Bitcoin, love it or hate it, think it’s a fraud or think it’s fantastic, this it’s going up, or think it’s going down it’s here to stay. And that means it’s here to be traded.
If you are new to trading bitcoin and don’t have a broker you can view our full crytopcurrency and Bitcoin broker comparison tables.
But first, if you want a bit of insight into Bitcoin and it’s prospects, Clem Chambers, CEO of ADVFN has just published (literally today) a book called Trading Cryptocurrencies: A Beginner’s Guide: Bitcoin, Ethereum, Litecoin which is probably worth a read. You can also watch Clem discussing Bitcoin on Core Finance TV below:
If you’re now caught up, here are the main advantages and disadvantages of trading Bitcoin three different ways.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money
1. Bitcoin spreadbetting with ETX Capital
Spread betting is tax free at the moment, there are no capital gains taxes due on profits from spread betting. So if Bitcoin goes to the moon and you are long then your winnings are yours to keep. If you are new to spread betting it’s basically financial margin trading structured as a bet.
Margin trading means, you leverage your funds to by more than you can pay for outright. You put a small deposit down known as margin and cover the daily P&L on the position.
The upside of financial spread betting this way is that your can multiply your profits, so for example you can buy £10,000 worth of Bitcoin with only £100 on account. So if Bitcoin doubles in price will make profit £10,000 rather than £100 profit if you didn’t use margin.
The downside of course is that Bitcoin only has to move 1% down before you have to top up your account to cover losses. Also, if you’re broker doesn’t offer negative balance protection then you could potentially lose £10,000 if Bitcoin is revealed as a scam and goes to zero. Meaning you owe your broker £9,900. Ouch!
2. Bitcoin CFD trading with PLUS 500.
Trading CFDs through a CFD broker is much the same as spread betting expect they are priced a little more like shares. Instead of betting £10 per point you would be buying 1,000 CFDs.
Unfortunately they are not tax free, but do offer the same leverage advantages as spread betting. Plus, if you lose you can offset your trading losses against capital gains on your other investments.
Read our PLUS 500 review here or see their Bitcoin pricing below:
3. Social Bitcoin Trading with eToro
If you trade through eToro you have a few options, you can just buy and sell CFDs as normal, or you can be a leader or a follower.
With social trading being a trade leader means that other traders can automatically copy your trades. You make additional money the more followers you have.
Or you can copy other traders. If you follow a trader that makes money trading Bitcoin, so will you. But if that trader loses money, so will you.
So there you have it, three different ways to trade Bitcoin with three different brokers.
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.