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Benefits & Risks of Trading Forex with Bitcoin

Bitcoin is now accepted by some forex brokers for currency trading. Here we look at the risks and benefits of trading forex using bitcoins.

A Standard Forex Trade

In a standard forex trade example, a US trader betting on the British pound/US dollar currency pair (GBP/USD) deposits USD100 with a forex broker. Assuming the rate of USD1 = GBP0.5, they receive GBP50 for the USD100. If the GBP/USD rate changes to 0.45, they close the position to 50/0.45 = USD111.11, giving an 11.11 percent profit over the initial USD100 deposit.

A Forex Trade Using Bitcoin

The example of a trade with a forex trading account with a broker who accepts bitcoins: You deposit 2 bitcoins from your digital wallet to the forex broker’s digital wallet. Assume the current bitcoin to USD rate is 1 BTC = USD500. Now, assume that you want to take a position in British pounds. If the exchange rate is BGP0.5 = USD1, you will receive GBP500. After some time, the GBP/USD rate changes to 0.45, and you square off your position to get USD1,111.11 in your trading account. Yet exchange rate fluctuations impacting profit and loss. If you cash out when 1 bitcoin = USD560 you receive BTC1.984; if the rate was 1 bitcoin = USD475 you would receive BTC2.399.

Benefits of Trading Forex With Bitcoin

Decentralized Valuations: There is no central bank to randomly change bitcoin valuations. Bitcoin rates are free from geopolitical influence and macroeconomic issues.


High Leverage: Most forex brokers offer high leverage ranging up to 1:1000 for bitcoin trades, though this can magnify the loss potential.

No Transaction Costs: There are usually no transaction costs involved in bitcoin, even for global transfers, improving trade profits.

Low Deposit Amount: With some bitcoin forex trading firms you can start small and a few forex trading firms even offer new members a matching deposit amount.

Low Cost of Trading: Most forex brokers that accept cryptocurrency keep brokerage costs very low to attract bitcoin-trading clients.

Security: With bitcoin transactions, you don’t need to reveal your bank account or credit card details to deposit or withdraw money.
No Global Boundaries: Bitcoin transactions have eliminated global boundaries, though this may raise regulatory challenges.

Risks of Trading Forex with Bitcoin

Bitcoins trade on multiple exchanges with varying exchange rates. Ensure you understand which bitcoin exchange rates the forex broker will be using.

While receiving bitcoin deposits from clients, many brokers instantly sell the bitcoins and hold the amount in USD, exposing BTC to USD rate risk from deposit to withdrawal. Historically, bitcoin prices have exhibited high volatility and in absence of regulations, volatility can be used by the unregulated brokers to their advantage and to a trader’s disadvantage.

Deposited bitcoins can be stolen through hacking, even from the broker’s digital wallet. To reduce this risk, look for brokers who have insurance protection against theft.

High leverage is a high risk for new traders who may not understand the exposure.

The Bottom Line

In forex trading, dealing in a decentralized currency that offers global transactions with no fees is an advantage, but the trade-off is in adding a third currency to what was a trading pair. Traders who take on that risk are advised to use only locally regulated forex brokerages.

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