Traders can use Bitcoin leverage mainly for the financial instruments of brokers. In addition to Bitcoin CFDs, there are also crypto share CFDs or Bitcoin certificates to choose from. This gives the unique opportunity to use leverage of up to 1:200 for their trading activities, depending on the risk tolerance.
If you choose Bitcoin CFDs, leverage with a maximum of 1:200 can be used, for other contracts for difference an even higher leverage. We show how trading with Bitcoin leverage can also be successful for trading beginners.
- Bitcoin leverage can be used for CFDs with up to 1:200
- Traders can trade Bitcoin CFDs with little equity
- Bitcoin certificates are lucrative, but extremely risky
- Test trading with Bitcoin leverage and risk with free demo account
Use Bitcoin Leverage for successful CFD Trading
Bitcoin traders have the opportunity to use leverage to benefit from the developments found in the cryptocurrency market. However, instead of buying the coins directly and having to invest some effort, it is much easier to trade with a broker specialized in leveraged BTC trades.
However, many traders often don’t even know the difference between trading with a broker and with an exchange and why the financial instruments with a broker are often the better choice. The point is not that traders can trade with leverage at the broker Bitcoin, but rather that they can enjoy many more advantages. We show why the broker can often be the more lucrative and, above all, more easily accessible means of choice than exchanges.
Opening a Trading Account with a Broker
Before traders can even speculate with leverage on Bitcoin or its price development, they need a trading account. This is the starting point for trading activity for exchanges and brokers alike. However, there are significant differences when opening an account, as the exchanges require traders to provide verification and the necessary equity.
Brokers, on the other hand, often provide not only the live account, but also a demo account. If you choose the demo account, you don’t need any verification at all, just log in with your e-mail address. Also the equity capital is then not necessary. In this way, traders can enjoy the benefits of trading financial instruments with or without leverage much faster.
Is Verification a Must?
Of course, the question arises why traders have to do verification for their Bitcoin trading account at all. If you want to trade with your own capital, you have to verify your details with both the broker and the exchange. But this only applies to exchanges and stock brokers who deal with fiat money. On many Bitcoin CFD brokers you don’t have to verify your identity as they only allow cryptocurrency deposits and no fiat money is involved in any transaction.
But depending on the broker you choose you might have to verify before you can even make a deposit. On the one hand, the verification serves the protection of personal information, so that, for example, no abusive actions can be carried out with it. On the other hand, with the verification process the providers also comply with their legal requirements, which every trader who wants to buy or trade Bitcoin with his own capital must confirm the authenticity of his details.
This is how the Verification Process works
Depending on the provider, the verification takes a few hours or even days. Experience has shown that a normal volume of inquiries from brokers and stock exchanges is fast, so that traders can hope to be activated within a few hours after the required documents have been sent and can proceed with the account capitalization. For the verification are needed:
- Valid identification document (identity card or passport)
- Proof of address (among other things through current telephone bill)
Traders can upload the required documents to either the broker or the exchange so that they are available for review by the support team or use the video feature. Yes, in the meantime selected brokers even offer the possibility to have the verification done via video call. This makes the entire process even faster and, above all, more convenient.
Better Trading Offers by Brokers
Bitcoin CFD Brokers are also usually ahead of the pack when it comes to trading offers. BTC trading with leverage is not the only trading option available, traders can also speculate on other underlying assets with high leverage. This includes the various cryptocurrencies as well as:
- Foreign Exchange
If you are interested in a financial instrument with less risk and a longer investment horizon, you can also take advantage of the opportunity to trade crypto securities with the broker. There is not only the option to purchase shares of Bitcoin GROUP SE, but also to buy numerous other company shares in the crypto sector. Thus, depending on their risk appetite and investment horizon, traders can comfortably spread their equity and not only use the leverage on Bitcoin investments, but also use numerous other financial instruments to build up their assets.
Trading offer at stock exchanges often limited
Experience shows that Bitcoin trading with leverage is not possible with crypto exchanges. The traders do not speculate on the price development, but actually buy the coins directly. This means that at the Exchanges they have at most the choice of whether they want to invest in other cryptocurrencies besides Bitcoin. Depending on the exchange, the choice is large or somewhat smaller. Those who invest with the leading crypto exchanges often find countless Internet currencies, including Litecoin, Ripple, etc. However, if the traders concentrate on a few large exchanges, the choice can be significantly limited.
Less Trading and Diversification Opportunities for Traders at Exchanges
Although some exchanges now offer additional opportunities to become active in the crypto market, the choice is still limited. Traders can also lend coins at exchanges and generate additional income with the interest earned. However, the choice of financial instruments, as offered by brokers, is not available at the exchanges. Brokers are therefore the better choice for all traders who want variety for their trading activities and who, for example, can or want to provide less equity for the purchase. There, leverage options for Bitcoin and other underlying assets can also be used optimally in CFD trading.
Bitcoin Margin Trading: Traders need less Equity
A further plus point goes to the offers of the brokers when it comes to the required equity capital. Traders not only have significantly lower barriers to entry to the crypto market, but also require less equity.
