A guide to the controversial world of cryptocurrency CFDs

It is fair to say that Bitcoin has been one of the biggest revelations over the last few years. Finally, we had a decentralised currency with great security features. A currency created by the people, for the people and protected by the people. However, it hasn’t gained the mass adoption early adopters would have hoped. This is changing slowly. For instance, you can now trade cryptocurrency CFDs.

What are cryptocurrency CFDs?

CFDs have been a powerhouse of the investments and trading market since the 1990s. Highly skilled traders love them because it enables them to magnify their returns. CFD traders predict the direction of a currency in relation to another currency. This is called a currency pair. For instance, you can predict that the dollar will rise against bitcoin over the next 24 hours. Your profit is based on how much the value of a dollar rose against the value of bitcoin. If you think this sounds like forex you would be almost right.

The attractive thing about CFDs is that you can trade on leverage. For instance, you can enter a $1000 trade with a $10. Therefore, if your prediction is right, your profits increase 100-fold. On the other hand, your losses are also magnified; therefore, you can lose a day’s worth of trading in a few minutes.

Interestingly, cryptocurrencies have entered the fold. Therefore, you can predict the price movements of Ethereum, Bitcoin, Litecoin and other cryptocurrencies against FIAT currencies such as the dollar, pound and euro. Notably, cryptocurrencies tend to be more volatile than FIAT currencies. This presents more risk and, as a result, greater reward. Therefore traders who know a lot about the drivers behind cryptocurrency prices stand to make a lot of money.

Like with any form of trading, there are more losers than winners. In short, the losing traders contribute to making a small percentage of cryptocurrency CFD traders rich. Just like in the real world, effort and intelligence isn’t enough. The best traders have their own system for making consistent returns over the mid-to-long term. They might have a losing day or week, but rarely will they have a losing month.

On the other hand, casual cryptocurrency CFD traders expect to become successful in a week. They watch a video about someone living in a rented mansion, driving a rented Lamborghini with hired models, and thinks it is an easy and quick way of making money.

People are looking to escape their boring 9-to-5 jobs and the paycheck-to-paycheck lifestyle. A federal survey showed that 40% of Americans can’t cover a $400 emergency. Bear in mind this is supposed to be one of the ‘greatest nations on earth’. We live in a materialistic world, but most of it is fuelled by debt.  Most people are living, but not truly enjoying life. They work hard and sit in traffic just to keep a roof over their head, and food in their stomachs.

Cryptocurrency CFD trading isn’t easy, but it can potentially be used as a tool to live life on your terms. Here are the benefits:

1) You can practice without investing any real money. Most platforms have demo accounts so you can hone your skills.

2) You can trade in your spare time and from the comfort of your home. People see the weekend as a time to watch television and eat junk food. Think of those 2 days as an opportunity to become a better trader.

3) You can beat the banks on the return-on-investment. Most banks offer an interest rate on savings which doesn’t even beat inflation. As a result, you lose purchasing power as time passes. On the other hand, cryptocurrency CFD trading gives you the opportunity to make a significant return on your investment from a small initial deposit.

To achieve what few have, you have to do what few can. The truth is that few people possess the skills and commitment necessary to become successful traders. Fortunately, much of this can be learned.

1) Commitment

It would be best if you believed you will be successful and work hard at it. Sorry, but you won’t get none of that “If you think hard enough you can achieve” from me. This means learning and practicing while others post selfies on Instagram and watch mindless tv shows.

2) Perseverance

There are times when despite your best efforts, you will run into a bad patch. The weak minded will shut down their computer and go back to a life of ‘normal’. However, if you can push past this, you are likely to succeed in the long run. You learn more from failure than success. Review each trade to see whether you let your emotions control you instead of data-backed judgement.

3) Learn

Elite cryptocurrency CFD traders are incredibly humble. They understand that there is no such thing as the perfect strategy. Therefore, they are always learning and trying to improve. This is an endless quest. The moment you stop learning, you stop growing.

If you do the 3 things above consistently, you are likely to become an exceptional trader. Most people trade for a week and then give up when their Lamborghini and mansion haven’t yet arrived. Cryptocurrency CFD trading is a marathon, not a sprint.

In conclusion, I hope you found this article useful. I am not encouraging you to become a cryptocurrency CFDs trader. There are big risks involved. You are more likely to make a loss than profit. However, if you are committed, invest money you can afford to lose, and don’t give up you could become quite  successful.

By Shelly Burns, who is Head of Content for BinaryOptionsExpert and due to her vast experience in the online broker space, has a very insightful insider knowledge of how brokers work.

If you would like to have your company featured in the Irish Tech News Business Showcase, get in contact with us at Simon@IrishTechNews.ie or on Twitter: @SimonCocking