Bitcoin trade 2020 – worth knowing to the trade with Bitcoin, the Top crypto currency!
The Bitcoin put in the past occasionally rapid course fluctuations in shortest time, which did not remain unnoticed by traders. The interest in the digital currency is still noticeably present. Who would like to enter into the trade with Bitcoin, does not only see itself placed before the chances and risks, which the volatile crypto currency brings with itself. In addition, there are different ways to invest money in Bitcoin. Trading via a CFD broker presents a possibility that does not require a Bitcoin wallet.
Invest in digital currency
Trading Bitcoins with leverage
Bitcoin CFDs: participate in the performance of Bitcoin
Bitcoin price with partly enormous fluctuations
What are Bitcoins? – briefly explained
Even though the Bitcoin trade is to be the focus of this article, we would like to introduce important features and questions of the well-known crypto currency – What is Bitcoin? Bitcoin explanation: Bitcoin or BTC for short is a digital currency that was introduced in 2009. If you are looking for the developer of the Bitcoin payment system, you will come across the pseudonym Satoshi Nakamoto, around which various theories are entwined. The transactions within the Bitcoin network are carried out via the block chain. If the block chain is described superficially, it can be described as a digital register that operates decentrally. Neither banks nor authorities are intermediaries.
Bitcoin units are generated via mining. In order to be able to mine Bitcoin, powerful support is now required, for example in the form of an appropriate graphics card. The block chain grows when new blocks are added. In total, a maximum of 21 million Bitcoin can be created. Bitcoin is not only created electronically, but also stored. Anyone in possession of Bitcoins needs a compatible wallet to manage the Bitcoins. There are different Bitcoin wallets that can be used to store the coins. Both paper wallet and online wallet represent possibilities.
Bitcoins are sent to a generated Bitcoin address. Personal data of the parties involved, such as the name, are not visible during the transaction. The transactions carried out within the Bitcoin network are stored and are publicly accessible. In terms of market capitalization, Bitcoin leads the list of crypto currencies.
What are the options for trading with Bitcoin?
Quite a few traders take a daily look at the Bitcoin exchange rate to keep up to date with the latest developments. There are different ways to invest in the probably best known crypto currency. Whoever buys Bitcoins as an investment bets that the price will rise. The past years showed that the Bitcoin course puts at short notice partly enormous fluctuations. So far there have been phases of rapid price increases, but on the other hand there have also been phases with drastic price drops. The Bitcoin sometimes shows a high fluctuation margin. Bitcoin trading via relevant Bitcoin exchanges and marketplaces is also possible for private investors.
With Bitcoin marketplaces, participants can place purchase and sales offers online on the marketplace to find a suitable trading partner. If Bitcoins are to be purchased via one of the crypto exchanges, this is usually done automatically after the “buy order” has been placed. It may be worthwhile to compare the Bitcoin prices of the various crypto exchanges. A regulated trading environment is largely absent at the crypto exchanges. In addition to the purchase of the digital currency, financial products such as Bitcoin certificates indicate investment opportunities for which the direct purchase of Bitcoin is not necessary.
For trading Bitcoin CFDs, traders do not need a Bitcoin wallet because the digital asset is not purchased. Rather, when trading Bitcoin via CFDs, traders can participate in the performance of the asset. If you are not interested in holding digital assets in the wallet to wait for a suitable time to sell, trading CFDs on Bitcoin is another way to speculate on its price movement.
How does trading Bitcoin CFDs work?
Those who have chosen to trade Bitcoin CFDs need a trading account with a CFD broker. Before deciding on a particular provider, important criteria should be considered. It is also necessary to take a look at the trading offer to ensure that Bitcoin is offered as the underlying instrument for CFD trading. Crypto currencies have not only recently found their way into the trading offer of many CFD brokers. Some brokers followed the customers’ requirements years ago and expanded their product range to include Bitcoin CFDs. It is not unusual for CFD trading to require a minimum deposit to capitalize the trading account.
Once the trading account is loaded with funds, it can go to trading. Trading with contracts for difference (CFDs) is usually realized with leverage, so that the price development of the underlying asset is “leveraged” accordingly. It should be noted that leverage works in both directions, i.e. both for gains and losses. In order to open a CFD position, a security deposit (margin) must first be deposited. Due to comparatively low stakes, larger volumes can be moved in CFD trading.
How does Bitcoin trading via CFD work: It is also possible to go long or short when trading Bitcoin CFDs. If there is an expectation that the price of the Bitcoin will rise, a long position can be opened. CFDs on Bitcoin also allow traders to go short, which allows speculation on a falling Bitcoin price.
