Trading carries a high level of risk, and may not be suitable for all investors. You should never invest money that you cannot afford to lose.

Monday, 4 December 2017

Trade Real Bitcoins not Derivatives

Why trade real bitcoins instead of derivatives like CFDs?

Few reasons to avoid Bitcoin derivatives and trade real owned Bitcoins:
  • margin trading is using leverage, that is increasing bad response to emotions (in case of manual trading), amplify the impact of execution errors (also in case of automated trading); and also encourages you to take unnecessary risks;
  • since you will invest with money borrowed from your broker, you do not have ownership over the investment (that is you cannot withdraw the bitcoins to your other wallet); the broker may close your positions for several reasons (a fork is coming, elections, bullshit, etc) and you cannot disagree with them - you will have no choice;
  • a margin-call will liquidate all your positions in case of a flash-crash, you will be forced to sell to avoid margin calls.
  • usually the contract size for derivatives is an integer, so you can trade 1, 2, 3 BTC for example, while if you own real bitcoins you can trade 0.01 BTC without any problems.
  • the commissions for a classical brokerage firm is way larger than ones on real exchanges
Stay away from crypto-currencies derivatives.

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Trading carries a high level of risk, and may not be suitable for all investors. You should never invest money that you cannot afford to lose.

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Trading carries a high level of risk, and may not be suitable for all investors. You should never invest money that you cannot afford to lose.