high risk investment, big potential
After the bursting of the speculative bubble of Bitcoin and other cryptocurrencies, many “investors” moved away from this “currency”. Nevertheless, it is always possible to earn money if you have a taste for risk. The point is to understand that it is possible to grow your investments even when the value drops, and not invest what you can not afford to lose.
Nota Bene: the cryptocurrency trading is to be reserved for those who want to spend a lot of time, to learn, to learn and especially able to keep the head on the shoulders. A matter of experts.
On eKonomia, we know that many of our readers, who have money problems, would be tempted to get into the world of trading, and why not in bitcoin and other cryptocurrency. This is most of the time a gross mistake, which we will explain.
We believe very strongly in cryptocurrencies, and hope that they will someday replace our fiduciary currencies (euros, dollars), but for now, it is clear that attempts at scams and speculation reign supreme.
This article is a highly speculative approach to cryptocurrency trading, here you are!
The runaway for “cryptos”
The entire economic sphere, including investors in traditional sectors, has been interested in cryptocurrencies when they have demonstrated their unparalleled potential for returns. By taking the train at the right time, some have indeed multiplied their investment by 10 or more, all in less than a year. This is where the banks, the states and the media began to take an interest in this sector, which is as little known as it is lucrative. Regulations and smear campaigns were then put in place to dissuade investors from placing their money elsewhere than in the traditional sectors of the economy.
The rapid fall of Bitcoin, following the bursting of the bubble, helped to support the demonstration, thus dissuading the neophytes to look further into the issue. In fact, it is not so simple because it is quite possible to take advantage of a bear market, as well as a bull market. As you can see, some have multiplied by 10 in one direction, then in the other. However, where gains are maximal and fast, so are the losses.
To convince myself of the volatility of cryptocurrencies, I invite you to regularly check CoinMarketCap. I go there every day, and seeing a motto take 10 or 20% in a day is something banal, just like losing 10 or 20%!
A Japanese candlestick, a graphic used in technical analysis. If it’s gibberish for you, then you measure the length of training you have to do before you start trading, let alone the cryptos!
What about today’s potential of cryptocurrency in terms of placement?
There is no ready-made answer to the meaning of the evolution of the latter, but the possibilities of taking advantage of it remain intact. To understand how these investments work, we need on the one hand a global vision of the cryptocurrencies themselves, and on the other hand an understanding of the risk which remains the counterpart of the potential of gains.
The risks associated with investing in cryptocurrencies.
One of the main risks of investing in a cryptocurrency is its outright disappearance. Many small cryptocurrencies, “alt coins” (alternative to Bitcoin) have indeed a limited life. They do not find takers on the market and their disaffection leads either to their disappearance or to the stagnation of their prices. Regarding major currencies, starting with Bitcoin, their disappearance seems more than unlikely.
Trusted third parties, ie platforms that buy, sell or trade in digital currency markets are also a crux of the problem. The case of MTGox, whose bankruptcy has resulted in the disappearance of thousands of accounts and therefore the placement of all its users, is one of the most glaring examples. Whoever says trusted third party also says security, and security remains a major problem in the cryptocurrency sector.
One way to minimize the risk is to store your own cryptocurrency on a “wallet”, a virtual wallet protected by a complex password. However, any security has its flaws, and cybercriminals redouble their ingenuity to achieve their goals. Thus, scams are multiplying on social networks for example. Pseudo specialists offer juicy placements or advice, their only goal remaining to steal people naive enough to trust them.
The opinion of “specialists” in finance.
The classic actors of finance will tell you (practically) all: investing in cryptocurrencies is a bad idea. For example, the banker will offer much safer investments with attractive earning potential. It is sometimes these same specialists who were enthusiastic before the bursting of the internet bubble. The use of a stock portfolio gives them money, so it is quite normal that they try to sell their products.
It is also obvious that these people discover the cryptocurrency and that as long as they will not have a product to offer on which they can take a margin, they will advise against this sector of investment. In addition, one can also think that if their expertise on the sector was so brilliant, they would certainly not work anymore as financial advisers.
What solutions to invest in cryptocurrency by minimizing risks?
On the other side of the Atlantic, where we are more reactive on the opportunities, the banks have already set up “futures” linked to the Bitcoin course. Here, the product is safe from the risk of hacking, theft and is completely regulated. Because this is the problem for the institutional actors of finance, cryptocurrencies are deregulated and non-centralized: no central bank decides the market, it self-regulates itself, according to the very principle of “the hand invisible, “so dear to capitalism.
If the share of technical protection is ensured, it is amusing to note that this is done through futures, product that does not exclude the intrinsic risk part of trading. Trading Futures requires the opening of a dedicated account to intervene on the US market. The gains realized will be taxed as capital gains.
CFD trading on Bitcoin.
CFD brokers did not wait to invest in the cryptos market. These professionals know that there are good investments to make, despite the risks. For a common person, it is tempting to get into it too, but we must not forget that it is necessary, before throwing himself into the arena, to have at least fairly advanced skills in trading.
CFDs or “Contracts For Difference” thus make it possible to invest in an asset (currency pair, index, share, commodity …) through a contract defined upwards or downwards. In fact, the investor does not own the asset, just the contract. When he resells his contract, it is the difference between the purchase price and the selling price which constitutes the gain or loss.
This type of financial product has several advantages:
The trader can use a leverage effect. A lever x10 on a CFD at 100 € is worth 1000 € for an investment that remains 100 € The brokers are regulated by European organizations.
Finally, before becoming an apprentice trader, I recommend a video of the excellent Thami Kabbaj. He explains the reasons that lead us to lose money.
Do not invest money in trading until the tools are fully mastered! All the interest of using a trading simulation platform is there, there is no easy money, there has never been, and even less on the stock market.
The opinion of eKonomia.
Cryptocurrency trading, yes, but only after a very good training.
Attention: we remind our readers that trading should be reserved for very well-trained people, who know exactly what they are doing. Too many people shout at the scam because of significant money losses, when they simply did not master the tools of trading. The advantage of demonstration accounts is there, it allows everyone to learn, take the time to embark on these risky investments, but with great potential.
Again, never invest what you can not afford to lose!
I quote Vestle.fr:
86% of retail investors’ accounts lose money by trading on CFDs with Vestle. You should evaluate if you can afford to take the risk of losing your money.
So there is no easy money. The very sharp rise of Bitcoin in 2018 attracted a lot of people who were not prepared for the world of finance, let alone cryptocurrency, by definition very volatile. The fall of the cryptocurrency has confirmed, those who knew what was happening have won on all fronts: by betting on the rise at the right time, then down. We understand that the nerve of war is above all information, and to be aware of what is happening on the markets.
Before venturing into trading, it is better to train and spend a lot of time thanks to a platform for simulations. Keeping in mind that while it’s easy to keep a cool head when there is no risk, investing your savings “for real” can make very bad decisions. not on the rational.
Leverage allows considerable gains, but also considerable losses, hence the importance of training, if only to learn how to implement “stop loss” …
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