Leverage Bitcoin – what works for private traders?
CFD leverage is one of the most prominent features of Contracts for Difference. The level of leverage should be chosen with care, as a high leverage has a correspondingly strong effect on price movements. There is a short formula that can be used to calculate the leverage of Bitcoin CFDs and of course CFDs on other underlying assets. Here, 100 is divided by the margin insert – 100/margins insert = leverage. When trading Bitcoin via CFDs, traders should have mastered the calculation of leverage. The amount of the maximum leverage plays a relevant role for both private traders and professional clients.
CFD brokers based in the European Union (EU) must follow the guidelines of the European Securities and Market Authority (ESMA). The measures also concern the maximum leverage that traders can use when trading CFDs. A leverage restriction has been adopted by the aforementioned authority to protect retail investors. Anyone who holds a CFD account as a retail customer will have different leverage options than professional customers. Retail investors can usually only trade Bitcoin CFDs and other crypto CFDs with a maximum leverage of 2. This results in a margin requirement of 50%. There is also a leverage restriction for other asset classes:
Major pairs: maximum leverage of 30
Forex Minors: maximum leverage of 20
most raw materials: maximum leverage of 10
Shares: maximum leverage of 5
Those who wish to trade CFDs with higher leverage must apply for a CFD account for professional clients with their broker. In order for the account to be converted, the trader must meet certain requirements.
What does a CFD broker do?
Anyone who has already gained experience in securities trading will know that a broker acts as an intermediary between the client and the respective exchange. Traders place an order, which is executed by the broker. Securities can be traded on the stock exchange, but also off-exchange via a trading partner. Trading CFDs is usually realized via off-exchange trading. CFD brokers are usually providers who have specialized in the financial product. A CFD position on Bitcoin can be opened after the margin required by the broker has been deposited. The amount of margin required for the position depends on the selected underlying asset.
There are brokers on the market with different market models such as Market Maker and No Dealing Desk Brokers. If the broker acts as a market maker, he determines the conditions of the contracts. The broker provides a trading platform so that customers can trade CFDs. Orders can be placed via the trading platform, which usually also applies to price analysis. For price analysis, numerous brokers provide various tools such as charts and indicators via the trading platform.
Good to know: Do Bitcoin taxes have to be paid on profits when trading? Profits from trading Bitcoin CFDs are taxable. In Germany the final withholding tax rate is 25%, plus the solidarity surcharge and church tax if applicable.
How do I find the right CFD broker?
The crypto currency trade also meets with interest with many investors from Germany. The Bitcoin trade Germany via a CFD broker located here is regulated by the Federal Financial Supervisory Authority (BaFin). A secure trading environment is an important factor when choosing a broker. Not only brokers in this country are controlled by a competent supervisory authority. As a rule, a close look at the broker’s website reveals whether the broker is controlled by a competent supervisory authority and by which one. The service offered by a provider from Germany naturally has the advantage of German-language support. In the meantime, quite a few CFD brokers based in other EU countries offer multilingual customer support in order to better respond to the needs of an international customer base.
To consider the trading conditions when choosing a suitable broker is the first priority for many traders. A minimum deposit is not uncommon for CFD accounts. However, the minimum deposit should not create an insurmountable hurdle. Anyone trading on the performance of Bitcoin via CFDs should also be aware of the trading costs. The narrowest possible spread should also be taken into account, as well as costs that can be incurred through overnight fees.
Important criteria when choosing a broker:
Functions and usability of the trading platform
In this section not yet listed, the trade offer. Who would like to act generally with Krypto CFDs and is not specified thereby on the Bitcoin as underlying basis value, value might put on as extensive a trade offer as possible at crypto currencies. The trading of CFDs is implemented via the broker’s trading platform, which should be characterized among other things by fast order execution.
Trading costs – you should know that!
When investing money, costs can arise which should be offset against any profits. It is possible to enter Bitcoin trading via CFDs if an account and securities account have been opened with a CFD broker beforehand. Not only brokers offer CFD trading, but also various direct banks. A cost advantage can arise with online brokers through free account and securities account management. The list of prices and services indicates whether the broker offers the services mentioned free of charge or charges fees for them. Depending on the broker or direct bank, fees may also be incurred for the management of the securities account.
