When Speaking of Forex, the image of currency trading is strong, but do you know that there is also a Forex version of Bitcoin?
There are surprisingly many people who have these kinds of ideas about Bitcoin Forex.
"It is easy to make profit in Bitcoin Forex"
“Requires high returns more efficiently than spot trading”
Therefore, in this article, I will explain in detail about the difference between ordinary Bitcoin Forex and the merits of trading from the actual overview of Bitcoin Forex.
Through this article, even those who are only interested in Bitcoin Forex but have only done spot trading can acquire the basic knowledge to actually start trading, so please refer to it.
- 1 What is Bitcoin Forex?
- 2 Difference between Bitcoin Forex and normal Forex
- 3 Merits of Bitcoin Forex
- 4 Points when choosing a Bitcoin Forex exchange
- 5 Tips for making profit from Bitcoin Forex
- 6 Summary
What is Bitcoin Forex?
"Bitcoin", which is a representative currency of cryptocurrency, is also traded as Forex, also called Bitcoin Forex, which investors and traders around the world are actively trading.
There are three main features of Bitcoin Forex.
- Expect price increases and decreases
- You can trade many times more than your own money
- Start with a small amount of money
Here, I will explain the above points in detail.
Expect price increases and decreases
Unlike spot trading, Bitcoin Forex allows you to pursue profits by placing buying and selling orders.
In other words, trading is done aiming for the difference depending on the price increase or decrease.
For example, suppose the current Bitcoin price is too high and you predict it will go down in the future. At this time, suppose you have a sell position and it crashed a few days later.
Then, you can buy back the position you had for sale as profit (finalize profit).
In this way, the basic outline of Bitcoin Forex is to anticipate price increases and decreases and aim for profit.
You can trade at many times more than your own money
With Bitcoin Forex, you can trade with a larger amount by depositing your own funds on the exchange.
By depositing funds on the exchange as margin money, it is possible to do bitcoin transactions beyond the original amount with the so-called "leverage" system.
Therefore, it is favored by traders who specialize in short-term trading.
Even if you own 250,000 yen, you can trade 1 million yen if you leverage 4 times.
In Bitcoin Forex, funds can be managed as efficiently as possible.
Start with a small amount of money
Bitcoin Forex can be started with a small amount of money. The minimum amount of money is lower than that of stocks and exchanges, and you can trade from around 1,000 yen.
Other financial products require tens to hundreds of thousands yen, but you can start Bitcoin Forex with an overwhelmingly small amount of money.
Bitcoin Forex is easy to start even if you have or want to start with a small amount of money.
Difference between Bitcoin Forex and normal Forex
Generally speaking, Forex means buying and selling legal currencies such as dollars, euros and yen. Trading them is called "Foreign exchange margin trading".
However, in Bitcoin Forex, a slight difference in trading rules is added to the trading style of foreign exchange margin trading.
I will explain here in detail the unique points of Forex that are specialized for Bitcoin.
Those who have experience in Forex trading can easily be confused by the differences in trading rules, so please check it out.
Difference in trading time
First of all, Bitcoin Forex has an overwhelmingly long trading time compared to Forex.
In the first place, cryptocurrencies have no trading time limit, so you can trade 24 hours a day, 365 days a year. This is also applied to Bitcoin Forex and you can trade all year round.
On the other hand, Forex trading currency exchange is only 24 hours on weekdays.
Although there is high flexibility in trading with general Forex alone, Bitcoin Forex allows trading even on weekends and other holidays, so there are always trading opportunities.
Therefore, Bitcoin Forex trading is characterized with even busy people can trade at their own pace.
Difference in volatility
Next, volatility is different between Bitcoin Forex and regular Forex.
In foreign exchange Forex, the more big news even with 1% volatility, the larger the price fluctuation.
On the other hand, in Bitcoin Forex, volatility may occur from a few percent to nearly 10%. Price volatility is severe, and it is easy to trade with consideration for price differences.
However, as price fluctuations are so large, funds must be managed with a sense of danger.
With ordinary Forex, you aim for profit with a small volatility, but with Bitcoin Forex, you can pursue profit by taking advantage of large volatility.
In ordinary Forex, you can receive swaps (interest difference) by buying high interest currency and selling low interest currency.
Conversely, with Bitcoin Forex you pay swaps in either position.
Swaps are swap points that can receive from the difference in interest rates of currencies between two countries in foreign exchange transactions.
Therefore, in foreign exchange Forex, if you have a currency with a high interest rate, you can receive swaps.
However, in Bitcoin Forex, you have to pay the swap when you hold it, whether you buy or sell.
With Bitcoin Forex, swaps are collected on the exchange every day just by holding a position.
Difference in spread
Bitcoin Forex has a wider spread to pay when making a trade than ordinary Forex.
Both transactions have a purchase price and a selling price, and there is a price difference when buying and selling. This price difference becomes the spread range collected by the exchange.
Therefore, the narrower the spread range, the smaller the burden on the trading side. Unfortunately, the spread on Bitcoin Forex is wider than regular Forex.
In the future, we may expect more liquidity in the market and a reconsideration of spreads on exchanges.
Merits of Bitcoin Forex
The advantage of doing Bitcoin Forex lies in the large price movements that other financial products do not have.
By using leverage even with a small amount of money, it is possible to efficiently increase assets. In addition, there is an advantage to use the trading rules unique to Bitcoin Forex.
