Traders Now Hedging the Value of Their Bitcoin Holdings
The simple fact that all digital currencies do tend to have some very volatile movements in regards to their values you may have been worried about buying into any of them, due to the risks that your investments and your holdings of those digital currencies could suddenly drop in value.
Therefore, you may be looking at ways that in the event of your digital currencies dropping in value that you can hedge against those losses you will experience and instead negate them as best you can do.
If so there are in fact plenty of different ways that you are going to be able to hedge the value of most if not all digital currencies and with that in mind I will enlighten you on how you can do just that in today’s news story.
Keep in mind though that if you are the type of person who does not fully understand the risks associated with using digital currencies in regards to the often huge swings in their values, then you do need to learn more about those risks before you even start to buy any digital currencies.
If the main reason you are buying any digital currencies is for investment purposes but you are averse to risk with your investments then I doubt you are going to have a peaceful night’s sleep investing in digital currencies so you may be best off looking for another investment opportunity!
Hedge Betting Digital Currencies Using Spread Bets
One interesting way that may just appeal to you in regards to trying to protect the value of any digital currency assets you may have is by making use of something that is known as a spread betting company, and place spread bets on the value of your chosen digital currencies.
When you sign up to a spread betting company’s website you are able to place a bet on whether you think any digital currency is going to increase in value over any given period of time, or whether you think that value of that digital currency will decrease in value over any given time.
Obviously if you are worried that the values of any digital currencies you currently have holdings of are going to decrease in value then you should place a spread bet on them doing so.
What you then will find it that each fraction of a unit of your chosen digital currency it drops by at the end of the time period you selected for your spread bet to be live, you will receive a winning payout based on the stake you wagered, so you could get a huge payout if the value does massively drop in value, which of course will then offset the losses of your digital currency holdings.
However, if you predict the value to fall and it rises or vice versa that for each fraction of a unit that digital currency increases by you have to pay a multiple of your chosen stake, so you do stand to lose some high amounts of cash when you predict the movement incorrectly, but that again will be offset by the increase in value your digital currencies will make.
Trading Digital Currencies at a Forex Brokers Sites
There are of course some very huge risks you will be taking if you do opt to place a spread bet as mentioned above on any digital currencies you may have holdings of, and as such you may be looking for something that isn’t going to expose you to just as much risk, in regards to possibly hedging the value of your digital currency holdings.
If that is the case then consider signing up to a Forex Brokers site, there are many of them available online and as soon as you do so you can then place a trade on any digital currency you like, and you will have to pair it up with another other fiat or digital currency.
You have to then decide whether your chosen digital currency is going to increase or decrease in value over any given time period against the value of the other fiat or digital currency and depending on which two you pair up and the amount of time you want that trade to be activate for the Forex Broker will then allocate you a payout ratio based on how much you place in a financial sense on that trade.
If the currencies move in the direction you chose then you win and are paid out according, if they don’t then you will lose the trade value you placed.
David is a forex trader and writer who has spent the last few years giving his opinion and spreading news about oncoming markets and trading tips. Besides from being a trader he is also a lifelong Everton fan and enjoys spending free time watching his beloved team in the premier league.