We’ve previously covered some of the best bitcoin brokers on the market and we’d like to build up on that by providing you with more information about Bitcoin forex brokers.
What is Forex Trading?
Forex trading, also commonly referred to as “FX trading” simply means currency trading. In other words, traders participate in the market by determining the price of one currency against another currency.
It’s a lot simpler than it sounds. For example, if you have ever travelled overseas you have likely made a forex transaction. For instance, if you travel from the US to most of the European countries and you want to have cash in you instead of just credit cards, you would have to exchange your dollars for euros – the currency used in the EU. This is basically a forex transaction. Now, imagine spending 1 dollar to get 0.5 euros (not an accurate comparison – solely for educational purpostes). By the time your vacation ends, the dollar might have become more expensive against the euro, which means that when you exchange your euros back to dollars, you will receive less.
This is how forex trading works in a nutshell. The forex market is, of course, global, and it’s comprised of a range of different currency pairs that you can trade with.
In this regard, forex trading looks a lot like cryptocurrency trading, but instead of digital currencies, you use fiat.
A forex broker is an entity which would provide you with access to a trading platform which allows you to buy or sell currencies. A forex Bitcoin broker is the same company but it would also have to allow you to trade Bitcoins. A wide range of the forex brokers have already adopted cryptocurrency trading and offer their users access to the market. These are also referred to as cryptocurrency forex brokers.
Advantages of Forex Trading
The forex market is incredibly liquid and it has an immense daily trading volume. This provides certain benefits for those who want to make money out of it. Of course, it is absolutely critical to understand that forex trading bears a significant risk warning and it’s best to consult with a professional before putting any of your money in.
The benefits of trading forex include:
Incredible Liquidity
Liquidity is a term used to describe the ability of an asset to be quickly converted into cash without any price discount. In terms of trading forex, this means that traders can move substantial amounts of money in and out of foreign currencies with minimal movement of the price.
Traditionally Low Transaction Costs
The tranasction costs of trading forex are typically incorporated within the price. There is a term for that – it’s called spread. It refers to the difference between the buying and the selling price.
Traders Can Use Leverage
Forex brokers usually allow traders to use leverage. This is the ability to trade more money on the market in comparison to what you actually hold in your account. Imagine having $10 in your account and there is a leverage trading provided by your forex broker capped at 10:1. This means that you can trade $10 for every $1 you have in your account. In this case, you’d be able to control a trade of $100 using only your $10 capital.
Risk warning is in place because leverage trading could see your account drained a lot quicker.
Constant Action
The forex market doesn’t have a directional trading restriction. In other words, if you think that a currency pair such as USD / EUR will increase in value, you can either buy it or go long. On the other hand, if you think USD / EUR will decrease in value, you are free to sell it or go short.
There is a lot of action going on the forex market, simply because there is a tremendous amount of currency pairs you can trade with. Of course, it would depend on which ones your trading platform supports.
Disadvantages of Forex Trading
Naturally, Forex trading also has its disadvantages. These include:
Serious Risk Factor
Much like cryptocurrency trading, forex trading carries a serious amount of risk. Price uncertainty is constant. Professional traders take advantage of technical analysis, and a whole lot of trading instruments in order to minimize their risk. Technical analysis, however, is not that easy to understand and it requires a lot of expertise.
Volatility is High
If you want to start trading, prepare for serious volatility. This is also associated with serious risk. While the upside potential is undoubtedly there, you can also lose a lot of money pretty quickly.
Low Barrier to Entry and Lack of Knowledge
Cryptocurrency trading, as well as forex trading, are becoming particularly accessible and, what is more – popular. The low barrier to entry means that anyone, irrespective of whether they have any prior knowledge or not, can enter the market and lose their money.
What are Binary Options
A few forex brokers also offer the so-called binary options. This is one of the trading instruments which allows traders to capitalize on short-term price fluctuations. In other words, it allows you to decide whether a certain currency pair like, for example GBP / USD will go up or down in value. If GBP /USD goes up and that’s what you’ve traded, you get a pre-determined return on your investment. Binary options trading is also incredibly risky and bears a lot of risks.
How to Choose the Best Bitcoin Forex Broker
Choosing the best Bitcoin forex broker would require you to go through a range of different characteristics. These include:
- Location
- Trading Fees
- Order Book Volume
- Transparency
- Deposit and Withdrawal Limits
For a more in-depth look at all of the above and more, you can take a look at our piece on the best bitcoin brokers, as the same considerations apply for the best Bitcoin forex brokers.
One particularly important thing to consider if you want to begin Bitcoin trading through a broker is to take a look at the payment methods. Different platforms have various payment options and you need to choose one which fits your needs.
