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Trade Bitcoins using MT4

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Trade
Bitcoins Using
MetaTrader 4

MetaTrader 4, also known as MT4, is one of the most popular electronic trading platforms for online retail traders. MetaQuotes Software developed the groundbreaking platform in 2005 and it has become the most popular software among forex brokers. The software can be utilised to trade financial products including currencies, commodities, options or futures, and cryptocurrencies. Those looking to trade Bitcoin or other digital currencies should consider MetaTrader 4. Below is some very useful information on MT4 and the role it plays in cryptocurrency trading.

What is a Trading
Platform?

A trading platform is software that allows traders to carry out financial transactions in various asset classes such as fiat currencies, cryptocurrencies, commodities and indices. The software also provides substantial support in the form of research reports, price analysis, latest news updates and economic calendars. It also provides several other tools that allow traders to monitor and review their trade positions.

Online trading platforms allow traders to operate from anywhere in the world and are available on a variety of devices including Windows, Mac, iOS and Android. It means you can complete trades around the clock at any time of the day as long as the desired market is open. Online trading platforms like MetaTrader 4 and MetaTrader 5 are superior in terms of trade execution making the entire process of trading easy and seamless.

What is
MetaTrader 4?

One of the most popular online trading platforms, MetaTrader 4 is an easy-to-use platform that allows trading in a wide range of asset classes. Initially launched for forex trading, the software has been enhanced and its use has expanded to include trading CFDs, commodities, indices and popular cryptocurrencies such as Bitcoin (BTC), Ripple (XRP) and Ethereum (ETH). The software is free to download with traders given the option of a demo account prior to opening a live account with a broker.

One can also download a zip file of the platform from the MetaQuotes website. The MetaQuotes language used for this platform is a script that is built for programming specific trading strategies. These scripts facilitate automated trading and customisation of technical indicators and libraries, as per the user’s requirements or trading strategy.

This software is compatible with macOS and Linux along with Windows 7, 8 and 10 versions. A trader can also trade directly through a web browser on their MacBook or Chromebook.

What Makes
MetaTrader 4 Such a
Popular Option?

MetaTrader 4 is a preferred choice for most brokers offering CFD trading in cryptocurrencies. The trading platform brings together traders and brokers in one place and also caters for the purchase and sale of financial instruments. It is the ideal platform for trading forex as it has an array of technical tools built into the software with educational pieces on how to utilise them.

Some of the key advantages of MT4 are:

Easy to Install and Download: MetaTrader 4 can be downloaded from the manufacturer’s site or the website of a forex broker that utilises the platform. It is then as simple as opening a foreign exchange trading account and embracing a whole new world.

Mobility: MT4 can be used on desktop, laptop, smartphones and tablets. There is also a WebTrader version that allows for use via a browser. Another advantage of this software is that it has both Android and iOS compatibility. The MT4 app allows traders to maintain complete control from their phone, without compromising on the functionality. It comes with a variety of charts, timeframe options, technical indicators, market news and a chatbot for interaction. The MT4 app is compatible with iPhones, iPads and Windows devices.

Additional Features: The platform comes with several highly useful in-built features. Following instrument price fluctuations, examining trading charts and graphs and plotting trends to locate planned trades has never been easier. The platform includes a variety of graphs, including candlestick patterns which are considered essential for technical analysis.

Simple to Understand and Use: Setting up your trading orders is simple. The software has the ability to execute predefined stop losses and target levels immediately. Similarly, trailing stop loss and pending orders are easily accessible.

Expert Advisors (EAs): MT4 comes with EAs that can automate trading by using scripts that are uploaded to the platform with instructions. The use of EAs is becoming more prominent in the forex market, in particular with those taking part in day trading.

Easy Tracking: MT4 is highly efficient as it allows traders to download historical data and to create or request detailed reports on past positions taken. This makes it easy for users to analyse their performance under particular trading conditions.

Customisation of Indicators: Users of this platform also have the option of writing their own technical indicators, in addition to those available on the platform.

Suitable for Trading Various Instruments: MT4 is highly useful for trading in a wide variety of instruments, such as currencies, cryptocurrencies, indices and stocks.

Security: It is a highly secure trading platform where the exchange of information between the trader, terminal and the broker is highly encrypted with 128-bit keys.

MT4 is the most popular and one of the best platforms among those who trade cryptocurrencies. The platform is ideal for those looking to open a forex trading account. There is more to trading cryptocurrencies than knowing the Bitcoin price. Here is a closer look at some of the nuances of Bitcoin trading.

What is Bitcoin
Trading?

Increased interest in cryptocurrencies has led to more and more people seeking to invest in Bitcoin and other digital currencies. Unlike fiat currencies which are regulated by their respective governments or central banks, cryptocurrencies are totally decentralised and largely unregulated. They use blockchain technology to keep track of transactions and tend to be highly volatile in nature. They are considered a high risk investment, but with volatility also comes opportunity.

