Last update: 28 May 2020
14 min read

Bitcoin Trading – How to Trade Bitcoin with a Forex Broker

Bitcoin trading is fast approaching a state where it can rival stock and forex trading and so you may already be asking yourself the following questions; why should I trade bitcoin? What even is bitcoin trading?

It’s pretty natural to have these questions, everybody did when first starting off. In this article, we will tackle these questions head-on and try to explain just how easy it is to trade bitcoin online. The information provided here is from experts that have decades of collective crypto trading experience, so you can rest assured you’re in safe hands.

In this article, you will learn the following:

  • Why bitcoin trading is a good idea
  • How to use a forex broker for BTC trading
  • How to get started
  • Strategies for beginners
  • How the cryptocurrency market works

 

The best forex brokers for bitcoin trading in June 2020

Broker
Summary
Min Deposit
Rating
XTB
Summary:Trade bitcoin CFDs and bitcoin crosses such as BCH/BTC. Award-winning proprietary trading platform.
Min Deposit: $250
98
Points
AvaTrade
Summary:Trade bitcoin, Bitcoin Gold (BTG) and Bitcoin Cash (BCH). 2:1 leverage for EU clients, 25:1 for non-EU clients.
Min Deposit: $100
97
Points
Plus500
Summary:Trade bitcoin and ETH/BTC CFDs. Enjoy leveraged 24/7 crypto trading.
Min Deposit: $100
96
Points
eToro
Summary:Enjoy 7 bitcoin currency pairs and 3 bitcoin/altcoin pairs. eToro CopyTrader social trading platform.
Min Deposit: $50
94
Points

Why trade bitcoin?

As you’re probably aware, bitcoin trading is incredibly popular right now. Its appeal comes from the fact that it provides great opportunities to profit and also offers many benefits over traditional forex or stock trading. Below, our experts have listed some of the most common reasons why you should consider bitcoin trading.

Trade a non-fiat currency – The main reason to get involved with bitcoin trading is the fact that it is decentralized. No government actions, economic issues or policies will be able to affect bitcoin the way they can affect traditional currencies pairs, such as the USD or the EUR. Bitcoin is not controlled by any entity, it is mostly “governed” by the people that trade it.

Enjoy 24/7 trading opportunities – Another reason why you may consider trading bitcoin is that the cryptocurrency market is 24/7, 7 days a week, 365 days a year. This means you can trade it whenever you like, as opposed to the forex market which closes on the weekends.

Benefit from volatility – Another popular reason why people trade bitcoin is that it’s a highly volatile asset. If you ever get asked what is bitcoin, just simply say that it’s synonymous with volatility. The asset can double in price overnight, and it has done so before. Volatility is also one of the main reasons why bitcoin trading is often more appealing than investing in bitcoin. The speed at which bitcoin changes its price means that it will be sold and bought again quite frequently. 

Utilize your trading skills – Learning to trade bitcoin is much easier than forex or stocks. There are slightly fewer tools to learn and the news that can affect the price is usually very easy to guess. If you do already trade forex or stocks then you’re in the perfect position to start trading bitcoin, as you’ll have already acquired the skills and mindset needed to succeed.

 

How to use a forex broker to trade bitcoin

You may be surprised to learn that trading bitcoin is not only possible on crypto exchanges. Many forex brokers have already seen the potential of bitcoin, as well as other cryptocurrencies, and are now offering crypto pairs on their platforms. They’re usually referred to as bitcoin forex brokers.

Bitcoin forex brokers may allow you to trade bitcoin currency pairs like BTC/USD, bitcoin CFDs, or both. It’s important to know the differences between these two trading opportunities.

  • Bitcoin currency pairs work in the same way as traditional currency pairs, like EUR/USD. If you buy a bitcoin currency pair, also known as going long or taking a long position, you are speculating that bitcoin will strengthen against the quote currency. Once the price rises, you can sell it for a profit. The opposite, taking a short position, means you think that bitcoin will weaken against the quote currency.
  • Bitcoin CFDs allow you to profit from the change in the price of bitcoin, without actually owning any. Here, your main concern is whether you think the price of bitcoin will fall or rise in the near future. Like with currency pairs, with bitcoin CFDs, you can take a long or short position.

The main difference between bitcoin currency pairs and CFDs is that when trading bitcoin currency pairs you need to also pay attention to the price of the fiat currency (in our example, this would be the US dollar). Currency pair trading is all about how the two currencies interact, whilst with CFDs, you only need to concern yourself with one asset.