If the traders decide to trade on the exchange, the coins must be purchased directly. If Bitcoin, for example, costs more than 19,000 USD at its all-time high, this increased capital expenditure is almost impossible for average petrol consumers to cope with. Although traders can also purchase coins proportionately, Bitcoin remains the most expensive crypto currency on the market. Significantly less equity is required for trading activities with a broker. Although it also depends on which financial instruments the traders use, experience shows that those who opt for CFDs and trade Bitcoin with leverage usually only need a few bucks.
Equity or Play Money?
Trading Bitcoin CFDs with leverage also means that the traders need little equity and yet, thanks to the leverage of maximum 1:2, can bring more into the market and thus generate higher profits at best. However, the leverage also means that if there is insufficient hedging, traders can incur greater losses. For this reason, it is advisable, especially for less experienced traders, to start with a demo account in order to familiarize themselves with the opportunities and risks and, above all, the leverage under near-market conditions. Those who use the demo account do not need any equity at all, as brokers usually provide virtual play money.
Advantage of Brokers: Flexible Trading Opportunities through Leverage
Traders can take advantage of the volatile price movements in the crypto market especially with CFDs. Hardly any other market has such a high volatility as the crypto-market, which often presents traders with challenges in their trading decisions. Especially traders who are active on the Crypto Exchange often have to wait a long time until the appropriate opportunity to buy or sell presents itself. It is much easier for a broker if the traders trade Bitcoin CFDs for example.
They allow even short price movements to be used, as the positions can be closed after a few minutes or hours. In any case, Bitcoin Contracts for Difference are usually used for one trading day in order to avoid unnecessary trading, overnight costs and to optimally capture the volatility within one trading day.
Focus on Price Analysis for Trading Decisions
If traders really want to trade Bitcoin CFDs, they need to be as accurate as possible in forecasting the price development. Even experienced traders have their difficulties with this, depending on the market situation. Although technical and/or fundamental analysis can help in this, there are always factors that can suddenly set the Bitcoin price in motion out of nowhere. In order for traders to be well prepared for this, they should know the factors that influence the price movements. These include:
- Decisions by the politics/regional government
- Fiscal political decisions (inter alia by the FED, ECB)
Publications of Crypto Exchanges
The decisions of countries, the central banks, or notifications from crypto exchanges often have a significant impact on movements of the Bitcoin price or the crypto, market in general.
Decisions by Politics/Governments
Decisions by individual countries can have a significant impact on the Bitcoin price. Many governments and experts continue to be critical of Bitcoin and Co., which is also shown by the continuing lack of official approval of Bitcoin as a means of payment. Due to the high mining resources required for Bitcoin, many governments, for example, have restricted or even completely banned mining.
Trading activities with the cryptocurrency are also strictly regulated in some countries. Many governments are still considering how to deal with Bitcoin and the other cryptocurrencies in general, and how to realize tax compliance, for example. If there are again news of new findings in this area, or if, for example, government officials make public statements about Bitcoin and Co., this often has an impact on the price, which then falls or rises depending on the type of news.
Fiscal Political Decisions
Fiscal policy decisions are also becoming the focus of public attention when it comes to Bitcoin. The European ECB, for example, has a major influence on movements in the crypto market through its decisions. If, for example, the central bank decides to continue its current interest rate policy and to grant hardly any interest on conventional savings and investment products, the demand for alternative investment and investment opportunities is unbroken. Many traders will then also orient themselves towards the crypto market and the various financial instruments offered by brokers. The increasing demand in turn also has a positive effect on the price development and ensures that Bitcoin can experience an upward trend.
Publications by Crypto Exchanges
The number of crypto exchanges has increased significantly in recent years. There are large trading places, where an enormous volume is converted to the individual cryptocurrencies. In addition to Bitcoin, leading Altcoins are often available for trading. Especially the big crypto exchanges have a power which should not be underestimated. For example, if you reduce the trading volume around Bitcoin, this can have a signal effect on other exchanges and the Bitcoin price. For example, if you reduce the trading volume around Bitcoin, this can have a signal effect on other exchanges and the Bitcoin price.
Tip: Do not underestimate news about hacker attacks
Also not to be underestimated are reports that may not have anything to do with politics or the stock markets themselves. A wallet is mandatory for all traders who want to buy Bitcoin directly from stock exchanges. If hackers have once again managed to crack a wallet and, for example, steal enormous amounts of Bitcoin, such a message can unsettle traders, because they are themselves uncertain, for example, whether their own coins in the wallet are still safe or not. To ensure that traders are prepared for almost all eventualities in price observation, we recommend using the notification functions, which are even offered free of charge by many brokers. Whenever there is news on the crypto-market, traders receive an SMS or push notification, for example, and can then act at short notice.
Conclusion: Bitcoin Leverage in CFD Trading for even more Success
Brokers now offer countless possibilities for traders to use the Bitcoin lever. In addition to contracts for differences, these include certificates. Optimal conditions, in other words, to take advantage of price developments on the crypto market are optimally dependent on the investment horizon and the willingness to take risks.
Bitcoin CFDs in particular are predestined for speculation on price developments, even in volatile phases. With the help of Bitcoin certificates, traders can also take advantage of price movements, although the certificates offer an enormous risk. On the other hand, traders also have the opportunity to earn significantly higher profits than with other financial instruments, for example. If you would like to start by looking at the various options for trading with leverage on Bitcoin, we recommend that you use a free demo account with the broker of your choice. With the help of play money, traders can easily test which type of risk they are and which financial instrument brings the best profits.
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