Bitcoin Exchanges vs FX/CFD Broker

There are several ways to buy and sell Bitcoin, through a bitcoin exchange or through FX/CFD broker. There is the difference between Bitcoin exchange and FX/CFD broker and there is always question which one to choose. Buying a Bitcoin on a crypto exchange on Saturday is just as easy as during peak trading hours on a Wednesday, not every broker supports weekend trading. Secure exchanges that are trustworthy and have good user ratings will rank higher than their peers. There are hundreds of Bitcoin exchanges and their values of bitcoin are slightly different from one another. Some investors/traders trade with Bitcoin exchanges directly but most exchanges were not built for the beginners, their customer support is not always available, crypto exchanges have also fallen victim to cyber attacks. In the meantime, every forex and CFD broker seems to be offering Bitcoin trading. The major difference between brokers and Bitcoin exchanges is that with brokers you are actually trading a CFD(Contract For Difference), most of the time. On the Bitcoin exchanges, traders and investors can really buy Bitcoin. Trading on an exchange grants you ownership of the Bitcoin and you can transfer it to an address (your own wallet).

 

When choosing a broker or exchange, always check history and reviews to make sure their performance is consistent. Checking the reviews is something you should always do. Before choosing a broker, traders should eye broker spreads of their cryptocurrencies during several different trading periods.

The advantages of trading Bitcoin through FX/CFD brokers include:

  • Better trading platforms
  • Brokers are highly regulated
  • Segregation of client accounts
  • Usually better customer support
  • Many years in business
  • Leverage – FX/CFD brokers usually allow trading with leverage
  • Brokers can provide a much higher leverage ratio
  • Brokers usually accept deposit and withdrawal via Credit Card Debit Card, PayPal, Skrill, Neteller and bank transfer (easier to access for most people, when compared to most cryptocurrency exchanges)
  • CFDs require an even lesser deposit, allowing traders to trade even more bitcoin and higher leverage to increase their profits even further
  • Absolutely transparent and fair practices, technology to protect all data and secure methods for funds depositing/withdrawing

The disadvantages of trading Bitcoin through FX/CFD brokers include:

  • With brokers, you are actually trading a CFD(Contract For Difference), most of the time
  • Increased cost of trading, spread on bitcoin will be higher than spreads on Forex pairs
  • Many brokers charge a commission on crypto trades
  • There are also other charges such as those for holding trades overnight
  • Due to volatility in bitcoins and other cryptos, brokers that are unhedged are more exposed to large losses caused by their client base
  • Not every broker supports weekend trading – the FX, equity and futures market closes for the weekend, cryptos don’t

The advantages of trading Bitcoin through Bitcoin Exchanges

  • When you buy Bitcoin, you can actually transfer it to an address
  • Bitcoin exchanges support weekend trading
  • Exchanges usually provide tighter spreads but apply a commission based on the volume of your transaction

The disadvantages of trading Bitcoin through Bitcoin Exchanges

  • The security of your funds is not as high
  • Some exchanges are not under direct regulation by any agency
  • Deposits and withdrawals are usually more complicated when compared to most brokers
  • Customer support is not always available
  • Exchanges usually offer average trading platform with several technical indicators available
  • Crypto exchanges have also fallen victim to cyber attacks
  • Only several years on the market

Conclusion

The major difference between brokers and Bitcoin exchanges is that with brokers you are actually trading a CFD(Contract For Difference), most of the time. On the Bitcoin exchanges, traders and investors can really buy Bitcoin. Trading on an exchange grants you ownership of the Bitcoin and you can transfer it to an address (your own wallet). Reputable brokers are highly regulated, on the other hand, some Bitcoin exchanges are not under direct regulation by any agency and security of clients funds is not as high. When it comes to the cost of trading, Bitcoin exchanges usually provide tighter spreads but apply a commission based on the volume of your transaction. Brokers usually include all the costs in the spread. When choosing a broker or exchange, always check history and reviews to make sure their performance is consistent. Traders can find lots of useful information and reviews on the internet. The Internet also makes it very easy for people to post their experiences and useful information. A few key points that are also very important include regulation, customer service, platform type and reputation. I would rather choose a secure a friendly broker that offers many tools for its customers with a good reputation and 24/7 customer service.

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