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How I lost 1600+ USD in Less Than 3 Hours

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A couple of days ago I wanted to show you how you can earn a lot of money by trading CFDs (Contracts for Difference). I made a pledge to myself, and to you, that I only was going to use 10 000 NOK (approx. 1200 USD) as my initial bankroll. The goal was to make as much money as possible in the coming weeks (and months). However, as I also wrote: This is margin trading and highly risky. You can earn a lot of money with the correct trades, but you can also lose an equivalent amount of money. You can even lose more money than you have on your account – if you are really unlucky.

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I knew that I most likely was going to go bankrupt (lose my entire bankroll) in the near future. But that it would only take two days to lose it all, well that even surprised me.

Read the first post here: (Video) How I Earned $400 + in less than 5 minutes Today

Second Day Trading, What went wrong

Well, as you might have guessed, I lost both my initial bankroll of $1200 and the $400 I earned the previous day. So what happened?

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I thought I read the current market correct and added a “buy” order at 7 points. I was up more than $200 (with $1800 on the account) within 10 minutes, but then the market shifted and a downtrend started to appear. The Dow Jones index fell sharp for a few minutes and I got nervous. Suddenly I was down with more than $600. You might ask yourself why I would trade with such a high margin and not put a stop-loss order sooner. Of course, I could have traded safer, but that was not the point with my experiment.

After I saw that the market had shifted and that it wasn’t likely to change, I closed the position at -$800. My bankroll was now $800. Then the “human psychology” enters the scene. When most humans lose money on a trade, they tend to get obsessed with the fact that they should try to recover what was lost – and then some more. That’s exactly what happened in my case as well (even though I am very familiar with the phenomena). So, I entered a second trade with what was left in my bankroll. And yes, that trade was a losing trade as well. When I thought I saw a downtrend in the market, it suddenly changed and went beyond my first buy position. So, if I just had waited and held on the first trade, I would have had more than $2000 on my account. Instead, I got anxious and traded a second time ending up in a losing streak.

When that is said, I could have been a lot more careful. I could have traded for far less than I did to ensure that I didn’t lose my entire bankroll (the golden rule is to have 50x what you are currently trading for as your bankroll). But, I’ve done this for more than 3 years, and it always comes back with the same result:

Unless you know something that the market doesn’t, you will end up losing money or earn less than by putting your money into an index fund.

I’ve tried multiple strategies, and the problem with CFD trading is the fee you pay every time you enter a new trade. And when you leave a trade over a longer period of time, you can end up paying even more due to the difference between the CFD market and the assets you trade during opening and closing hours + an interest fee that the CFD-platform charges (when leaving a position overnight).

I hoped that I could have traded over a longer period with my 10 000 NOK, but the result would have been the same and that was my initial goal with the experiment. To warn you about trading with CFDs and to make you understand that you should never, ever, start trading CFDs. Unless you are a wonder child or have a robust system that works more than 75% of the time (which no one has), do not bother to start with CFD trading.

I know it looks like “easy money”. But please read our 2. lesson: Never lose money. I’m 99% certain that if you start with trading CFDs, you will end up losing money eventually.

All in all, I’ve lost more money on CFD than I’ve earned. And yes, some days I earned more than $60 000.

Please make a comment below if you wish to correct my findings or if you got any questions.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Fidelity Investments is Mining Cryptocurrency

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Fidelity Investments is a multi-billion dollar brokerage  that just so happens to be mining cryptocurrency. In fact, it has been at it for three years, using its own computers to harvest bitcoin and Ethereum.

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Profitable Experiment

CEO Abby Johnson recently told Fortune that its U.S.-based mining operation is “making a lot of money.” This comes despite running a relatively modest operation.

Hadley Stern, Senior VP of Fidelity Labs, described his company’s venture as an “experiment.”

The real reason we began mining, and still do, is to learn how the network works, how consensus works, how difficulty levels work,” he said in reference to the mining process.

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The key to profitability has been the dramatic rise in cryptocurrency over the past year. Bitcoin and Ethereum are the world’s No. 1 and 2 cryptocurrencies by market capitalization, and no-one else comes close.

