Cryptocurrency CFD Trading

Every market or financial instrument has its personality, and unlike Forex trading, the cryptocurrency CFD market is probably one of the most volatile markets.  But it is this volatility in the market that creates the chance for big profits.

The high level of volatility available with digital currencies will automatically replace the need to use margin trading. Even though margin trading is a powerful tool, margin trading of cryptocurrencies is a recipe for disaster for the inexperienced trader.

With that said, these are some trading tips that will help you approach cryptocurrency trading more successfully.

Before You Begin

The majority of people who trade or invest in cryptocurrencies misunderstand why they are buying specific digital coins and see it as a get-rich-quick scheme. Before you ever start buying Bitcoin or any other alternative currency, you have to understand blockchain technology and how the crypto world works.  The more you educate yourself, the more informed you’ll become, and ultimately this will lead to better trading decisions.

Secondly, most brokers don’t let you trade cryptocurrencies.  There are a few who do, and there are even fewer that have a wide range of coins to trade.

Before you invest your money in cryptocurrency you should also know that there is no guarantee you will make money, you might even lose money, so make sure you only invest with the money you can afford to lose.

How Cryptocurrency Trading Works

Cryptocurrency trading works almost the same way as you would trade the Forex market. In other words, if you buy Bitcoin or any other crypto, you’re doing so with the expectation that its value will rise shortly so you can sell it for a profit.

Conversely, you can also do short selling if you believe the crypto value will depreciate in the nearest future, and profit from the downturn in the market.

As with Forex currency pairs, cryptocurrencies also use a two-way quotation system where you usually exchange one fiat currency into a cryptocurrency and then, when you cash out, back into fiat currency.

You can use the same chart reading skills and chart pattern recognition skills that you acquired in the Forex market because the supply and demand forces work the same in the cryptocurrency market.

How to Start

If you want to get into trading cryptocurrencies, there are some dos, and the don’ts.  Knowing these should prevent you from making the same mistakes all novice traders are prone to make. Before you start trading cryptocurrencies, you need a broker that allows you the buying and the selling these digital coins.

As a general rule, we want to buy when there is panic in the market or a relative dip because that’s when we can get in at the bottom and pay a low price.

Only trade crypto though the most trusted brokers and before choosing one, do your research and look for online reviews like on this website.  Secondly, use brokers that offer two-factor authentication, which is a necessary step if you want a second layer of protection against hacking.

Cryptocurrency Brokers

Is It Profitable?

If you’re on the right side of the market, it’s pretty easy to see that you can make a quick profit. However, if you’re on the wrong side of the market, then you can lose a lot of money in a short period.

The Cryptocurrency market is very volatile, and it’s not uncommon to see 20%, 30% and even 50% swings every single day. If you’re day trading, this can translate to some nice profits if you can capitalise on the short-term fluctuations.

You can also choose to be an investor, which means that you would purchase some cryptocurrencies and take ownership of them until the value of your portfolio appreciates. Purchasing larger sums of cryptocurrency also has the potential to generate substantial profits because the digital coins have a history of increasing in value by 1000s percentage in a year.

It’s up to you to evaluate what your goals are and what level of risk you’re willing to take.

Is It Safe?

Trading cryptocurrency is a very high-risk market, and you should not invest more than you’re willing to lose.  We’re dealing with a virgin market that doesn’t have a long history, which is why this unpredictability makes cryptocurrencies a risky asset to trade.

Secondly, these digital coins are based on the blockchain technology, which is just computer code. Like in the dot-com bubble some of these technologies will fail, and there is a risk of losing all your money.

Like the pump and dump penny stocks, there are digital currencies that are pure scam intended to steal people’s money.

There are also security risks because the cryptocurrency exchanges and brokers are prone to be hacked.  With that, you risk losing all your coins. As a general tip, you should never store your coins on these exchanges or even wallets which have proven to have lots of vulnerabilities that can be exploited by savvy hackers.

The safest way to store your digital coins is to use a hardware wallet or a paper wallet which you keep offline. So far this is the most secure way to save your cryptocurrencies, and even if you lose your physical wallet, you can still recover your coins using a seed phrase.

Cryptocurrency Trading Hours

Unlike any other markets, cryptocurrencies are the only assets that trade around the clock, seven days a week, 365 days a year which is pretty unique in the financial world. For example, the stock market only operates 8 hours a day; 5 days per week while even the Forex market ceases trading over the weekend.

The main advantage of a 24/7 market is that you can buy and sell cryptocurrencies any time of the day making it very accessible to all traders.

Are Profits Taxable?

Like any other regular income, cryptocurrency trading is taxable. However, the cryptocurrency market remains a relatively new market, and because of that, there is also a lot of ambiguity in the laws. In Australia, Bitcoin is not seen as money, but rather as a property, thus being an asset subject to the same capital gains tax (CGT).

If you’re transacting any cryptocurrency, you need to be aware of the tax consequences — no matter where you live and whatever your circumstances are if you have significant money invested in cryptocurrencies when it comes to legal issues and taxes you should always seek help from a financial adviser or an accountant.


Trading cryptocurrencies work the same as trading Forex currency pairs, and if you’re already an experienced Forex trader the transition into cryptocurrency should be smooth. If you put in the time and the effort into doing your homework, there is a significant potential to make big money trading digital currencies.

Strive to gain more knowledge with each trade and learn from your mistakes as this is the path to successful trading

Trading Forex and CFDs is not suitable for all investors and comes with a high risk of losing money rapidly due to leverage. 75-90% of retail investors lose money trading these products. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
+ +