Best Bitcoin Forex Brokers
eToro
eToro is a company founded back in 2007 and it’s amongst the best bitcoin forex brokers. One of the interesting trading instruments this Bitcoin forex broker provides is the ability to copy a trader. In other words, you would be able to mimic the trades of someone that you have confidence in.
There is no additional cost to it and the spreads remain the same, regardless of whether you are currently copying someone or you are trading manually on your own. It allows bitcoin trading.
As it is with the majority of forex brokers, eToro has demo accounts that users can take advantage of to test out the platform and ensure it provides all the trading instruments they might need.
There are plenty of payment methods as eToro is one of the most recognizable forex brokers. You can deposit and withdraw using PayPal, Skrill, Neteller, WebMoney, credit cards, bank transfers, and whatnot.
Moneta Markets
Moneta Markets are a regulated Forex and CFD broker that offers traders access to a range of the most popular Crypto CFDs, Forex pairs, Indices, Commodities and Share CFDs of some of the biggest companies in the world, all at the lowest possible costs.
With some of the lowest spreads in the industry across all instruments, traders can open an account in just minutes and deposit funds using 20+ different cryptocurrencies, and start trading their choice of 300+ CFD markets via the Moneta Markets next-gen WebTrader Platform, or the popular MetaTrader 4 and MetaTrader 5 platforms.
The broker also offers all traders access to uncapped deposit bonuses, daily trading signals, a range of research and educational resources, and trading tools to help traders of all styles boost their edge, as well as 24/7 customer support.
Visit Moneta Markets to find out more!
SimpleFX
SimpleFX is another forex broker which allows cryptocurrency trading and, respectively – Bitcoin trading. It’s amongst the best Bitcoin forex brokers, as a matter of fact, as it offers a broad range of different tools users can take advantage of.
The trading platform has a very user-friendly interface and it guarantees quick and secure transfers. It has a very helpful API manager and it doesn’t have a min deposit or withdrawal requirement. The forex broker also offers a negative balance protection which will further reduce the chances of serious losses.
SimpleFX allows bitcoin trading and it is amongst the forex brokers which also have Bitcoin CFDs as an option, hence providing a greater variety of trading tools.
Besides bitcoin trading, you can also enjoy forex and indices markets.
Plus500
Plus500 is amongst the most well-known forex brokers and it is a bitcoin forex broker as well – hence, it allows bitcoin trading.
The company is headquartered in Israel, but it has subsidiaries in the UK, Australia, and in Cyprus. It is authorized and regulated by the Financial Conduct Authority and the CySEC.
Plus500 is amongst the Bitcoin forex brokers which offer a very powerful and robust Bitcoin CFD trading platform. There are a few different risk management tools that traders can take advantage of, which is particularly convenient.
Additionally, being amongst the best Bitcoin forex brokers, Plus 500 is translated in 32 different languages. Deposits and withdrawals can be made with a lot of different payment options such as PayPal, Skrill, credit cards, or bank transfers.
FXCM
FXCM stands for Forex Capital Markets. It was founded back in 1999 in the US and it was one of the pioneers when it comes to forex brokers.
It is also a Bitcoin forex broker and it provides two different contracts for difference when it comes to cryptocurrency trading: Bitcoin CFD and Ethereum CFD.
The platform allows for directional trading and provides for a fairly affordable market entry. You can also enjoy bitcoin trading with leverage if you want to increase your earning potential.
In terms of forex trading, the broker is known for a range of different training tools and research options, tight spreads, and ongoing 24-hour customer support during weekdays.
AVA Trade
AVA Trade is another trading platform which offers virtual currency trading. It’s amongst the trading brokers which have received regulatory approval across six different jurisdictions.
The company was established back in 2006 and it has Bitcoin CFDs on both of its platforms. You can trade both short and long positions. The platform has a demo account that users can register for to test it out.
Apart from virtual currency trading, users can also benefit from a range of forex reviews and a lot of different learning resources. The platform allows for a lot of payment methods to be used.
Conclusion
While there are plenty of different good bitcoin forex brokers, the essentials you’d have to have in mind are always going to be the same. Make sure that you find a trusted solution – one which has enough reputation, user reviews, and transparency because you’d be trusting it with your own money.
The abovementioned bitcoin forex brokers are not, by all means, all of those you can trust. They are, however, proven and reliable trading platforms with years of experience on the market and stellar reputation.
[Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Trading cryptocurrency is volatile and risky. Always consult with a trained financial professional before making any investment decisions. Some companies included in this article are premium partners or sponsors of Bitcoinist.]