Nowadays, Bitcoin can be used for forex trading. However, there are some risks you need to know before try it.
The Exchange Rates
Bitcoin can be used on multiple exchange rates and currencies. And, Forex broker usually only use one or several exchange rates for Bitcoin Forex trading service that they have. If you don’t understand about the exchange rate, you can lose lot of money.
Bitcoin system doesn’t have specific party that holds the order or regulations. Therefore, there are many possibilities of misused by unregulated broker. This will only make you lose more money, while give more profit for that broker.
For example, the exchange rates of Bitcoin are fluctuated from $500 to $560 in a day. Then, when you make deposit, the Forex broker can set the exchange rates for your Bitcoin at the lowest limit. So, for example you have to deposit 2 Bitcoin, you will only get $1,000.
However, when you want to make a withdrawal after you get profit from place your fund in right position, the broker will use the highest exchange rates. So, you only get 1.78571 Bitcoin ($1,000/$560 = 1.78571 Bitcoin). So, you can see that the value of your deposit has decreased quite a lot.
High Leverage Risk
For beginner, high leverage here means big loss. The high leverage has a chance to give you more money, if you make right trading. However, for beginner who doesn’t have too much experiences as well as good skill, you will only losing lot of your fund. So, we can say this trading is only for professional, for beginner, do not even try it. Things to Avoid when Doing Forex Trading
This is actually risk that you also need to face, when you use standard Forex trading method. However, with Bitcoin that you can only keep in your or broker’s digital wallet, there is a chance that someone can break and take it. To deal with it, you need to find Forex broker that has theft protection insurance.
The New System
Bitcoin and Blockchain is new system that hasn’t been implemented on current financial system. Although we have to admit, the world finance is going into this cryptocurrency direction, but for today, it’s not easy system to use.
Trading in forex with Bitcoin is indeed interesting. However, with that high risk, you may need to consider it as alternative. Remember, investment diversity is the secret to make profit.