It goes without saying that crypto trading is now growing as fast as never before. Well, it is quite obvious, simply because the Bitcoin has grown in value over 10 times in just a year. This is why so many people are looking to not only acquire some cryptocurrencies, but also to trade them for purely speculative purposes. Another reason for trading crypto is its volatility. Unlike other currencies that change their values for a few % on a daily basis, crypto can vary in its price for some 10-25% within just a day. Typically, the traders were always choosing various cryptocurrency exchanges. But is this the case nowadays? Let’s take a look.
What are FX Brokers?
Forex, or Foreign Exchange, is the world’s largest market. It has opened its doors to the retail traders a couple of decades ago, and until now it has accumulated over 100 of various brokers – companies that let traders fill their orders. Most of the brokers are the middleman between the liquidity providers (banks, large funds etc) and the retail traders (people like us). These brokers provide the support, pricing and the platform. Typically, many brokers have not invested into their proprietary trading technology. Instead of it, these brokers have been using ready-made solutions by such companies as Spotoption, MetaQuotes, Spotware and others. Recently, a large proportion of the brokers has started offering cryptocurrencies within their portfolio of the assets. Let’s take a look at the advantages of trading crypto with FX Brokers.
The vast majority of the FX brokers are regulated in the UK, EU, and Australia. Unlike regular bitcoin exchanges, you will actually open an account at a company that has physical presence in at least one country, you will deposit the funds at a segregated account, and you will be able to claim your money back (up to a certain amount) in case the company goes bankrupt.
This is, perhaps, the strongest point of trading cryptocurrencies with an FX broker. Most of the brokers have accumulated thousands of clients and they do have to serve them on a daily basis. Considering that an average FX trader has a hefty amount of money on his account, the brokers have mastered their support activities and are now providing live chat, phone and email support.
99% of the retail FX brokers allow their traders to gear up when trading currencies online. Even though this is not the case with cryptocurrency trading, it is quite likely that many of these brokers will provide at least some leverage for the Bitcoin, Litecoin and other crypto currencies. Typically, a person can trade up to 50 times more than the size of his deposit. In other words, if you have 10,000 USD on your account, you can trade about 50 bitcoins at a time (considering the current rate of around 10,000 USD per bitcoin).
Finally, when you are trading cryptocurrencies, you are actually purchasing a physical file that can be downloaded to your hardware. In case you are keeping the funds on the exchange, it means that the exchange is responsible for hosting these files. Quite often the exchanges get hacked and your money can easily be gone in a matter of seconds. When trading crypto with an FX brokers, you are actually trading something that is known as CFD (Contract For Difference). In other words, when you are buying a bitcoin CFD, you are just buying a contract for the future difference in the bitcoin’s price. Hence, there is no risk of having the actual bitcoins stolen.