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How to Trade Bitcoin Cash CFDs

Reading time: 6 minutes

This article will provide traders with an explanation of what Bitcoin Cash is, how it differs from Bitcoin, how to trade the BCH/USD CFD, how to trade Bitcoin Cash CFDs with MetaTrader 5, and a useful 50 EMA strategy that traders can use for the BCH/USD CFD.

How To Trade CFDs on Bitcoin Cash

What Is Bitcoin Cash?

Bitcoin Cash, or the BCH/USD CFD, was formed when Bitcoin went through a hard fork on Bitcoin Cash (BCH). Like its predecessor Bitcoin (BTC), Bitcoin Cash is a peer-to-peer electronic payment system that is supported by blockchain technology and a decentralised computer network – a system based on cryptography processes that verifies and records electronic payment transactions without relying on trusted third parties (i.e. financial institutions).

Bitcoin Cash then lowers transaction costs by removing third parties who mediate disputes between buyers and merchants. Theoretically, it should decrease fraud by requiring security protocols, such as proof-of-work and digital signatures that are verified on a publicly-distributed ledger, known as blockchain.

How is Bitcoin Cash Different to Bitcoin?

Bitcoin Cash was created by the Bitcoin miner and developer community, as they were concerned with the future of this particular cryptocurrency and its potential inability to scale-up effectively. BCH was formed as a result, with the main difference being that it features an increased block size, helping to accelerate the verification process.

How to Trade the BCH/USD CFD

Trading Bitcoin Cash CFDs are not dissimilar to trading any other currency pair, commodity, or CFD. However, when approaching the financial markets, it's critical to ensure that you're well prepared before entering any trade setups. Yet, you might be wondering, what does a good level of preparation look like? Well, traders should always be aware of three major components before tackling the markets. All three aspects are critical because they support each other and just one weak link could lead to failure. These components are:

A trading strategy or a trading plan is important as it enables traders to know how and when to tackle the financial markets. It provides an outline of which tools to use, and explains at which moments the odds could be stacked in their favour, and when they are not. Trading psychology is vital because risking real money will impact your nerves and possibly create fear, and a potential rollercoaster of associated emotions.

Good trading psychology allows traders to formulate proper responses, and helps them to handle these situations. Risk management is critical. It allows traders to protect their capital, which is needed to access the financial markets. Without proper risk control, traders tend to over-risk on one or a couple of trade setups, which may lead to large losses and huge drawdowns.

A 50 EMA Strategy for the BCH/USD CFD

To successfully implement the trading strategy described below you will need to download Admiral Markets' MetaTrader 4 (MT4) or MetaTrader 5 (MT5) enhanced plugin known as: MetaTrader Supreme Edition. Among the many other great tools available to traders, there is also an indicator called the Admiral Pivot. To be able to trade with this strategy, you need to follow certain rules. Here is the set up for the strategy:

Time Frame:

  • 30 min or H1 chart

Metatrader Indicators:

  • Admiral Pivot set on daily time frame
  • MACD (12,26,9)
  • EMA 50 set on close

For buy trades, the MACD should be above the zero line, and the price should be above the 50 EMA. When the price breaks the Admiral Pivot from below and closes above it, traders should place a buy order.

BCHUSD Chart - MetaTrader 4 Supreme Edition

Source: MetaTrader 4 Supreme Edition - BCH/USD Chart - M30 Time Frame - Data Range: 4 November, 2017 - 6 November, 2017 - Please Note: Past performance does not indicate future results, nor is it a reliable indicator of future performance.

The chart below shows how this looks on the MT5 trading platform. With just one click on the Admiral 'Mini Terminal' you can add the pivots to your charts.

MT5 Supreme Edition - BCHUSD Chart

Source: MetaTrader 5 Supreme Edition - BCH/USD Chart - H1 Time Frame - Data Range: 27 October, 2017 - 6 November, 2017 - Please Note: Past performance does not indicate future results, nor is it a reliable indicator of future performance.

Again, here's an example of a long trade using the MT5 platform:

MT4 Supreme Edition - BCHUSD Chart

Source: MetaTrader 4 Supreme Edition - BCH/USD Chart - M30 chart - Data Range: 1 December, 2017 - 4 December, 2017 - Please Note: Past performance does not indicate future results, nor is it a reliable indicator of future performance.

Trading Bitcoin Cash CFDs with MetaTrader 5

This enhancement is the future of online trading because MetaTrader 5, which retains the usability and the looks of MT4, is incomparably more advanced and feature-packed software, both on the client side and on the server side. This means that it's able to support even more instruments, markets, exchanges, and trading setups, with almost no limits on flexibility or scalability. This new, revamped platform offers (but is not limited to) the following:

  • Hedging
  • No FIFO rule
  • An integrated fundamental calendar
  • Commerce integration
  • Improved charting and time frames
  • Exclusive first-class indicators
  • Multiple market order ability
  • MT5 Supreme Edition integration

Trading Alternative Cryptocurrency CFDs

Besides trading Bitcoin Cash versus the US Dollar (BCH/USD), Admiral Markets clients can also choose to trade CFDs on Bitcoin versus the US Dollar (BTC/USD), Ether versus the US Dollar (ETH/USD), Litecoin versus the US Dollar (LTC/USD) and Ripple versus the US Dollar (XRP/USD) to name a few. To find out more and to start trading today, click the banner below!

Trade CFDs on Cryptocurrencies!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Risk Warning

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.