Practical issues
Welcome to step 6 of the course “investing in bitcoins”. In this step, we will discuss some practical issues that need to be considered when trading online. You can read about online trading fees and what times you can trade.
6.1 How expensive is it to trade online through a broker?
The broker’s business model consists of two parts: the spreads and overnight fees. The business model will be discussed below:
- The first payment you give to a CFD broker is called the spreads. Spreads are the difference between the actual price of a share and the price for which you buy or sell a share. For example, if you buy stocks you must pay a spread. This is often a percentage of the amount that you initially invested. However, this is only a small percentage for brokers, further dependent on the price of the share.
- Secondly, the broker charges an overnight fee. You are charged this “fare” if you leave a position open overnight. The amount you pay is very small, unless you leave a position open for months. If this happens, you may end up being charged a substantial amount. However, we have never left a position open for months, because it is often not profitable enough. Generally, the fee is between 0.001% and 0.03% per position per night.
6.2 What times can I trade?
Online trading is bound to certain times. The bitcoin market opens every Sunday at 4pm and closes the following Sunday at 2pm.
In step 7 you will learn how to start trading with a broker.