Whenever an investor moves into the trading space, be it on securities, currencies or derivatives, the strategy often moves from the ‘long term’ through to a short to medium-term focus, to profit and maximise returns based on market movements.
In the world of cryptocurrencies, many traders over the past several years have been successful, however, for many others, there have been significant losses sustained due to the huge fluctuation in many currencies’ values leading up to and after the January 2018 market crash.
So how can you get started successfully in cryptocurrency trading?
Like any investment there are risks, and when trading in cryptocurrencies you should never invest or trade more than you can afford to lose.
There were many stories of ‘uneducated investors’ being sucked in by the FOMO (fear of missing out) on the cryptocurrency price rises and taking out loans, in some cases losing 85% of their value in a matter of a month. One example of this relates to a 32-year-old who took out a loan for crypto that is now required to make repayments of over $3000 per month until December 2021 to repay the debt and interest!
Your first step to investing or trading in cryptocurrency is to get educated. Read forums, blogs, speak to an alternative investments specialist and of course watch market movements of the currencies that you are interested in. Not only the past few days or weeks but long term reviews due to the relatively new cryptocurrency trading markets so you can look at the market as a whole and keep an eye on the fluctuations.
To trade cryptocurrencies in Australia, the easiest way to get started is to set up an account on a cryptocurrency exchange.
Meanwhile, for those looking at CFD’s or derivative action as well as cryptocurrency trading, eToro provides services in this space, however, investors should note the disclaimer from finder.com.au when referencing the CFD trading with this particular site “highly volatile investment product. Your capital is at risk. 76% of retail investor accounts lose money when trading CFDs with this provider”.
As with any trading account, whether it is shares, bonds, CFD’s or currencies, once you have your account and you have uploaded money you are ready to trade.
Similar to trading FX or foreign exchange, the major premise behind cryptocurrency trading is that you are better off when it comes to the movement of the currency up or down versus the AUD or USD that you use to purchase the coins/currency (as many platforms operate using USD).
While currency trading was often left to the financial elite or the experienced traders, the ‘crypto craze’ brought a whole new level of an investor trying to strike it rich – while many did, many did not and lost.
The difference with cryptocurrency trading is that there is still little regulation on the market or the currencies themselves with disagreements in financial circles about their ‘actual value’ with many people not understanding them.
Cryptocurrency trading or CFD’s provides a platform to trade, speculate, profit and to potentially lose, so the best step is to speak to you alternative investments expert to get solid, qualified financial adviser before you start putting money in cryptocurrency trading.
For the full breakdown on Cryptocurrency check out our article: Cryptocurrency – The rise, fall and future
We welcome you to give our team a call to discuss your investment goals and objectives.
You can call Walker Capital Australia on +61 2 8076 2210, and we’ll see how we can help you achieve your investment goals.