When you trade forex with Bitcoin, you are essentially speculating on the price movement of the crypto against other fiat currencies; or cryptocurrency trading. For example, if you think that Bitcoin will appreciate against the Australian Dollar, you would go long on BTC/AUD. There are several different ways that you can go about it.
Find a reputable forex broker that offers BTC trading
The first step is to find a reputable forex broker that offers BTC trading. There are several different ones out there, so it is essential to do your research and make sure that you find one regulated by a reputable body such as the Australian Securities and Investments Commission (ASIC).
You can start your research at Forex Peace Army, Baby Pips, and TrustPilot. Once you have found a few potential brokers, take the time to read through their reviews and compare their features. You might want to consider spreads, leverage, customer service, and deposit/withdrawal options.
Open an account and deposit funds
Once you have chosen a broker, the next step is to open an account and deposit funds. Most brokers will require you to go through a verification process before starting trading. It usually involves providing some personal information and proof of ID.
Once your account is verified, you will need to deposit funds into it. You can use various methods, such as bank transfer, credit/debit card, or e-wallet.
Most brokers will require you to deposit a minimum amount of money before you can start trading. It is typically around $500-$1000.
Start trading BTC
Once you have deposited funds into your account, you are ready to start trading Bitcoin. The first thing you’ll need to do is choose which currency pair you want to trade. The most popular ones are BTC/USD, BTC/EUR, and BTC/GBP.
Once you have chosen your currency pair, you need to decide how much you want to trade, known as your position size. Your position size is calculated in units of the base currency.
For example, if you wanted to buy 10,000 units of BTC/USD, your position size would be 10,000 USD.
Most brokers will allow you to trade fractions of a unit, so you don’t have to have the total amount available in your account.
Once you have chosen your position size, you can place your trade. Most brokers will have a simple order interface that you can use to do this.
If you think that the price of BTC is going to increase against the USD, you will place a buy order. If you think it will decrease, you will place a sell order.
Your broker will then execute the order at the current market price.
Monitor your trade and close it when you are ready
You need to monitor your trade and ensure it is going in the right direction. You can do this by looking at the chart for your currency pair.
Most brokers will also provide some newsfeed that you can use to stay up-to-date with what is happening in the markets. When you are ready to close, you can place an order to sell or buy at the current market price. Your broker will close the position, and you will receive your profit or loss.
Risks of trading forex with Bitcoin
The first and most obvious risk is that of volatility. Bitcoin’s price is volatile and is known to fluctuate by large amounts daily, meaning that your profits can quickly turn into losses if you are not careful.
It would be best to consider the risk of liquidity. When you trade forex with Bitcoin, you effectively trade a currency that is not widely accepted or traded, meaning it can be hard to find buyers or sellers, and the market may be illiquid.
Risk of theft
Another risk to consider is theft because Bitcoin is stored electronically, making it susceptible to hacking and theft. By keeping your Bitcoin on an exchange or in a wallet that is not adequately secured, you risk losing your Bitcoin to hackers.
Another risk to consider is regulatory risk. The regulatory landscape for Bitcoin and forex trading is still relatively unclear, meaning there is a risk that regulations could change in the future, which could harm the price of Bitcoin and your ability to trade it.