it is possible that positions are not executed or are executed too late.

Through a high leverage, the account can theoretically end up in negative balance if the market shoots against the planned trading direction. However, this is not possible because the regulated CFD brokers have a protection against a negative balance. As soon as the necessary margin is no longer available, the position is forced to be closed.

“THERE IS NO MARGIN REQUIREMENT WITH THE REGULATED CFD BROKERS”

Bitcoin is a highly volatile financial instrument. Ultimately, however, the trader always determines his own risk in the form of the position size and the stop loss. Don’t overestimate yourself and also invest sensible amounts that you can cope with in case of a loss. There is no profit to be made without risk.

What fees can be charged for Bitcoin Trading?

The CFD broker must be financed and charges an additional spread every time a position is opened. You can also see this transparently in the trading platform. Depending on the account model a trading commission may also be charged. In principle, the CFD broker always charges a fee when opening and closing a position.

CFDs can even be cheaper than traditional trading on crypto exchanges. Often the order execution is delayed there and you have to wait several minutes for your trade. With CFDs you can open your position directly.

The spread is the difference between the buy and sell price. It is higher than the current market spread and the broker takes this difference as commission. There may also be a financing cost to the position. When trading with leverage, you use borrowed capital to maintain the position. However, the financing fee is only due if the position is held overnight.

These fees may apply:

  • spread: Difference between the buy and sell price.
  • Commission: Fixed fee per trade
  • Financing fee (swap): leveraged positions must be financed. The fee is only due overnight.

Why is Bitcoin Trading so popular with speculators?

In addition to the interesting development of this crypto currency and the system behind it, Bitcoin has a great appeal for most traders. This is due to its strong movements, which often run in one direction for several days in a row. It is possible to double your invested capital in a few days.

In contrast to normal markets (stocks, Forex, etc.), Bitcoin moves very fast. The last few years have shown that the price can be multiplied very quickly. Especially due to the attention of the media and other institutions the price skyrocketed.

In my opinion, Bitcoin is currently to be considered a pure speculative object, because the price fluctuates far too much for a normal currency.

Facts about Bitcoin:

  • Highly volatile instrument.
  • Has less liquidity than normal currencies
  • Is driven by hypes
  • doubling of capital possible within a few days
  • Interesting system behind the Bitcoin

My conclusion: Is Bitcoin Trading via CFD safe? – – 100%

In summary, Bitcoin trading via CFD (contract for difference) is a secure alternative to conventional crypto exchanges. Not only are the providers regulated, no wallet is required and you are protected from hacker attacks. In the past, there have been many hacks from crypto exchanges.

Trade Bitcoin 24/7 with just a few clicks on a professional trading platform at low fees. You benefit from high liquidity, leverage and fast execution. CFDs clearly win for me against conventional crypto exchanges.

Furthermore, a reputable provider should be chosen. On this page I have shown you a complete guide to trading Bitcoin CFDs. Now it’s up to you whether you want to start.

Good luck with your trading!

To the test reports of the providers:

  • Etoro
  • BDSwiss
  • IQ Option

Read my other articles about CFD Trading:

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