How To Trade on BTC and BCH Price Moves Without using your Crypto

One of the things I love most about cryptocurrency, is that the truly never sleep. Over this past weekend, while all the other financial markets in the world were closed, there was a lot of activity in both Bitcoin (BTC) and Bitcoin Cash (BCH). The table and charts below shows just how much activity happened in slightly over 2 days.

*closing price was market price at time of data collection

As we can see, there was plenty of movement in both Bitcoin (20%) and Bitcoin Cash (236%) over the weekend. We all know that the price of cryptos can move fast, especially if there's an event (such as a fork being averted). In this post I want to share my experience trading Bitcoin, and some other cryptos through a company called plus500

Why Do I Like plus500

First I will disclose that I am a plus500 affiliate, so I won't pretend that incentive's not there. I am also an affiliate with 3 other competitors who I've chosen not to actively recommend because in all honest plus500 is the best one. I was a customer before I became an affiliate and was sharing my positive experiences with friends back then too.

plus500 have several offices around the world, and holds official licenses to provide derivative investment securities in, the United Kingdom, Cyprus, Australia, New Zealand and South Africa. This means that Plus500 is fully regulated and your funds are protected by the same legislation that applies to stock markets and other traditional investments.

Plus500 is a publicly listed company traded on both the London Stock Exchange, and the Stuttgart Stock Exchange. This means that they are legally required to provide fully audited financials. This gives us the impression that Plus500 is a trustworthy company

What I'm getting at here is that I trust plus500 with my funds. I have only recently started trading cryptocurrencies with them, but have been trading fiat foreign exchange with them for almost 5 years. My experience with them has been that they are an excellent trading platform.

I have tried a few competitors along the way but none of them have managed to replace plus500 as my main trading account. I like that their platform is fast and easy to navigate, you never waste time trying to figure out how to place a trade. You can trade from your phone just as easily- I've used both the ios and Android apps, nothing takes more than a few intuitive touches

How Does Trading Work With plus500

plus500 provides Contracts for Difference (CFDs). These are derivative investments which enable individuals to gain leveraged exposure, to several markets including stocks, commodities, forex and cryptocurrencies. The use of leverage creates a substantial increase in financial risk, and for this reason, it's important to understand that your funds are at risk, you should never deposit more than you can afford to lose.

There are two main advantages to trading with CFDS:

• Market Exposure - Despite being located in Australia, I can easily invest in international shares, commodities, foreign exchange and a whole lot of other markets, including Bitcoin. Investing directly into these markets as an individual, would be very difficult, specially if they are overseas or require large sums to open an account.

• Leverage (yes it does make it more risky but it's also an advantage) - The borrowing side of CFDs is very similar to how a margin loan works. You need to put in some of your own money, then plus500 will let you borrow to magnify the amount you can invest by a 'leverage ratio'. The effects of leverage on your returns is shown in the table below:
  

The cryptocurrencies available on plus500 and their leverage ratios are shown in the table below:

Bitcoin has a leverage ratio of 1:30. This means for every $1 you have on deposit, plus500 will let you trade $30 worth of Bitcoin. This means that your returns will be magnified by the same ratio. If the price of Bitcoin moves by 1% you will experience a 30% change on your deposit.

I'll try and explain that in more detail with an example. Let's say we have opened a free account and qualified for the bonus (currently available if you sign up from Australia)

We now decide to use the complimentary $30 to trade Bitcoin in real money account. There is also an unrestricted free demo account so you could also test your trading with hypothetical funds .

The first thing we'd do to place a trade is look at the Bitcoin CFD shown in the screenshot below:

Look at the two big boxes with prices in them. The one on the left has the word 'short' in it and the one on the right has 'buy'. Opening trades is as easy as pressing one of these two buttons. A short trade means you are selling. A long trade means you are buying. with plus500 we can trade short or long and bet on the price going either up or down

In our example, let's assume that we think the price will move up in the next few hours so we want to buy Bitcoin. We'd press the buy button to open a long trade and would get the following screen:

Here we can decide how much to invest in the trade. As we can see it has started off with 0.1 contracts. This is the minimum trade size for the Bitcoin CFD. We then see that 0.1 contracts would give us just over US$600 worth of Bitcoin and we'd need a required margin (our own funds on deposit) of just over US$20.

plus500 has also shown AUD values, this is because I am located in Australia and so they automatically show all investments in my local currency. The required margin for this minimum BTC trade is AUD $26.15, so we can place the trade with our complimentary $30.

