$500 - $1,000
$1,000 to $10,000
Trying to search for a Forex or cryptocurrency broker can be a difficult task.
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Based on your trading styles and specific requirements the algorithm will populate and recommend the three top online brokers.
What is Cryptocurrency?
Cryptocurrency is a digital asset created to work as a medium of exchange using cryptography to secure its transactions, in simple terms a “peer to peer electronic cash system”. Transactions are recorded in digital assets on a decentralised distributed public ledger known as the Blockchain.
There have been many attempts before to create a “peer to peer electronic cash system” with the likes of “Flooz” and “Digicash”. Digicash was created in 1989 and one of the reasons for its failure is that they couldn’t overcome the problem of “double spending”. This is a problem where the same digital token/asset can be spent more than once, duplicated or even falsified. Ultimately this creates a devaluation of asset and diminishes user trust.
Bitcoin Inventor Satoshi Nakamoto created the solution to the ‘double spending’ flaw. Bitcoin, uses a cryptographic protocol called a proof-of work system to avoid the need for a trusted third party to validate transactions. Therefore, no central authority, government or institution can intervene, increase, reduce or even manipulate the supply of Bitcoin.
For any transaction, single balance, or change to the network to take place, there would need to be consensus amongst those validating the network – the miners. Since the evolution of Bitcoin, many programmers have validated the work of Satoshi Nakamoto and have developed, tweaked this revolutionary technology to meet other potential demands.
Other cryptocurrencies include Ethereum, Monero, Ripple, Litecoin and NEO. These cryptocurrencies have specific purposes. Ethereum is an open source platform that features smart contracts directing developers, to write quality applications i.e. majority of newer cryptocurrencies are developed on the Ethereum network.
How to Trade Bitcoin?
Bitcoin trading is the speculation of future prices of the coin. Other financial markets such as Forex (foreign exchange market), is where price sentiment of Fiat currency (GBP, USD and EUR) can be influenced by many factors such as Government policies, inflation, interest rates to name a few. In comparison to other markets the cryptocurrency market is at the Infant stage. An investor or trader can speculate the price of Bitcoin based on total coin supply, technical details, Institution/corporation usage & mission statements.*
Majority of traders use technical analysis & charting techniques to look for buy and sell positions. Tradingvew and majority of crypto exchanges have Bitcoin and other cryptocurrency charts to analyse.
Bitcoin can be traded by physically buying and selling a whole or portion it on notable/trusted exchanges like Coinbase, Cex.io or Local Bitcoins.
Also many online brokers are offering CFD (contract for difference) trading where you can Long (buy) in a bull market and also open Short (sell) positions in a Bear market.
What is the difference between Bitcoin and Cryptocurrency?
Bitcoin has been trading on the open market since 2010 starting with a price of $0.08 (8 cents) per Bitcoin. It got its notoriety in 2013 when many exchanges were created like CEX.IO and Coinbase to facilitate investors to trade Bitcoin in the open market. Early 2013, Coinbase reported $1million worth of Bitcoins traded in a single month with price over just over $22 per Bitcoin.
Bitcoin is a cryptocurrency because it carries the function of being a digital asset designed to work as a medium of exchange using cryptographic protocols (proof of work system). It was the first decentralised cryptocurrency that has successfully carried out its function of scalability, operation as a digital asset and has been accepted as a form of electronic cash for the exchange of goods and services.
What are the differences between Litecoin and Bitcoin?
Bitcoin is a modern day phenomenon where price of each coin reached an unprecedented $20,000 during December 2017. It can be said that the price we are seeing today has been driven by speculation of traders, investors, media and institutions. It has gained notoriety and attention from mainstream media. Bitcoin has been dubbed by many financial experts as the ‘digital gold’. It has unique properties that are similar to Gold e.g. it’s a scarce asset that has fixed supply of approximately 21million coins in circulation. The code is open source, which means it can be modified by anyone and freely used for other projects.
Post creation of Bitcoin, many cryptocurrencies have launched modifying and tweaked the existing code to create better versions of Bitcoin. Litecoin was launched in 2011 and has been recognised as the ’Silver’ to Bitcoin’s ‘gold’.
