Hello, everyone, this is Petko Aleksandrov and in this lecture I will show you what is the difference between trading the Bitcoin on exchanges and trading the Bitcoin on brokers. And as you probably know, the most popular way to participate on the Cryptocurrency market is through the Cryptocurrency exchanges.
So, for example, right now on my trading screen, I have my account on Coinbase from where I have been personally buying Cryptocurrencies, and it’s very easy to do it. I have the trade button. I simply click on it. I decide for how much I want to buy, for example, for 500 EUR and I can pay straight with my Visa card. If I click on Preview Buy, I will see how much exactly I will receive as Bitcoins.
What is the purchase? What is the Coinbase fee that I will be paying? So if I pay with my Visa card, it’s a little bit more compared to if I use my EUR wallet on the Coinbase and then I just Buy it and I get the Bitcoins. From there, I can send them to a wallet or I can exchange them for different Cryptocurrencies. Now on the other side we have the brokers.
These are companies that offer trading platforms, for example, in front of me now I have the MetaTrader platform, which is the most popular platform for trading with the brokers. It is free for us – the traders, and most of the regulated brokers are for it, which is great. And the difference here, when we are trading Cryptocurrencies and not Forex, is that we are doing CFD trading.
So here is the Bitcoin. But if I want to Buy it, if I click on New Order, I will be Buying with lot sizes. This is the term that we use in trading. OK, so 1 lot nowadays for the Bitcoin equals to 1 Bitcoin, but I can Buy 0.01, for example. Right? Now, the difference here, the main difference for the beginner traders is that I have the Buy button and I have to Sell button, OK, something that I didn’t have on the Coinbase.
All right? So if I have an account of $5000, this is what I have here for the purpose of this course, I can use this money to Sell Bitcoins even without Buying it previously. OK, this is what the CFD does. So CFD trading stands for contract for difference. Every time I Buy or every time I Sell with the broker, I make a contract with the broker that if the price goes in my direction, I will benefit out of that.
And if the price goes against me, I will lose because of the difference in the price. All right? So, for example, if right now I Buy Bitcoin at 18 203 and the price goes to 18 800, I will benefit the difference of $600. And at the same time, if I Sell the Bitcoin right now and the price drops to 18 000, I will lose that difference of $178 and something. OK, this is the CFD trading. I don’t physically Buy Bitcoins. I won’t be getting the actual coins in my portfolio. Just with the amount of money that I have in my account, I will be able to Buy and to Sell.
All right? So many of my traders and students ask me which one of the two is better? Is it better to do it just on the exchanges where we get actual coins and we have much more assets to Buy and to exchange Cryptocurrencies? Or is it better with the CFD trading because we can Sell without having the coins previously? So for the moment, I don’t recommend one of the two.
You need to understand that these are 2 different types of trading and participating on the market. It really depends what you want to do exactly. So, for example, if you want just to Buy Bitcoins or any other Cryptos, you want to hold them for months, years and then Sell them in the later stage when you have a better price and you can benefit out of that, or if you want to use them for actual purchasing online or you want to use the Bitcoin for any other purposes, definitely you need to go through exchange because you’re getting actual coins.
Now, the downside of the exchanges for the moment is that it doesn’t allow algorithmic trading. And this is exactly what I will be showing you in this course, how to trade the Bitcoin with Robots. And for the moment, in 2020, the most reliable method and that’s being the most reliable method for the last decade or so is the MetaTrader platform. All right? So with the MetaTrader platform, we can trade with Robots using the CFD trading.
And this is how we do algorithmic trading nowadays. Maybe in the future, the Crypto exchanges will allow algorithmic trading. And of course, I will update you as soon as this happens. But for the moment, one more time, the most reliable way to do algorithmic trading with Robots is on the MetaTrader platform because we have backtest, because we can trade many Robots on one single account and because the most trusted brokers and regulated brokers offer MetaTrader platform.
And this is what exactly I’ll be showing in this course. For the purpose of this course, I have selected to use the HotForex broker, which is a broker that I have been using at the moment, and please don’t take as a recommendation any of the brokers that I show in my courses, my courses are for educational purposes. But as you already know, I will include some ready to use Expert Advisors.
And since I’m rerecording this course completely now in 2020, it will be much better than the old version. The Robots will be better, I will explain why a little bit later in the course. And I have changed many of the lectures, so it will be easier for you to start with algorithmic trading if you are a complete beginner. All right? So in the next lecture, I will show you more about the MetaTrader platform and as well, I will tell you why it is super important to start with a Demo Account so you can practice on the market.
And before we go to the next video don’t forget to like that one and subscribe to our channel if you have missed doing it. Cheers..
Read More: Tron (TRX) Truth REVEALED!