Cryptocurrencies have grown in importance over the last few years. The original and most well-know is bitcoin, which was launched in 2009 but there are now a number of competitor digital currencies that can be bought and traded.
Cryptocurrencies operate independently of banks and governments but can still be exchanged, traded or speculated on like traditional fiat currencies. They are based on block-chain technology, which is open source and peer-to-peer, so there is no need for intermediaries for transactions. Bitcoins are created through mining with an agreement that there will be a finite supply of 21 million.
How can I trade CFDs on bitcoin?
Normally trading cryptocurrencies is done via an exchange, and you need to have set-up a virtual ‘wallet’ to hold them – which can be a slow and lengthy process. But now ADS Securities clients can have the convenience of trading bitcoin through their ADS Prime account, removing any time consuming barriers.
Simply log in to the ADS Securities MT4 platform to access bitcoin, which will be quoted against the USD. When you open a CFD position, rather than taking actual ownership of the bitcoins, you essentially trade on whether the price of the bitcoins will rise or fall in value in relation to the US dollar. As with any CFD if you are correct, you will profit; if you are not, you will make a loss.
Trading bitcoin with ADS Prime
The advantages of trading bitcoin CFDs with ADS Prime:
- Trade on leverage, with margins starting from 2%
- Flexibility on trade size – as 1 CFD equals 1 bitcoin.
- Go long or short – capitalize on uptrends or downtrends in price.
- Pricing available to all clients on our MT4 platform
- Simple account opening & funding process
- Excellent customer service 24 hours a day, 6 days a week
- Trading with a counterparty regulated and licensed by the UAE Central Bank
Bitcoin CFD example
If you are interested in trading a bitcoin in USD via a CFD, the following examples will help explain he the trading works. If our price is 3875 to sell bitcoin, or 3900 to buy it (please note that bitcoin offers some exciting volatility so this price is only given as an example) and you believe that bitcoin’s price will fall against the dollar, you may decide to sell 10 bitcoin contracts at 3875 – for simplicity each of our CFD contracts is equivalent to transacting in 1 bitcoin.
The bitcoin price does fall and our new price is 3700/3725. You decide to take your profit by buying at 3725.
$3875 – $3725 = $150 move or 150 points
Your gross profit is 10 contracts x $150 = $1500
The bitcoin price actually rallies and the price on our platform is 3925/3950. You decide to close your position by buying at 3950 to limit your losses.
$3875 – $3950 = $75 move or 75 points
Your gross loss is 10 contracts x $75 = $750