All we need to do now is press the big blue buy button, and in a few seconds our trade will be open. The system will take you back your dashboard where you should be able to easily see the open trade. Here's what it will look like from the webtrader

You can see that under Bitcoin there is an open trade. It is showing a loss of $3.67, which is normal. Your profit or loss is measured as the difference between the price you opened your trade and the current cost to instantly close it. Your trades will always open at a slight loss.

The reason for the instant loss is the market spread, or the difference between the short price and the buy price. At the time we opened the trade the spread was US $23, which translated into a $3 opening loss. This spread is how plus500 makes their money, there is no other upfront brokerage charged.

The only other fees you might incur is a holding premium. This is like interest charged on the funds you have borrowed. It is only charged once a day. The Bitcoin CFD shows us that the premium is 0.33% and is charged at 6:00am (our time).
If we have a Bitcoin trade open at 6:00 am we will get charged the fee which would be around AUD $2.35. It doesn't matter if the trade has been open for 24 hours or for 1 minute, you will be charged the same fee on all open Bitcoin CFDs at 6:00am

plus500 adjusts the profit or loss to include any premiums charged. This means that you can always see exactly how much you have made or lost on your open trades. When you close a trade, then there are no surprise additional fees.

If you had more funds on deposit and wanted to trade a larger amount, this is also an option. However you can only invest in units of 0.1 contracts so the next option would be to invest US$40 or AUD $52.30. It's tempting to invest as much as possible, but we recommend trying to keep some spare funds available.

How Much Money Can You Make Trading with plus500

Like any investment, it is possible to make or lose a lot of money with plus500. The leverage means that you can achieve very substantial gains or losses in a short time. I don't keep a lot of money on deposit. I withdraw profits often and if I get wiped out by bad losses (it happens) I generally only start again with $100. It's an amount I'm willing to risk after all I used to spend more than that on Xbox games...

Back in August I put $100 in the account and decided to go long BCH. I got extremely lucky and the price of Bitcoin Cash started moving up quickly. plus500 includes profits and losses from open trades in your available trading balance. This means as the price went up, I had more funds available so I opened more trades.

After around 4 hours of following the market and opening more trades, I had 5 open trades and captured this screenshot of my plus500 dashboard

As you can see I had over $450 in profit from my $100 deposit. That's 450% in around 4 hours! I'd love to pretend that I pressed close on all 5 trades at that moment, but that's not what happened. That screenshot was near the peak and not long after that I closed out all trades for a total profit of around $300. That's still pretty good for half a day's work.

Obviously this was an example of what is possible if you are lucky enough to catch a trending market. As I said before I've also had days where I've lost my entire balance (some of those days it was more than $100). ** With highly leveraged trading, it's possible to achieve huge gains but just as possible to suffer total losses.**

Can You Limit Your Losses with plus500

You can place 'stop loss' and 'take profit' levels on your trades. If we go back to our long Bitcoin trade, it now looks like this

In the time it's taken me to get to this point in the review, the trade has moved from a loss of $3.68 to a gain of $5.58. That's a change of $9.26, which is quite impressive if you consider we only used $26.15 of the available funds... it works out to over 30%.

If I want to add a stop loss to this, I can either click on the word 'edit' which is in smaller print next to the 'close' button on the open trade in the dashboard. Alternatively I can just double click on the trade. Both will take us to this screen:

All I did here was tick the stop loss box. The system then suggested a price for the stop. Because this trade is in profit, the suggested stop is when the trade is ahead by $1.01. In other words I can now lock this trade into profit. If the price keeps going up, I can keep making more profit. If it turns and goes down, the system should close my trade and leave me with $1.01 in profit.

I pressed the update button and the stop loss is now set. It's important to realize that this is not a guaranteed stop. That means that if the market moves down very fast (which we all know is possible with Bitcoin), then it could skip over my stop loss price. If this happens the trade will automatically close as soon as possible after your stop has been triggered. I have had trades close at a loss when my stops were set in profit.

This is part of the risk involved with instruments such as cryptocurrencies. It is less likely to happen on very heavily traded markets such as foreign exchange. The price is less likely to skip your stop with forex, but it can happen especially if market sensitive data has just been released.

Some Final Thoughts

All trading is risky. Trading with highly leverage CFDs is especially risky! If you decide to trade cryptocurrencies or anything else with plus500, remember to never deposit more money than you are willing to lose.

As you've seen from some of the examples above it is possible to do very well with plus500. I hope that you'll be able to share stories of greater wins than I can show. Having said that I don't want you to share stories of how this left you in financial distress.

p.s this is my first attempt at writing a full post with Steemit, I'd appreciate any feedback that can help me improve on future posts.