The Bitcoin Cash (BCH) cryptocurrency is a peer-to-peer electronic currency for the internet. Just as it is with other cryptocurrencies, it is a decentralized platform with no central bank or government control. As you read this piece, you’ll learn everything on Bitcoin Cash, what a fork is, Bitcoin Cash CFDs, and how to trade like a pro does.
Bitcoin Cash came to existence in late 2017 as a result of a hard fork with Bitcoin. The investor(s) of Bitcoin (BTC) envisioned an increased internet speed and decreased storage costs. This implies that blockchains could be increased in size without negatively changing the theory of a decentralized currency. The development led to the creation of Bitcoin Cash, and as a result, advocates characterize it as the “real Bitcoin.”
Since its creation, there have been 44 forks of the Bitcoin blockchain, none of these is as popular as Bitcoin Cash. Bitcoin is an open-source code; any developer can fork it. A fork occurs when only a few nodes accept an update on the original code of a blockchain. The popularity of Bitcoin led to increased transaction fees and longer execution times. With Bitcoin Cash, you have a transaction fee of about $0.20 per transaction and don’t have to wait for 10 minutes as it is with Bitcoin.
While it has become one of the world’s most successful cryptocurrencies, its low transaction costs and faster executions are some of its major selling points. Compared to Bitcoin, Bitcoin Cash offers an added level of stability thanks to its new algorithm with an emergency difficulty adjustment plan in place.
Bitcoin Cash Contracts for Difference (CFDs) is a derivative trading account that enables a trader to speculate on the rising or falling prices of Bitcoin Cash. Unlike buying the actual asset, which is Bitcoin Cash in this scenario, CFDs derive their value from an underlying asset’s movement.
The price of Bitcoin Cash is usually quoted against the US dollar (USD) when you buy on an exchange. In essence, you are selling USD to buy one unit of bitcoin cash. If Bitcoin Cash rises in price, you will be able to go short for a profit, as it now worth more than the USD. However, if the price falls and you decide to sell, then you would make a loss. Bitcoin Cash shows a lot of promise with Contracts for Difference (CFDs) brokerage starting the BCH/USD pair to prove an increasing approval on the part of conventional financial markets.
How to Calculate Bitcoin Cash CFDs Margin?
Traders need to fund their CFDs accounts to open a position with a margin. The margin is not the exact amount of money needed for a position; it is a percentage of the position. CFDs margins vary depending on your platform of choice. You can find the specific margin of Bitcoin Cash in the market information sheet on the platform you employ.
For example, if you are trading on $4,000 of Bitcoin Cash via a CFDs and the CFDs provider has set a margin of 10%, you need a margin or collateral of $400 in your account.
To calculate your initial margin: quantity × price = Full Notional value.
Margin required = Full Notional value × Margin percentage.
Therefore, if you want to trade an asset of 5000 and it is $10 each, the Full Notional value will be 5000 × $10 = $50,000. If the margin percentage is 5%, then the initial margin required will be 5% × $50,000 = $2500
CFDs accounts allow the trader to use more capital than the initial amount deposited due to leverage. Therefore, the broker requires collateral in the form of margin is to cater to potential losses.
Bitcoin Cash CFDs Trading
Bitcoin Cash made a new version of the blockchain with a distinctive set of rules. One critical problem it has been able to solve is the lengthy Bitcoin trading scalability hassle. Its minimal cost and speed have brought about considerable ease of doing business online. If you are ready for Bitcoin Cash CFDs trading, you’d want to settle for a broker with low spreads and uncompromised security.
In the current financial market, there are many industry-leading brokers with some of the most reliable crypto trading features on offer.
You can trade Bitcoin Cash CFDs with these easy steps. Open a trading account with your bitcoin online broker of choice, fund your account, fill in your preferred investment amount. You may choose to go long (buy) or go short (sell) your Bitcoin Cash. One surefire way of gaining enough confidence during live trade is practice. A demo account exposes you to things in the market just as they are on a live account, but without losing real money. Your risk management blueprint should include steps that allow you to protect against the downside of a trade. Having a robust risk management plan is crucial if you want to reduce losses resulting from exchange rate fluctuations.
As it is with other forms of trading, Bitcoin Cash CFDs trading calls for a strategy you can count on. Maintaining your discipline is key to earning. Your strategy has to be logical and back-tested to help build your confidence while trading.
Whenever there is a spike in the prices of Bitcoin Cash, it turns out to be a prominent trading asset against Bitcoin and a substantial investment to hedge against Bitcoin. Since its creation, Bitcoin Cash has grown to be among the most profitable digital currencies available today. With a suitable broker, the right risk management profile, and a tested strategy, you can make a living off trading the Bitcoin Cash CFDs. When it comes to defining the best and most profitable Bitcoin Cash CFDs trading strategy, there is no single answer, as no two traders are the same. A given strategy might be a success to a trader A, and a disaster to another trader B. The best strategies are what works best for you in terms of meeting your trading goals. You’d want to figure out your trading goals and work out the best Bitcoin Cash strategy that meets your needs.