In this chapter, I will introduce the benefits of trading Bitcoin Forex.
Trading is possible 24 hours a day, 365 days a year
As I mentioned earlier, Bitcoin Forex allows 24 hours a day, 365 days a year trading. No other financial instrument can be traded everyday.
In particular, the stocks and exchanges that many people invest in are limited to certain times of the week.
In that regard, cryptocurrencies are open all year round, so Bitcoin Forex can be performed without any interruption.
Therefore, even on weekdays, people who cannot take time at all can concentrate on Saturdays and Sundays.
You can aim for profit even in a falling market
In Bitcoin Forex, you can hold a position from selling, not from buying, so it is also strong against falling prices.
Bitcoin prices tend to easily fluctuate, but Bitcoin Forex can hold a hypothetical selling position.
Therefore, even if the price drops after you hold a position, you can still aim for profit.
Although it will be a disadvantageous situation in the falling market if you trade only in kind, Bitcoin Forex using leverage has the advantage that it can be converted into profit.
You can trade more efficiently than in spot trading
Bitcoin is an investment target with greater volatility compared to stocks and foreign exchange, so you can actively aim for profit by making use of price movements.
You can earn big profit only spot trading, but you can also pursue for a larger profit by leveraging.
Too much leverage, of course, comes with risk. However, if you set a profit-fixing/loss-cut line with low-leverage operations, you can perform a more efficient transactions.
Points when choosing a Bitcoin Forex exchange
In order to trade in the most favorable situation in Bitcoin Forex, you may want to focus on the "trading cost" and select an exchange.
When doing Bitcoin Forex continuously, it is a pain to ignore the trading cost.
Here, I will explain the points of choosing an exchange you can invest into while suppressing the trading cost of Bitcoin Forex.
Choose an exchange with a small spread
First, try to choose an exchange with a spread that is as narrow as possible.
The difference between the spread shown on the display and the difference between the buying and selling price is paid by the investor as the cost at the time of trading.
If you continue to trade on an exchange with wide spreads, that alone will cost you a lot of money.
Be careful because exchanges with severe price differences will spread by 0.1 to 1% or more.
The ideal spread range in Bitcoin Forex is 0% or less.
Is the standard value for applying the loss cut rule low? (Margin maintenance rate)
Even if you make a leveraged transaction with a small amount of money, you should choose an exchange that has a margin maintenance rate that is less likely to be loss cut.
The loss cut rule when performing margin trading means that the position you hold is forcibly traded against your account funds when you lose a certain amount of unrealized loss.
Depending on the exchange, the standard value for executing the loss cut will change depending on the knowledge you want to keep.
The average margin maintenance rate for loss cut is 70 to 100% regardless of domestic or overseas.
If the standard value for loss cut is low, you can trade with an allowance even if you have a large position.
Therefore, it is important that the applicable standard value of the loss cut rule is low.
Choose an exchange according to low swap
Swaps, also known as open interest fees, refer to fees incurred each time you hold a position.
In Bitcoin Forex, swaps are collected just by holding a position from both buying and selling.
The average swap fee is about 0.04%, but depending on the exchange, it may be collected about 0.1%.
Those who are thinking of holding bitcoins in the medium to long term need to be careful because it will be a huge cost.
Tips for making profit from Bitcoin Forex
Finally, I will introduce the tips to make a profit from Bitcoin Forex.
Bitcoin prices tend to fluctuate, but by mainly analyzing charts, you can make trading strategies.
Please refer to the trading methods introduced below.
Trade with awareness of the trend line
The trend line is the line connecting the candlesticks displayed on the chart.
By connecting the lows and lows and the highs and highs, it is possible to distinguish between the "uptrend" and the "downtrend".
Since Bitcoin Forex can handle up and down price movements, you can mainly carry out market follower transactions according to trends.
Also, trends may change due to price reversals and breaking the trend line.
It is recommended to draw a trend line because it will give you a clear trading index.
Dealing with support line and resistance line in mind
There are support lines and resistance lines as recommended trades with awareness of the lines.
The support line is also called the "low price support line" that connects the past low prices.
This is the point that many investors are conscious of, as it is the lowest price lined up in the same price range. In many cases, there is a resistance on the support line, which increases buying demand.
On the other hand, the resistance line is also called the "upper price resistance line" and is a line that connects the past high prices.
Since the prices are lined up on the same line, it will be the same high points as the support line.
If it breaks out market follower, if you anticipate repulsion, you can use the contrarian trading method.
Trade using technical analysis
In order to make a profit from Bitcoin Forex, incorporate a typical technical analysis.
In particular, typical technical analysis such as.
- Moving average line
- Bollinger band
Since there is Bitcoin Forex in emerging markets, the trading signs of technical analysis work well.
Try to trade while being aware of the standard of each technical analysis, and not "overbought or oversold".
This time, I explained in detail about Bitcoin Forex, such as the difference from ordinary Forex, and its trading advantages.
The attraction of Bitcoin Forex lies in the price that moves greatly. Besides, it is possible to operate with a small amount of money, and it is possible to firmly aim for profit even in a falling market.
However, depending on the exchange, there are disadvantages such as wide spreads and high standard values for loss cut, so please consider carefully before selecting.
If you would like to have a wider range not only in spot trading of Bitcoin but also in trading, make use of this article for reference.