Of all the options we’ve discussed for growing your Bitcoin wealth, this is the one where you can take a relatively small stake and turn it into something very substantial in a short period of time. Or lose the lot in the blink of an eye.
And it’s all due to leverage.
When you trade currencies… any currencies… you do it with a margin account, usually higher than any other type of trading.
Brokers commonly offer new traders a margin rate of 100:1 or higher, meaning you can control $10,000 worth of currency with just $100 of your own money, or margin.
Because the Crypto Currencies can be quite volatile and liquidity can be quite low at times, most brokers wind back the margin on Cryptos to about 30:1 – 50:1.
And that’s really a good thing for most people… especially when you’re learning.
A Quick Lesson In Margin Trading
So as an example, right now 1 Bitcoin is worth about US$2700.
Depending who you talk to, the price could hit $4000 by the end of the year, or there could be a correction that will see it dip to $1600 or lower before it continues on up.
So if I think it’s headed straight up, I could ‘buy’ 10 Bitcoin using $900 in margin.
If the price of a Bitcoin does reach $4,000 I can sell it to close out the trade, and I’ll have a tidy profit of $13,000.
But if the price drops to $1,600, I’d be looking at a $11,000 loss instead.
If I had sufficient funds in my account… in theory… I could wait it out and wear the ‘paper loss’ until the price came back up…
Assuming it eventually does… and still reach my profit target of $4000.
But if I didn’t have enough reserves in my account, I’d be stopped out once I ran out of available margin, and the paper loss would become very real, very fast.
So the lesson here is simply that high margins and high volatility is a dangerous mix, especially if you don’t have the protection of deep reserves.
It can be extremely profitable if you know what you’re doing, but if you get in over your head it can punish you just as fast.
Despite all that, I believe this kind of trading is a valuable skill for everyone to learn quite possibly the best option for the majority of people to achieve financial independence.
Yes there are most certainly risks, but they are manageable… if you get out of the Get-Rich-Quick mindset and treat it as a long term strategy.
Getting Started In Currency Trading
Obviously this short eBook is never intended to be a crash course in forex trading, but if you’re serious about it, I would like to set you off on the right path…
I’ve been trading FX for quite a few years now. I’ve blown up my account numerous times while I was learning and I’ve spent a small fortune on different courses and strategies trying to master it. I’ve been a member of a number of trader’s forums and communities and I even worked for a spell with a Pro Trader who used to manage millions for one of the big banks.
The one thing I eventually learned was, there is no quick option here if you want to do it right…
- Get-Rich-Quick packages you’ll find all over the internet are never the Holy Grail they promise to be. Most are simply repackaging one basic strategy or technical pattern that informed traders have known about for years…
- Expensive Training Courses are mostly repackaging basic information that could be found in a $20 book… or fr free… but instead they put together a flashy sales page, make some big promises and ask for thousands of dollars…
- Autotrading Robots are also more about marketing than substance… there are exceptions we’ll look at shortly… but most are trading those same basic patterns, tweaked to show some impressive past results…
The thing is, all these ‘shortcuts’ are based on common technical analysis that is freely available to anyone prepared to do a little work. And when I look back at the time and money I wasted looking for a shortcut, I really wish someone had told me as much back when I first started.
So when we get to the Action Plan section below, please pay particularly close attention to the recommended training… it is better quality than a $3000 course I once completed, and it will give you all the tools you need to trade virtually any market safely and profitably.
One Final Tip… That Most People Will Ignore…
Don’t Learn on Crypo-Currencies.
Cryptos are about the worst possible market to learn to trade on.
- They are highly volatile… meaning you can get some huge fluctuations in price in a very short period of time, which means you can make a lot of money very fast, but you can lose it even faster.
- They are low liquidity… meaning there aren’t as many people trading them so it can take longer to fill an order. And if the price is moving against you that can cost you dearly.
- And both of those factors combine to make it harder to identify reliable patterns… which makes it harder to find good trades.
So cryptos are a challenge to trade well, even for veteran traders.
You will be much better off learning of a relatively stable, high-volume currency like the Euro or Pound. If you complete the training course below, you’ll there is clear potential for similar profits with much less risk.
A missed opportunity is always better than loss of capital!
As much as you will want to ‘be there’ for the ‘big moves’ that are being promised in the various crypto-currencies, if you blow up your account learning, you won’t be there if/when they do happen anyway!