The key differences between Litecoin and Bitcoin, 1- Both Litecoin and Bitcoin can be mined. The key difference for end-users being the 2.5-minute time to generate a block, as opposed to bitcoin's 10 minutes 2- The other key difference is Litecoin can confirm transaction much faster than Coin
What is Blockchain Technology?
It is a decentralised digital ledger which records transactions made between one entity to another in Bitcoin or any other cryptocurrency securely, chronologically and publicly
Marc Andreessen quote regarding Blockchain technology (Entrepreneur & Investor),
"The practical consequence [...is...] for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate."
What is Market Capitalisation?
Market Capitalisation is a valuation tool. It is the calculated by number of token/coins in circulation/supply by the current market price of that particular token/coin.
What are the main differences in trading cryptocurrency with an online broker and a cryptocurrency exchange?
There are two main ways to trade and Invest in Bitcoin and other cryptocurrencies
- Cryptocurrency exchange
- Online Broker
With established online brokers such as (Plus500, FxPro, XTB etc) you can only trade Bitcoin CFD, speculating whether price will rise or fall without actually owning the underlying asset. Whereas with a cryptocurrency exchange, you can buy and sell actual Bitcoin and other cryptocurrencies (meaning you will own the underlying asset).
Advantages of trading Bitcoin with an online Broker
- Regulation - Online brokers such as XTB and FxPro that offer Bitcoin CFD trading are regulated by FCA. Hence if you trade with up to £50,000 of Fiat capital (GBP, USD or EUR) your funds are secured under their compensation scheme. Many times in the past and a lot of crypto exchanges have collapsed because they couldn’t scale appropriately and cope with demand. Some collapsed due to the fact they didn’t have enough liquidity to cover all transactions.
- Simplicity - Executing trades are much simpler with online brokers as terminals such as Metatrader 4 have tested the time and have been in operating for over 15 years. Functions of Entering trades with stop limits/losses and pending orders is more user friendly. The orderbooks on cryptocurrency exchanges can be quite complex for a beginner looking to trade crypto.
- Fees on transactions - There are no charges on fees with deposit with online brokers and maybe minor fee when withdrawing profits. Charges are one of the main reasons why investor and traders deter from cryptocurrency exchange. In some circumstances you could lose up to 20% on Fees.
Disadvantages of trading Bitcoin with an online Broker1) Obvious disadvantage would be that many Investors would like to Buy crypto and hold coins/tokens for long term knowing that one day that particular asset will increase in value. Trading CFD only mean you can profit or make loss from the rise and fall of price sentiment.
Can you go long and short on Cryptocurrencies? Is CFD trading available for cryptocurrencies?
Yes, CFD trading is available for traders and investors who want to trade cryptocurrencies. CFD trading is very attractive because you don’t physically hold Bitcoin or other cryptocurrencies as an asset you only speculate if price will rise and fall.
As the cryptocurrency market is relatively smaller and newer in comparison to other established markets (Forex, Stocks, Commodities et.) it is known for its volatility. Therefore, traders can seize to make huge gains from leveraging their capital in rising and falling markets. The cryptocurrency market has been in a Bear market (falling prices) from late Mid-January 2018. May traders and institutions have taken advantage of CFD trading to short (sell) cryptocurrencies.
*All CFD trading involves risk as it involves leverage trading. Losses can exceed deposits.
What is cryptocurrency mining?
Without Miners, the cryptocurrency market could not function.
Miners provide a two-fold role in cryptocurrency. Firstly, they process complex mathematical problems to “unlock” new coins. Secondly, they validate transactions on the network.
They must have consensus on any change to the network for the blockchain to remain consistent. Non-consensus can lead to forks in the network. Forks are incredibly difficult to make happen on the Bitcoin network, and for many this is one of its strongest attributes.
What is Forex Trading?
It is a known fact that the Forex Market or FX market short for Foreign Exchange market is the largest traded financial market with Daily volume exceeding $5 trillion dollars and can be accessed 24hours, 5 days a week 365 days a year. There is no central marketplace for currency exchange as trade is conducted over the counter. Currencies are traded worldwide among the major financial centres of London, Zurich, Tokyo, New York, Frankfurt, Hong Kong, Singapore and Sydney. Forex trading works much like it does with stocks, you buy low and you sell high. Investors speculate and make an informed decision on whether a currency will rise or fall relative to another currency (e.g. Euro against the dollar) based on technical, fundamental and political factors that all affect the exchange rate. We have recommended a few well-designed free courses below, that will help you to understand broader aspects of Forex trading.