A single cryptocurrency may witness price changes several times a day due to news about regulatory changes, an emerging product, a new fork or general news related to crypto exchanges. It is important to know the difference between physical investments and trading in Contracts for Difference (CFDs).

Bitcoin can be purchased via crypto exchanges which work like a marketplace. In order to do so you need a digital wallet to store your crypto holdings. An account can be opened with an exchange by depositing fiat currency. There is a high level of risk associated with this type of investment in cryptocurrencies as it is open to hacks and fraudulent activity from the digital wallet provider.

In addition, the process of buying and selling via a crypto exchange is not as simple as trading through the online trading platform of a CFD broker. While the exchange option offers investors a chance to purchase even the lesser-known cryptocurrencies, it does not offer any kind of tools or materials that can be useful in decision making.

In contrast, CFD trading is fast emerging as an attractive way to trade cryptocurrencies. A CFD is a contract, wherein two parties agree to pay in cash any difference in price that arises due to the change in value of the underlying cryptocurrency. This means that no actual purchase or sale of a cryptocurrency is conducted. Instead, traders speculate on future price movements of a digital currency.

In relation to Bitcoin trading, this would mean you are taking a position, depending on your expectation of the future movement in its price. This way of trading is done via an online trading platform, like MT4. The popularity of Bitcoin is reflected by the fact that it can now be traded against a fiat currency. You can now trade Bitcoin against the US Dollar (BTCUSD) in the same manner as trading other fiat currencies such as the Euro and US Dollar (EUR/USD).

Pros and Cons of
Bitcoin CFD Trading

Bitcoin CFD trading has never been easier. Those who have a trading account with a registered broker can execute trades from a range of devices in a matter of seconds. Trading is done via MT4 or any other online trading platform offered by your broker. Here are some pros and cons of carrying out Bitcoin trading via MT4.

Pros

  • Bitcoin trading via a registered broker does away with the need to register with a crypto exchange or open a digital wallet. This makes it much simpler.

  • Safety is one of the biggest advantages of trading CFDs. Registered brokers need to comply with regulatory guidelines which includes segregation of client funds from their own. Brokers are committed to following regulations as a failure to do so can result in strict action including the cancellation of a financial services licence.

  • The use of online platforms, such as MT4, makes trading quite simple and allows traders to make educated and informed decisions. These platforms come with in-built tools that allow traders to analyse the market, check trends and stay abreast of the latest events and news that might affect price movements.

  • MT4 allows for automated trading. Traders can manage risks by using stop loss and profit-taking tools. It also does away with the need to watch over trade positions continuously.

  • MT4 offers access to a variety of tools and charts for technical analysis, highly useful in Bitcoin CFD trading.

  • Brokers offer professional support to allow new traders to become familiar with the nuances of Bitcoin CFD trading.

  • MT4 is a highly safe platform, where interactions between traders and the platform are encrypted.

Cons

  • Each broker offers a limited selection of cryptocurrencies to trade in. The main cryptocurrencies offered for CFD trade include Bitcoin, Ethereum, Ripple, Litecoin and Bitcoin Cash. Those who wish to trade a new digital currency or a fork would need to invest via an exchange.

  • CFD trading does not involve actual sale or purchase and is, therefore, not suitable for people looking for physical ownership of Bitcoin or other digital currencies.

How to Start Bitcoin Trading on MT4?

Once you have decided that you want to trade Bitcoin CFDs using MT4, the search for a broker that offers CFD trading and is registered with the regulatory authorities begins.

1. Finalise a Broker

Some factors to look at before finalising a broker are:

  • Ensure that they are registered and regulated. This will ensure adherence to all the regulations and, therefore, offer greater safety for your funds. Experienced brokers provide a wide range of products and additional educational tools.

  • Check the leverage being offered. This is important because CFD trading is highly leveraged and allows traders to gain exposure that is much higher than the funds available in their trading account.

  • Check the spreads and commissions being charged. This will help you determine the cost of trading.

  • Deposit and withdrawal options vary depending on the forex broker. Prior to funding your trading account, ensure that the most suitable options are available.

  • Check the customer support services. This is of higher importance to new traders who may not be familiar with forex, the trading platform being used and CFD trading.

  • Check whether they offer negative balance protection. This means that traders will not lose more money than that deposited in their account, in case the market moves in an unfavourable direction.

2. Open a Trading Account

Once you finalise a broker, the next step is to open a trading account, by providing the necessary details and documents. You can first open a demo account and use it to get a feel of trading Bitcoin. Follow this up with a live account. A demo account is an excellent way to start trading cryptocurrency CFDs, without risking actual money. The account works in the same way as a real live account, except that the money used is not real. The use of MT4 is the same, with access to historical data, indicators and EAs available in both demo and live accounts.

