How leveraged bitcoin trading works

Bitcoin contracts for difference (CFDs) give you exposure to the bitcoin price without having to actually purchase the underlying asset. This gives you additional confidence because you don’t hold any actual bitcoins, meaning you don’t need to use a wallet to store them.

It is important to remember that when trading CFDs, you are trading on leverage. While this allows you to gain exposure to a large position without having to commit the full cost at the outset, it is important to remember that both your profits and losses are greatly magnified, and your losses could exceed your deposits.

Bitcoin is usually quoted against the US dollar — so when you buy bitcoin on an exchange, you are selling USD and buying bitcoin. If bitcoin’s price rises, then you can sell it for a profit, because bitcoin is worth more USD than when you bought it. If bitcoin’s price falls, then you make a loss.

When you trade bitcoin CFDs with IG, you’re speculating on the same price movements. But instead of taking ownership of bitcoin, you’re can take a long position if you believe that the price will increase in value. As bitcoin’s price increases against the dollar, you will gain a profit. If bitcoin’s price falls, then your position will make a loss.

You can also use CFDs to take a short positions as well. So if bitcoin's price drops, you will make a profit on your short position. Conversely, if bitcoin’s price rises, you will make a loss. Our spreads start at just 40 points. Bitcoin can be traded on all our CFD trading platforms, including on MT4.