Trading forex involves the buying of one currency and simultaneously selling another. In forex, traders attempt to profit by buying and selling currencies by actively speculating on the direction currencies are likely to take in the future.
Historically, trading foreign exchange has always been in the dominion of central banks, Investments bank, hedge funds, and an investment tool for high net worth individuals. As technology has evolved over the years and we have seen growth of the internet age, the average person now has access and can take advantage of the opportunity market presents. The market for the ‘everyday person’ has grown considerably since the early 2000’s and now constitutes to an estimated $300 billion dollars in traded volume every day.
Why choose to trade Forex?
Unlike other trading instruments, traders and investors only focus on a number of currency pairs especially noting the four major currency pairs i.e. EUR/USD (Euro), GBP/USD (Sterling), USD/JPY (Yen) and USD/CHF (Swiss).
Become your own Boss
Forex Trading is no different than from running your own business in that it requires focus, commitment, application and risk. All businesses require effort and dedication to get off the ground but with enough knowledge, patience, disciple and perseverance you can achieve great returns and rewards from forex trading. There is no reason why you can’t run a professional forex trading business from the luxury of your own home.
The market is accessible 24 hours a day, 5 days a week that allows flexibility and caters for those who have preference in trading in specific sessions i.e. London, New York & Asian. Fundamental new announcements are pre-set round the clock and in accordance to the economic calendar which will allows a trader to take advantage of major price shifts.
LiquidityIn terms of traded volume, the Forex market is considerably larger than equity markets by at least ten times meaning it’s very deep in liquidity. This is very attractive to investors as margins for trades would be considerably low and leverage high.
When can I trade the Forex market?
As stated before the market is accessible 24 hours a day, 5 days a week that allows flexibility and caters for those who have preference in trading in specific sessions i.e. London, New York & Tokyo.
- Where can I trade Forex?
The great advantage for anyone looking to trade Forex is that they only require the below which makes it very cost effective.
- Device - PC, Mac, Phone or Tablet
- Broker - This is the Third-party that executes your trades. You can practice with demo account or trade with real account by depositing your funds with a reputable broker. See our suggested brokers to get you started.
- Live Terminal/Portal - This is a MetaTrader4 or MetaTrader 5 that can be downloaded onto your device. You can physically place and execute your trades/orders and use their charting tools. See chart below.
- Internet Connection – That’s correct online! Based on the above you have the leisure to trade anywhere in the world.
- How large is the forex market?
Foreign Exchange market is the largest traded financial market with Daily volume exceeding $5 trillion dollars.
- What are ‘spreads’ or ‘pips’?
The difference between the bid price and the ask price is called a spread. If we were to look at the following quote: GBP/USD = (BID) 1.3965 & (ASK) 1.3960, the spread would be 0.0005 or 5 pips, also known as percentage in points. Although these movements may seem insignificant, even the smallest point change can result in thousands of dollars being made or lost due to leverage. Again, this is one of the reasons that traders are so attracted to the forex market; even small increments in price movement can result in huge profit.
The ‘PIP’ is the smallest amount a price can move in any currency quote. In the case of the U.S. dollar, euro, British pound or Swiss franc, one pip would be 0.0001. With the Japanese yen, one pip would be 0.01, because this currency is quoted to two decimal places. So, in a forex quote of USD/CHF, the pip would be 0.0001 Swiss francs. Majority of currencies trade in daily ranges between 100 pips to 200 pips on average. Major currency pairs like the Dollar, Sterling, Euro & Yen have exceeded more than 500 pips making it very volatile and lucrative market for traders.
- How can I start trading Forex?
We have recommended three top online brokers that one will require to start trading. You can start demo or virtual trading to get use to platforms such as MetaTrader 4/5 and begin with executing trades etc. (see article regarding the difference between demo trading and real live trading). Majority of the online brokers listed have their own online platforms to execute trades. It is advisable to practice trading on a demo account and get use to applying risk managing techniques to your trades. Having a trading strategy is fundamental. Learn techniques and develop trading strategies using our education centre, where we list the best trading education services.
Recommended Brokers for Forex Trading
- Where can I trade Forex?