It is important to remember that neither of these methods allows you to own bitcoin. When we look at investing vs trading cryptocurrencies, this is where the distinction comes from. Trading allows you to profit from price movements, without owning the asset itself.

How to start trading bitcoin – a step by step guide

With the help of our experts trading bitcoin is easy and safe. Whilst there are several things you need to understand and do before you can start trading bitcoin, our experts have explained each step of the process to make everything as easy as possible. Follow our step-by-step guide to start trading now.

1. Open an account with a forex broker

The very first thing you need to do is to find a high-quality bitcoin brokerage. To do this, you can use the list of brokers on this page. All of these brokers have been rigorously tested by experts and offer great cryptocurrency trading opportunities.

If you wish to check out other brokers, you need to first make sure that the platform allows you to trade bitcoin in crypto pairs or CFDs. Not all forex brokers offer bitcoin trading, so if you can’t see it as an option, you may wish to contact customer support.

Next, it’s time to see if the company is licensed. This information is usually disclosed either on the front page or the About Us page of the forex broker. If you can’t find this information either contact the company or leave immediately. A license is essential to avoid fraudsters. Of course, all of our recommended bitcoin brokers are licensed by highly respected bodies, such as the FCA and CySEC, so you can rest assured they are safe.

To open a bitcoin trading account, you will require the following information:

  • Your personal details (Name, Surname, Middle name, ID)
  • Employment details (where you work or have worked)
  • How much you know about trading
  • KYC documentation (usually an ID and photo of you)
  • An approved and supported depositing method (usually bank transfer or PayPal)

2. Create a trading plan

Once you’ve chosen your bitcoin trading platform, it is time to create a trading plan. This is the most important step you will take, as it can impact your profits. To be successful at bitcoin trading you need to be disciplined and methodical.

First, you’ll need to define a trading budget. As a trader, you should never deposit more than you’re ready to lose, as the market is sometimes very unpredictable and you never know what may happen. Next, it’s time to settle the psychological part of trading. Make sure that you have a clearly defined goal and know what you want out of the market. Make your profit expectations realistic, don’t just shoot for the moon.

Finally, you’ll need to choose a trading style. This generally depends on how often you wish to trade, and how much time you’re willing to spend on analyzing the market.

3. Conduct analysis and research

Successful bitcoin trading is reliant research and analysis. This usually starts with reading and understanding the latest bitcoin news. To find bitcoin news, you can use a trusted website or a group on social media channels such as Telegram. Alternatively, you can follow thought leaders on Twitter and gain insight from them.

Every forex bitcoin platform is kitted out with useful tools and features that you can use to make research easier. Things like support levels, resistance levels, and moving averages are some of the indicators you could use. It’s pretty much exactly like forex trading, but BTC tends to react more to news rather than trader sentiment.

4. Place a trade

Finally, once you’ve created your trading strategy and decided which indicators to use, it is time to place a trade and see all of your hard work pay off. We recommend trading with a demo account first so that you can get to grips with the markets before using your own money.

To place a bitcoin trade, you’ll need to download trading software from your broker. Then you’ll need to configure the platform for trading bitcoin. This means choosing the correct currency pairs and setting up the graphs. Usually, once you choose the currency pair, the graph will show up immediately. The most common pair is bitcoin to USD, so you may want to start with that.

Before you place a trade, you should also set up “Stop Loss” and “Take Profit” orders. These orders will help you avoid any unnecessary losses if the trade moves against you. These orders are also useful if you have to leave your device and are unable to watch the prices.

Bitcoin trading strategies

Before diving into bitcoin trading, you must understand the four main strategies that people use. This allows you to choose one that suits your trading needs and style. Below, our experts have explained all four popular bitcoin trading strategies in more detail.

  • Swing trading
    Swing trading is very similar to investing, as a trader keeps his or her position open for more than one trading session. This means having the trade open for a few days, weeks or even months. This strategy is perfect if you don’t have much time to keep watching the markets and making regular adjustments.
  • Day trading
    Day trading is, as its name suggests, a strategy where trades aren’t held for longer than a day. Usually, day traders hold positions for a few minutes up to an hour. Given the volatility of bitcoin, it is a useful strategy, as it allows you to take advantage of quick price movements.
  • Scalping
    Scalping is an amplified version of day trading. Scalpers usually open and close trades in a matter of seconds. The longest scalping trade you’ll see will last for a minute or so. Again, this can be a beneficial trading strategy as bitcoin is incredibly volatile.
  • Automated trading
    Automated trading is also quite self-explanatory. If your bitcoin brokerage provides or supports AI software, you can simply say how much you are ready to dedicate and what profits you are looking for on which cryptos. The AI then starts trading on your behalf, mostly using the scalping strategy.