Once you are registered with the broker, you can download the MT4 platform using the link provided by your broker and log in to your account.

3. Log in to Your Trade Account

Once you have logged into your account, you have the option to personalise the MetaTrader 4 platform for chart setups. You can also view your account balance and margin levels. You will be able to trade only when your account has adequate funds or the required margin amount. In case the funds in your account fall below the margin limit, it will show as inadequate funds and you will need to deposit the additional money to reach the margin level. Your account will also have the option to deposit and withdraw funds through one of the options offered by your broker.

Before you actually place a trade, you need to be aware of certain things about the asset selected by you:

1.

Symbol: A trader needs to be aware of the symbol for the cryptocurrency chosen for trade. Bitcoin is traded under the symbol BTC and Litecoin under LTC. This will help you choose your asset from the list provided on the MT4 platform.

2.

Volume: A decision about the trade size or the number of lots to trade is important. Most brokers offer a minimum lot size of 0.01 for Bitcoin, while the maximum may vary from 10 to 20.

3.

Decide your trade position: You can enter into a long position or a short position, depending on your prediction of the future price movement of your chosen cryptocurrency.

4.

Tools: You can use stop loss and take profit tools to manage risks. While the stop loss tool will limit the size of losses by automatically closing trades when they reach a set level. Similarly, take profit orders will mean an automatic closure of a trade when the profits hit a certain level.

A trader also needs to be aware of:

  • Leverage offered by a broker, as this will help in deciding the size of the trade position.

  • Spreads charged by a broker.

  • Products on offer and which fiat currencies can be used to trade Bitcoins and other cryptocurrencies.

  • Lot sizes offered by the broker.

  • Margin requirements for operating an account.

  • Trading hours for the asset chosen by you. Some brokers’ MT4 server time and charts are GMT+2, to ensure a 5-day candle week.

  • Rules for depositing and withdrawing money from your trading account.

  • Whether negative balance protection is available.

4. Place an Order or Enter a Trade
Position

You can go to the Help section of MT4 to get to know the platform better. For specific queries, you can get in touch with the customer support services of your broker. Once you are familiar with the way the platform functions, you can take a position/place an order. The platform offers options of instant orders as well as pending orders, which means giving instructions about the placing of an order at a specific time or price level.

You need to select the cryptocurrency that you wish to trade from the list of all available options. You will also need to choose the lot size and then place the order. You can also fill in the details of your chosen strategy, so that MT4’s EAs can analyse price quotes and take positions, based on the predetermined algorithms.

Once you have placed an order, you can monitor it, change stops and limits via the Modify button. You can also use the charts to study price movements, by choosing the timeframe that you wish to monitor it for or adding a custom timeframe of your choice. MT4 comes loaded with several inbuilt technical indicators that can be downloaded from its code base and used for technical analysis.

Using Leverage in
Bitcoin CFD Trading

CFD trading also offers you the chance to use leverage up to 30:1, which allows you to enter into a position that is much larger than what you would be able enter with the funds in your trading account alone.

For instance, if your broker offers leverage of 5:1 and requires a margin of 2% to enter a trade, you need to fund only 2% of the entire position size to open a trade position. So, if you wish to open a Bitcoin position worth $50,000, you need to ensure that you have at least $1,000 in your account. You will need to monitor your position to make sure that the funds in your account do not fall below this minimum of $1,000. If it does, the broker will notify you through a margin call, asking you to deposit the required amount in your trading account.

If you believe that the price of Bitcoin is going to fall in value in the near future, you could enter into a short position. If your prediction turns out to be correct and the value of Bitcoin falls, you make a much larger profit than you would with just $1,000. However, if the value of Bitcoin rises, your losses would be magnified too. To avoid incurring very high losses, it is useful to always use appropriate risk management measures, such as stop loss and take profit.

Traders also have the option of using EAs, available on MT4, to set parameters for opening and closing trade positions. This is done by filling in the details of your chosen strategy, which the EAs will use to analyse price quotes and take positions, based on the predetermined algorithms.

Conclusion

Traders can either open their contracts on the performance of Bitcoin, relative to another cryptocurrency, such as Ethereum or Litecoin, or against a fiat currency, like the Australian Dollar or the US Dollar. However, you will need to monitor the events or news that could influence BTC price moves or the digital currency being traded. Apart from the demand and supply for a cryptocurrency, several other factors, especially a wide variety of news related to their acceptance, adoption or introduction of newer products or regulatory updates, can lead to change in the prices of cryptocurrencies.

The best way to trade Bitcoin CFDs on MetaTrader 4 is to use the available resources for fundamental and technical analysis to make an informed decision. Timely use of stop loss and take profit, as well as other tools, is important for managing the risks associated with Bitcoin trading.

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Source - database | Page ID - 19581

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