Now to the trading costs, which in CFD trading are primarily represented by the spread. The spread indicates the difference between the buy and sell price. With many brokers there is a variable spread. So that interested traders can inform themselves, many brokers indicate the minimum spread, which is available on average. There are also brokers on the market who offer account models with fixed spreads. However, these spreads are often higher than for accounts with variable spreads. There is no fixed maturity for trading Bitcoin CFDs. Traders can decide for themselves when to sell a CFD position. There is no maturity limit on most CFDs. An exception is made here for future CFDs.
Important cost factors at a glance:
Fees for account and securities account management
Fees for overnight positions
It is possible to hold CFDs overnight and overnight. If CFD trading is to be implemented with a long term investment horizon, traders should be aware of the fees that may apply to overnight positions.
For which traders is Bitcoin trading suitable?
Not only professional traders are interested in trading with Bitcoin. The Bitcoin hype has not passed many small investors by either. Bitcoin is very volatile, which can lead to strong price fluctuations. It shows up difficult to estimate the future course of the price. Influence on the Bitcoin course can take numerous factors, which makes the market analysis additionally more difficult. Who would like to invest capital in Bitcoin, must be ready to take a certain risk. It is alike whether the investment is made by the direct purchase of Bitcoins or by the Trading of Bitcoin CFDs.
Bitcoin trading requires a profit-oriented investment strategy in which the trader should be aware that losses can also occur. A certain capital strength is required if Bitcoins are to be bought. CFD trading shows the advantage here that positions can be opened even with low capital investment. In the case of such an eventful course of prices, as Bitcoin shows, it makes sense to keep up to date with price developments. This is particularly important if you have already invested in Bitcoin. Bitcoin Express Trading makes it possible to acquire coins particularly quickly.
An investment in Bitcoin is speculative and can be interesting for traders who are relatively willing to take risks. CFD trading in crypto currencies reveals further factors that need to be taken into account when measuring opportunities and risks. The leverage effect, which already affects even small price movements, should be mentioned superficially. Regardless of whether the price rises or falls.
Bitcoin shows a turbulent price trend
The price development of the Bitcoin is an important aspect for traders who want to invest in the digital currency. Not only the current price level is of interest, but also the historical price data. Bitcoin was introduced in 2009, when the history of the well-known crypto currency began with the generation of the first 50 blocks. Since then, a lot has happened in terms of price development. In 2017, the Bitcoin exchange rate gained special attention due to a rise that can certainly be described as rapid. When looking at the course of the share price so far, the increase in the share price that Bitcoin has achieved in the past years is naturally striking.
Whoever would like to get closer to the price development can do this for example via a Bitcoin-Euro Chart. By the graphic representation in the Chart the historical course of the Bitcoin is clearly illustrated. In addition, the chart display enables a quick overview of highs and correspondingly also of lows. In the settings of a chart there are usually different time intervals in which the price trend can be viewed. Furthermore, there are different chart types, among which the line chart is probably one of the best known. This type of chart illustrates the price trend by connecting the closing prices with a line.
The long-term price development up to the present day can be easily viewed via a chart. There are various online options for this. If you already have a trading account with a broker and have access to a trading platform, you will usually find valuable information about the price trend there as well.
Try out Bitcoin trading via CFDs via demo
For newcomers to the crypto market, it is not only a question of the opportunities and risks associated with Bitcoin trading. In addition, the chosen financial product should match their personal risk appetite. An investment in Bitcoin requires a rather profit-oriented investment strategy. Initial Bitcoin experience with the trading of Bitcoin CFDs does not necessarily have to be made via a real money account. In the service spectrum of numerous CFD brokers there are free and non-binding demo accounts that can be used for training purposes. The advantages of a CFD demo account are not only presented under the aspect of being able to test the trading environment without risk.
Furthermore, trading strategies can be tried out without using real money. Those who register for such a demo account do not have to deposit real capital. The trades are made with virtual amounts. For this purpose, the respective broker fills the demo account with virtual funds. How high this credit balance is, depends on the respective broker. In addition, the demo accounts on the market sometimes also differ in the period of use. Some demo accounts are only available for a short period of a few weeks after opening. Others, however, do not have a fixed demo duration.
The demo account allows traders to explore the various functions of the trading platform. However, the functional scope of the demo account may differ from that of the real trading account. It makes sense if live spreads are also offered via the demo version. Skills in placing orders can also be practiced via a demo account.