Whilst these are the four most commonly used bitcoin trading strategies, there’s plenty more to learn. The advantage of bitcoin trading is that you can try different strategies to find one that works for you. In contrast, investors have to just buy their assets and wait for them to grow in price.

Customizing your strategy is always going to lead to more successful trades. We recommend learning more about cryptocurrency trading strategies before placing your first trades.

 

What moves the price of bitcoin?

Aside from employing a trading strategy, it’s also important to constantly ask yourself the question, ‘how does bitcoin work and what’s making the price of it move?’

In contrast to traditional asset classes, the price of bitcoin isn’t affected by social and political factors as it isn’t tied to a central government. Instead, it’s the decentralized nature of bitcoin which makes it liquid and very appealing to traders.

Here are five things that usually drive bitcoin prices:

  • Bitcoin supply – Bitcoin is a finite asset, which means its supply is limited. The more bitcoins there are in circulation, the less bitcoin costs.
  • BTC market cap – Although bitcoin is the most well-known cryptocurrency, there are many other altcoins gaining traction. This competition can drive prices down. For example, if some exciting news about another coin type is released, it may affect the value of bitcoin
  • Bad press – Any news about bitcoin scams, hacks, frauds or malfunctions can temporarily worsen trader sentiment and impact its price.
  • Regulations – As various countries invent new cryptocurrency laws and regulations, the price of bitcoin changes. In some cases, such as countries prohibiting bitcoin trading, the price is negatively affected as it creates a sense of doubt. In other cases, regulation can drive up the price, as trading bitcoin is seen as a safer and more mainstream option.
  • Adoption – When large, trusted companies embrace bitcoin, the price of the asset generally grows. Big companies validate how useful and legitimate bitcoin is.

 

The difference between buying and trading bitcoin

It’s easy to get confused between buying and trading bitcoin. This isn’t helped by the fact that even specialists conflate the two ideas. To ensure that you know exactly what trading bitcoin entails, our experts have created this simple explanation:

  • Buying bitcoin is a long-term endeavor, which is why it’s associated with investing. People buy BTC, hold on to it for months or years and then usually sell it for fiat in the end.
  • Bitcoin trading is a short-term endeavor. When you trade bitcoin, you are essentially speculating whether or not the price of the asset will fall or rise. You don’t own bitcoin yourself but instead profit from these price movements.

Prefer to buy bitcoin? – Our recommended exchange

If you’ve realized you’d prefer to simply learn how to buy bitcoin, then we recommend choosing Coinbase.


Coinbase

Coinbase


Visit site
Coinbase is one of the largest cryptocurrency exchanges in the world that supports buying Bitcoin with USD through multiple options. The platform has some of the lowest commissions on buying Bitcoin, and also allows you to trade if for other cryptocurrencies should you want to. Coinbase is also one of the few registered and regulated exchanges operating in both the UK and the US.

What made bitcoin so popular?

We’ve discussed bitcoin trading, shouldn’t ignore the fact, however, that investing is what made bitcoin so popular. Since bitcoin has a finite supply, those that started investing early, when the price was low and supply high, managed to reap a lot of benefits when demand rose and supply dwindled. This was noticed by forex brokers too, and they began offering bitcoin currency pairs, CFDs and futures.

Bitcoin exploded in 2017 when the value of 1 BTC reached almost $20,000. At this time, stories of incredibly rich bitcoin miners made the news and the cryptocurrency turned mainstream.

Should you mine bitcoin?

You may have heard how a distant relative or a friend set up a bitcoin mining farm and made millions of dollars thanks to it. You may have concluded that bitcoin trading is a waste of time and that mining is what’s actually profitable. This was indeed true a few years ago, but nowadays it’s simply not the case.

The only way to learn how to mine bitcoin is by dedicating hundreds of thousands of dollars to equipment and real estate. Even then, you have to hope that the market does not slump at times and keeps on growing consistently. In today’s situation, that’s virtually impossible.

Thanks to increased volatility (meaning the price of bitcoin changes a lot), trading is now much more useful as miners cannot exploit those gaps of buying low and selling high Asking the question ‘what is bitcoin mining’ is almost redundant as the practice is a waste of money unless you’re a multi-million-dollar corporation.

