I've been getting a lot of questions recently about trading cryptocurrency from people looking to get into Bitcoin. Plus500 is one of the worlds most popular trading platforms, and it's popular for trading bitcoin too. But is it the right choice?
I'm going to break down some of the pros and cons of trading Bitcoin on Plus500:
The first thing to note, is that on Plus500 you're not actually buying Bitcoin – you're simply trading on the price of Bitcoin. This is CFD trading. It has some advantages. One, you can open both long and short positions. So it's possible to profit if the rises or falls. And you don't need to take actual ownership of the underlying asset. So you don't need to worry about storing Bitcoin in a secure wallet.
Holding (hodling) Bitcoin
CFD platforms such as Plus500 aren't the best option for long term investments. Plus500 is more suited to day trading. Positions that are kept open for more than a day, will be subject to overnight fees. So positions that you keep open for days and days will start costing you in fees.
If you're looking at Bitcoin as a long term investment, it's best to actually buy some Bitcoin. You can do this through Coinbase or CoinSpot (for Australians). If you're looking for a more managed solution, try the crypto copypotfolio.
Day Trading Bitcoin
Plus500 is a good option for day trading bitcoin. Due to the volatility of Bitcoin and other cryptocurrencies, this can be very risky. I can't give you a magic bullet that will let you make money from Bitcoin on Plus500. What I can do is recommend you look into Price Action Trading. If you learn about price action, you'll learn to read the movements of the market.
Plus500 uses leverage. This allows you to control a larger position with a smaller amount of capital. Leverage is a very powerful tool for traders. If used correctly, it's possible to massively increase your profits. But inexperienced traders beware – leverage makes it really easy to lose your money.
Start with Demo Account
The best way to see if Plus500 is a suitable choice for you is to try trading using a demo account. Plus500 offers a free demo account. You'll be able to trade with it under real market conditions without actually risking any money.
While it is possible to make money trading Bitcoin on Plus500, it's not a good platform for beginners. If you've heard about Bitcoin on the news and would like to get in on the action, I would recommend just buying some. Plus500 can be a good choice if you're a more experienced trader with some knowledge of technical analysis.