Nowadays it is possible to invest in Bitcoin or other cryptocurrencies in multiple ways. However, one of the most common and secure, according to multiple users, is through an online broker. But, there is a big difference from an online broker and a cryptocurrency exchange platform; and the truth is that they are important points to know.
In addition to this, you should also consider a series of guidelines to follow when choosing an online broker that is safe. Since, remember that an investment will be made, so that money will be in the hands of an online platform; which is possibly unknown in its entirety.
Therefore, it is also indispensable to know how to find a platform to trade CFDs on Bitcoin or other cryptos that guarantees users that their money will be safe. And to know where you can classify and find platforms or online investment brokers you can visit fx-list.com.
In this intuitive and quick access portal it is possible to filter the different digital brokers by interests. But what is an online broker? you’ll find out later.
What is an online broker?
An online broker is a platform that acts as an intermediary, and connects traders or investors with the desired financial market. Considering this, we can say that brokers simply reflect to the market the orders exposed by their clients and users.
Therefore, the shares, currencies or cryptocurrencies that are traded on the broker will only be part of a contract for difference; better known as a CFD. Because of this, it can be said that the investor will not have the digital asset directly; as is the case of Bitcoin, which can be held in a cold personal wallet; to follow an example.
Even so, there will be a contract established with the broker, where there is a starting price and a closing price; both selected by the investor or trader.
In addition, it is necessary to highlight that there are a number of financial markets and to invest in them it is suggested to choose specific online intermediaries that can meet the desired demands. And to make a correct selection remember that there are portals to find brokers, and also, we suggest considering the following factors that we will highlight below.
Bitcoin CFDs at online brokers
Bitcoin CFDs or contracts for differences are an investment modality in which the individual will not have to make the purchase of the cryptocurrency; therefore, many risks can be avoided. In this way it will be possible to trade without having a direct participation in the crypto world.
It consists mainly of agreeing with the broker or intermediary an agreement where an entry point is established; where the intermediary selling will have to pay the investor the difference between the current value of the underlying asset, and its value depending on the amount of time the agreement lasts.
5 Key factors to choose an online broker
Choosing a broker and registering can be quite easy. However, before doing so, we suggest considering the following factors when choosing an online broker. Since, despite the wide existence of them, not all can be considered safe to trade Bitcoin CFDs.
1. Check if it is regulated
First of all, it is essential to assess whether the platform on which the investment will be made is regulated by an entity that guarantees protection to investors. Because, if a broker is unregulated, it automatically becomes an unreliable alternative.
Therefore, it is suggested to evaluate whether the intermediary platform is regulated or supervised. Because, these regulators are responsible for ensuring investors that they will be able to choose the online broker with peace of mind and that their funds will be safe at all times, that there will be transparency in each transaction, and that each operation can be carried out correctly.
2. Available financial instruments
Depending on the experience of the trader or investor, financial instruments will be required to complement the activities that they wish to perform within the online broker. Therefore, depending on the interests of the user, it will have to be assessed whether the intermediary has financial instruments.
For those more experienced in trading, it is suggested to evaluate the compatibility of the broker with MetaTrader, its functionalities, speed to open or close trades, among others. However, new users may only require a regulated and secure broker to get started.
3. Minimum deposit and methods
On the other hand, it is essential to know what the deposit minimums of online brokers are. Because, this will let the user know if he has the minimum investment capital to start generating orders in the market.
In addition to this, you should also know the method available to make the deposit. Since, some brokers are limited in this regard, offering up to 3 or 4 unique options to make deposits, while, other options are more versatile and offer from 5 or more alternatives.
4. Spreads and commissions
A very important point to consider is commissions and spreads. Since, although at the beginning they may seem “low”, it is necessary to consider that, if constant investments are made, these commissions can represent a significant expense; of course, speaking in the long term.
So, it is useful to know these details when choosing an online broker. In this way, the amount of money paid in commissions can be reduced and investments will be more profitable.
In addition, spread percentages vary depending on the financial instrument selected; and of course, it will also change by the chosen broker. For this reason it is suggested to evaluate different brokers, in order to choose the one that charges the trader or investor the lowest percentage of spreads and commissions.
5. Technical support, demo accounts, others
To close, remember that it is always important to know the effectiveness of the support or customer service of a platform of this type. Since, in case of any problem it is convenient to know the average response time, the means available to communicate with customer service, the language in which they will attend the request, among others.
In addition, for new investors it is suggested to evaluate whether the broker has demo accounts that can be used for learning, as well as whether they have educational or training materials.
The above tips are the most used by traders when choosing an online broker. That doesn’t mean that every investor has to do a thorough investigation on their own when choosing a broker.
While it is true that you can live from trading, do not lose sight that it is a risky profession and must be done with sufficient technical / fundamental knowledge.