Preparation for trading Bitcoins
Good preparation for trading in speculative financial products should not be neglected. Before money flows into an investment, it is important to be informed not only about the expected returns, but also about the risks that can lead to possible losses. Diversification can reduce the risk by investing in different financial instruments. When all the capital is invested in Bitcoin trading, the success or failure of the investment depends on only one asset. Many brokers would like to facilitate the entry into CFD trading with content-rich educational offers. The content is provided through the following channels, among others:
Such educational opportunities often convey much more than just basic knowledge about the financial products offered. In order to make attentive to the tradable crypto currencies, some brokers make themselves the trouble to deal more near with these. Meanwhile the market for crypto currencies points not few investment possibilities out, which exist beside the Bitcoin Trading. As already mentioned before, traders can concern themselves risk-free with the trading environment with the help of a demo account. But video tutorials on the trading platform can also illustrate the handling of important functions.
Which trading strategy a trader chooses depends on various factors. Those who pursue a short-term investment horizon may be interested in day trading. In day trading, a position is opened and closed within one trading day. When trading Bitcoin CFDs, day trading has the advantage that the position is not held overnight, which avoids additional costs.
Trading Bitcoins in Germany
Meanwhile Trader on-line many possibilities find, in order to exchange Bitcoins against euro. The Bitcoin trade Germany can be accomplished also over one here resident market place. World-wide the selection at crypto stock exchanges and crypto market places shows up, around a multiple larger. There are also German providers in the Bitcoin CFDs sector. There are various reasons for choosing a provider based in Germany. A German-language customer service facilitates communication with the support team, which prompts quite a few traders to search specifically for a German CFD broker.
Anyone trading Bitcoins through a CFD broker should attach importance to a convincing hedging environment. For CFDs to be traded, the trading account must be capitalized. In Germany the legal deposit insurance is effective, which protects customer funds up to an amount of 100,000 Euro per customer. In addition, customer funds must be kept separate from company funds. As part of the security, it should also be mentioned that payouts are made to the customer’s reference account. In Germany, BaFin is responsible for controlling brokers.
Regardless of whether Bitcoins are to be purchased through a provider or traded via CFDs, the decision should be based on the range of services offered and the conditions. It can be stated that Bitcoin trading is also a major issue for traders from Germany.
CFD trading with other crypto currencies
The crypto currency trade is not limited to the Bitcoin. Anyone looking around the crypto market will notice that numerous digital currencies have been added in recent years. Crypto currencies other than Bitcoin are often referred to as Altcoins. So far, no Altcoin has been able to push Bitcoin from the throne. At least not in terms of market capitalization. Some time after the introduction of the Bitcoin further crypto currencies went to the start. Litecoin (LTC), for example, went to market in 2011, followed by Ripple (XRP) in 2012. One of the best-known crypto currencies is certainly Ether (ETH), which has been on the market since 2015.
The crypto trading offers of the various CFD brokers sometimes differ significantly in the number of crypto currencies that can be traded. The mentioned Altcoins can be found among the services of many brokers. CFD trading on Bitcoin Cash is also frequently offered. Bitcoin Cash is a fork of Bitcoin, available since 2017. The list could be extended considerably, but this would go beyond the scope of this article. A short selection of Altcoins that can also be traded via CDFs is shown below:
Traders who prefer a large selection of tradable crypto currencies should inform themselves in advance about the scope of the trading offer. A reliable prognosis of the future price development is more than difficult also with the different Altcoins. Like the Bitcoin, Altcoins are subject to strong fluctuations. In order to find out which Altcoins are promising for an investment, a detailed information gathering can be useful.
Conclusion: speculate on price development with Bitcoin CFDs
Trading with Bitcoins can be done in several ways. In doing so, also small investors get the chance to invest in the crypto-market. Bitcoins can be bought and sold via national and international crypto-marketplaces. If speculation in Bitcoin is not to take place via a purchase, Bitcoin CFDs prove to be an alternative. CFD trading on Bitcoins makes it possible to speculate not only on rising prices but also on falling prices. By trading CFDs on Bitcoin, traders can participate in the performance of the well-known crypto currency. Small investors can trade crypto currencies with a maximum leverage of 2 via their CFD account.
The corresponding charts provide insight into the price development of Bitcoin. Over the presented time intervals settings can be made, so that for example also the price development of the past five years can be regarded. Traders must have a certain risk tolerance if they want to trade with Bitcoin. If a CFD account does not yet exist, traders must first choose a broker.
To allow potential clients to test the trading conditions, many brokers offer a CFD demo account. Virtual bets allow CFD positions to be opened to familiarize themselves with the process. In the crypto market, Bitcoin presents only one digital asset that can be used for CFD trading. A broker’s crypto trading offer may well contain multiple digital currencies.