The global currency trading market is one of the largest liquid financial markets in the world and employs millions of people who depend on it for their livelihood. Forex trading is fast emerging as a great way of income generation as forex markets stay open 24 hours a day, seven days a week.
Thus, you get the flexibility to decide your operating hours, giving you your desired levels of work-life balance and professional flexibility. Additionally, you can also stand to earn copious amounts of money if you decide to learn forex trading formally.
The recent emergence of cryptocurrencies has added to the dynamism associated with forex trading as people have started to use them for trading. Today, many forex brokers accept digital currencies as brokerage payments, paving the way for a larger role of cryptocurrencies like Bitcoins in the forex market.
Let’s first understand how cryptocurrencies are used in forex trading before examining their benefits and associated risks.
What does a standard forex trade involve?
Simply put, an average forex trade involves you buying or selling a currency against the rate of a second currency. As a forex trader, you make money off the continual fluctuations in the value of different currency pairs.
How does forex trading with bitcoins take place?
The use of cryptocurrencies in forex trading has had a mixed effect. While the volatility of prices has shot up significantly (since cryptocurrencies are more volatile than normal currencies), traders are now able to take better advantage of the volatility to make money.
However, you should still exercise caution when using cryptocurrencies like Bitcoins to buy conventional currency pairs.
What are the top benefits of using bitcoins for forex trades?
There are too many benefits of using decentralized digital currencies for forex trading to not give it a try. Here are the top advantages.
- Your trades get decentralized valuations which can help you override country-specific inflation or interest rates.
- You get high leverage from Bitcoin traders.
- Your deposit amounts for forex trades are quite low which means anyone can start trading in forex.
- Accepting cryptocurrencies like Bitcoin keeps your brokerage costs very low.
- Since Bitcoin transactions have no global boundaries, you can expand the realm of your trades beyond your geographical barriers.
Are there any major risks to using bitcoins for forex trading?
Yes! The lack of regulation concerning Bitcoins makes it legally vulnerable to malpractices and trading frauds. Here are the major risks you run when you use cryptocurrencies for your forex transactions.
- There’s always a high danger of volatility
- You can be affected by the US Dollar Rate risk
- The different exchange rates of Bitcoins with different currencies can lead you to lose money in exchange transactions
- There can be a danger of asset class mixing
- Bitcoins are prone to hacking which can make your trades insecure
A good forex trading programme can help you learn strategies to overcome these kinds of risks. Start looking out for appropriate courses today!
