How to buy bitcoin in Australia

How much you deposit depends on how much bitcoin you want to buy. Remember, thanks to leverage, you won’t need to deposit the full value of your position if you’re planning on trading crypto CFDs. However, we do recommend adding sufficient funds to cover your margin at all times – even if your trade falls into a loss.

Learn more about how margin works here.

You’ll usually pay to buy bitcoin in one of two ways: commission or the spread. Commission is a fee charged to execute your order, often calculated as a percentage of its total size. The spread, meanwhile, is the difference between the buy and sell prices you see listed for bitcoin. Providers and exchanges who charge via the spread will have a wider gap between these prices, but they won’t charge you any commission.

4. Open your bitcoin position

Finally, it’s time to open your crypto position. To do this, you’ll need to decide its size and direction, then consider adding a take profit and stop loss.

How much bitcoin should you buy?

The size of your first position depends entirely on your available funds and your trading plan. If this is a one-off investment, for example, then you might spend most of your available balance at once – leaving some back to cover any losses.

If you’re day trading bitcoin, on the other hand, then you’ll need to ensure that you have enough funds for future opportunities as well. Lots of day traders only risk 1-2% of their total balance on any given position, which gives them the best chance of trading over the long term.

Whatever your plan, you should decide how much you can afford to lose – remember, trading cryptos is always risky.

Going long or short

Bitcoin is highly volatile, which means it experiences huge price swings in both directions. Many traders try to take advantage of both sides of this equation by shorting bitcoin’s bear runs as well as buying the crypto.

So, when you open your first position, you may want to consider which direction you think bitcoin is heading in.

Much will depend on your chosen timeframe. You might, for example, believe that bitcoin’s overall trend is upward – but that it’s in for a downward run in the next few weeks. If you’re only planning on keeping your position open for a short period, then you’d be better off going short. But longer-term traders might take the risk of near-term loss for the overall gain, or wait for the overall trend to resume before opening their position.

On the City Index platform, you can choose to go short by hitting ‘sell’ instead of ‘buy’.

Take profits and stop losses

Successful traders never enter a position without knowing where they’re going to exit it, whether the trade is successful or not. Take profits and stop losses enable you to automatically close your position when it reaches your profit target or maximum amount of loss.

You might, for example, be targeting 100 points of profit from your bitcoin position, with a maximum loss of 50 points. If you’re buying the crypto, then you’d set a take profit 100 points above your opening level and a stop loss 50 points below it. Then, if either milestone is reached, your trade will close automatically – securing your profit or minimising your loss.

With your size, direction and risk management all set, you should be ready to place your order. On the City Index platform, you do this by hitting ‘Place Trade’.

Monitor and close your trade

Even with a stop and a take profit in place, you’ll want to keep an eye on your position once it is live. After all, conditions may change or new headlines might require you to adapt your strategy at any time.

To manually close your position, you simply make the opposite trade to when you opened it. So if you bought at the outset, you’d sell now. With a short position, you’d buy to close off your exposure. On the City Index platform, you can do this by hitting ‘Close trade'.

How bitcoin works

Bitcoin is the world’s first and leading cryptocurrency – a digital payment system that enables users to store capital, make purchases and more with no regulation from central banks or other entities. In recent years, though, it has chiefly been used as an investment, prized for its rapid growth and lack of correlation with other markets.

But even if you’re only buying bitcoin to diversify your portfolio or speculate on its price action, it still pays to understand how cryptocurrencies work. We’ll cover a few key concepts here, or for a complete breakdown head over to our crypto guides.

Bitcoin mining

The supply of traditional ‘fiat’ currencies is usually controlled by a central bank, which decides when to mint new cash. Bitcoin, on the other hand, is completely independent. So how are new bitcoins created?

The answer is mining, a process in which powerful computers solve complex mathematical problems, in exchange for new bitcoins. In doing so, they also validate the latest batch of transactions and add them to the blockchain (more on that below).

Unlike fiat currencies, bitcoin also has a finite supply – there will never be more than 21 million BTC mined. However, the rate at which new coins are released by mining halves every four years, so we’re some time from hitting the 21 million cap.