Best and most trusted forex brokers in 2020

Broker Min Deposit Bonus Rating More
Forex.com (US) $ 50 Check Website ★★★★★

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FXChoice $ 100 15% ★★★★

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Nadex $ 250 N/A ★★★★

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Alpari $ 100 Cashback ★★★★★

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HYCM $ 100 $5000 ★★★★

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EasyMarkets (EU) $ 100 N/A ★★★★

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eToro $ 200 - ★★★★

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Pepperstone $ 200 N/A ★★★★

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FPMarkets $ 100 N/A ★★★★

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Broker Min Deposit Bonus Rating More
FXTM $ 10 N/A ★★★★★

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Alpari $ 100 Cashback ★★★★★

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ATFX $ 500 N/A ★★★★

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XTB $ 10 N/A ★★★★★

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Plus500 $ 100 N/A ★★★★

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XM $ 5 $25 Non-Deposit Bonus** ★★★★★

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eToro $ 200 - ★★★★

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HF Markets $ 50 N/A ★★★★★

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EasyMarkets (EU) $ 100 N/A ★★★★

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FBS $ 1 100% ★★★★

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Capex $ 100 N/A ★★★★

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FBS $ 1 100% ★★★★

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XTB $ 10 N/A ★★★★★

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FPMarkets $ 100 N/A ★★★★

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Instaforex $ 1 $20 ★★★

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Capex $ 100 N/A ★★★★

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Alpari $ 100 Cashback ★★★★★

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EasyMarkets (EU) $ 100 N/A ★★★★

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Avatrade $ 100 N/A ★★★★

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XM $ 5 $25 Non-Deposit Bonus** ★★★★★

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ForexMart $ 1 30% ★★★★

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FPMarkets $ 100 N/A ★★★★

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IQ Option $ 10 N/A ★★★★

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FBS $ 1 100% ★★★★

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Alpari $ 100 Cashback ★★★★★

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EasyMarkets (EU) $ 100 N/A ★★★★

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XM $ 5 $25 Non-Deposit Bonus** ★★★★★

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24option $ 100 50% ★★★★

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FBS $ 1 100% ★★★★

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ForexMart $ 1 30% ★★★★

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XTB $ 10 N/A ★★★★★

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Avatrade $ 100 N/A ★★★★

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Avatrade $ 100 N/A ★★★★

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ALPARI (GCC) $ 100 Cashback ★★★★★

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XTB (GCC) $ 0 N/A ★★★★★

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XM (GCC) $ 5 $30 non deposit bonus ★★★★★

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ForexMart $ 1 30% ★★★★

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Zulu Trade $ 100 N/A ★★★★

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IQ Option (GCC) $ 10 No Information ★★★★★

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AVATRADE (GCC) $ 100 20% on deposits over $1,000 ★★★★★

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Broker Min Deposit Bonus Rating More
FXTM $ 10 N/A ★★★★★

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Alpari $ 100 Cashback ★★★★★

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XM $ 5 $25 Non-Deposit Bonus** ★★★★★

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XTB $ 10 N/A ★★★★★

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ForexMart $ 1 30% ★★★★

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Avatrade $ 100 N/A ★★★★

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IQ Option $ 10 N/A ★★★★

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Broker Min Deposit Bonus Rating More
Alpari $ 100 Cashback ★★★★★

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XM $ 5 $25 Non-Deposit Bonus** ★★★★★

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XTB $ 10 N/A ★★★★★

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Pepperstone $ 200 N/A ★★★★

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Avatrade $ 100 N/A ★★★★

Review
FBS $ 1 100% ★★★★

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EasyMarkets (EU) $ 100 N/A ★★★★

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IQ Option $ 10 N/A ★★★★

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Broker Min Deposit Bonus Rating More
FBS $ 1 100% ★★★★

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FPMarkets $ 100 N/A ★★★★

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Avatrade $ 100 N/A ★★★★

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Zulu Trade $ 100 N/A ★★★★

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Broker Min Deposit Bonus Rating More
Alpari $ 100 Cashback ★★★★★

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XM $ 5 $25 Non-Deposit Bonus** ★★★★★

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ForexMart $ 1 30% ★★★★

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FBS $ 1 100% ★★★★

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EasyMarkets (EU) $ 100 N/A ★★★★

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IQ Option $ 10 N/A ★★★★

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Zulu Trade $ 100 N/A ★★★★

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Avatrade $ 100 N/A ★★★★

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Instaforex $ 1 $20 ★★★

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Frequently asked questions about bitcoin (FAQs)

Can you trade bitcoin on forex? Arrow
Is forex and bitcoin trading the same? Arrow
How do I start trading bitcoin? Arrow
Can I make money trading bitcoin? Arrow
Can I trade bitcoin on MT4? Arrow

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