Daily Bitcoin CFD

Trading Bitcoin with Plus500

Plus500 offer a daily Bitcoin CFD (Contract For Difference) which allows you to buy or sell Bitcoin using margin or leverage of 10:1 or 10%. The advantage of leverage is that a 1% change in the price of Bitcoin is amplified to a 10% change in the CFD price. However, leverage is symmetric so both LOSSES and PROFITS are amplified in the same way. The daily contract runs from midnight to midnight except Saturday & Sunday and can be traded from your PC, tablet or smartphone.

Personally, I use the Plus500 web trader software on my PC because it just sits in a tab on my browser and I use the iPhone app when I am out & about. It's not the most sophisticated trading platform but it works nicely, performs well and is easy to use.

Cash Bonus, No Deposit Required!

Currently, Plus500 are offerring GBP20.00 to open an account. This means you can open an account and trade BitSignals for free without fear of making a loss. GBP 20.00 when you deposit GBP 100.00 and a further GBP 10.00 to confirm your ID.  So that's a possible extra 50% on top of your GBP 100.00 deposit! You won't have to hunt around their website to find these bonuses - Plus500 are very good at notifying your bonuses available so you won't miss out.

Open an account now while these bonuses are still on offer.

Margin

An Initial Margin of 10% is required to support each open position. An additional maintenance margin of 5% of the account equity is required for open positions. When your equity (account balance + P&L of open positions) falls below your maintenance margin,  a margin call is triggered and Plus500 will close your open positions so that your account balance does not go below zero. This prevents you from ending up owing money to Plus500 if your trading is unsuccessful. In other words, the maximum you can lose is your account balance. This is a useful safety feature: In the event you have an open position and Bitcoin prices start swinging around wildly, your potential account losses are limited to the money in your trading account.

Account & Trading Balances

When you start trading, the Plus500 trading software (on your PC, smartphone or tablet) will show you your balance details in real time. You should understand what these numbers mean so you can prevent unwanted position closure because your account equity was too low. No trader likes to see a position get closed through lack of sufficient margin and then see prices finally move in your favour.

For example, if you start with an account balance of GBP 50.00 and

• You place a short (sell) trade of 20 contracts at BTC/USD 1,170.22

• The value of the contract is 0.2 * USD 1170.22 = USD 234.04 (1/5th of a Bitcoin)

• The open position requires an initial margin of GBP 14.25 (USD 23.36) or 10% of the contract value of GBP 142.25.

• Additional maintenance margin of 5% is required = GBP 7.13.

Your account balances are shown as:

• Available Balance = Balance + P&L of open positions - Initial Margin = GBP 35.75

• Equity = Balance + P&L of open positions = GBP 50.00

• Maintenance Margin = GBP 7.13

• P&L of open positions = GBP 0

Risk Management

A Margin Call gets triggered when your Equity balance falls below your Maintenance Margin amount but when your maintenance margin = 40% of your equity, Plus500 will send you a text / SMS/ push notification according to your preferences set in your Account Notifications settings. However, you should not rely on this mechanism to prevent a Margin Call. When prices are moving quickly, you may not have enough time to add further funds to your account or close the open position yourself: Bitcoin price volatility is currently around 20% and rapid swings of USD 30.00 in the price are common. You can see that in the example shown above, if the P&L of open positions were to fall to GBP -32.18 then a Margin Call would take place. Bitcoin price volatility makes the asset attractive to trade but you need to put in place measures to prevent your account getting wiped out during periods of high volatility.

BitSignals will provide educational material on how to trade safely and employ prudent risk management. The Bitcoin trading signals (BitSignals) provided are for educational purposes only. If you trade them on your own account, it's at your own risk. Trading Bitcoin CFD's on margin can result in the loss of your entire account balance. Please ensure you fully understand the risks involved.

Open an account now and learn how to trade Bitcoin.