Well Ahead of the Pack

The fact that Fidelity has been at this for three years speaks volumes about the company. Other, much bigger players are still dipping their toes in the market, but are unsure about how to proceed. Goldman Sachs is reportedly on the fence about starting a cryptocurrency trading operation, while J.P. Morgan has already begun handling customer orders for bitcoin-based instruments.

Fidelity is doing a lot more than just mining tokens. Earlier this year, it reached an agreement with Coinbase to let customers view cryptocurrency prices alongside other assets on their Fidelity homepage.

Coinbase is the world’s most funded cryptocurrency exchange with more than 7.4 million users.

Cryptocurrency Prices

The cryptocurrency market ended the week on a firm note, with bitcoin (BTC/USD) reaching a session high of $4,425.00. At press time, the index was up 1.6% at $4,368.

Ether is also trading higher against the dollar, with the ETH/USD rallying more than 3% to $305.

Ripple (XRP) lost momentum on Friday, but still managed a weekly gain of 21%.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Chinese Government Eyeing Fresh Bitcoin Legislation?

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The Chinese government could roll out fresh cryptocurrency regulation in the coming months permitting licensed brokers to operate, based on recent information from Xinhua.

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The state-owned news publication recently revealed that the government is mostly concerned with stamping out illegal activity involving bitcoin and other cryptos. Government authorities could be planning to regulate the market by creating a licensing program with strict Know Your Customer (KYC) and Anti-Money Laundering (AML) systems.

The Case for AML

The need for KYC/AML protocols has long been raised by cryptocurrency proponents, especially in reference to initial coin offerings (ICOs). In response, the blockchain community has come together to create the Simple Agreement for Future Tokens (SAFT). The SAFT is both an instrument and open-source framework for token sales that vets accredited investors.

SAFT activity is quickly gaining traction, with the likes of Gizer recently issuing a presale of its ICO through SAFTLaunch.

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SAFT was officially created by Protocol Labs in close collaboration with AngelList and Cooley.

China’s Stance Looms Large for Cryptocurrency Market

Although digital assets have recovered from the China-induced flash crash of September, favorable regulations on the mainland could mean big business for bitcoin exchanges. Prior to the ban on ICOs and bitcoin brokers, Chinese investors were responsible for a quarter of all BTC trades.

According to Xinhua, China is likely to pursue a licensing program similar to Japan, a country that recently approved 11 cryptocurrency exchanges. CnLedger, a leading source of cryptocurrency news in China, recently had this to say:

“Xinhua News, official press agency of CN: Virtual currencies have become the top choices of underground economies. We shall adopt ‘0-tolerance policies’ towards crimes hidden underneath and take measures such as record-keeping, licensing, AML processes, real-name, limiting large transactions.”

Is China’s cryptocurrency ban temporary? It certainly looks that way. Regulators must already know that the ban hasn’t stopped mainland investors from buying cryptocurrencies next door in Hong Kong or Singapore. A saner approach to an all-out blanket ban is a tighter regulatory framework that will stamp out money laundering and other underground activities.

«Featured image from Shutterstock.»

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Tim Draper Has Made Over $110 Million Since 2014 With his Bitcoin Investment

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Tim Draper, the billionaire technology investor and prominent venture capitalist who has invested in some of the most successful technology startups in the likes of Coinbase, Patreon, SpaceX, Tesla, Box, FourSquare, has profited over $110 million from his investment in bitcoin less than three years ago.

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In 2014, Draper participated in the auction of 144,336 bitcoins by the US government and the US Justice Department, which were seized during the investigation into Silk Road, a dark web marketplace. Draper was granted the permission to purchase a batch of 30,000 at around $600 from the US government.

Upon securing 30,000 bitcoins, Draper told Fox Business:

“[I’m] very excited about bitcoin and what it can do for the world. Bitcoin is as big a transformation to the finance and commerce industry as the internet was for information and communications. If bitcoin were here in 2008, it would be a stability source for our world economy. Everybody should go out there and buy a bitcoin. Every investor who’s a fiduciary should at least be partially involved in bitcoin because it’s a hedge against all the other currencies. There’s a whole ecosystem being built that’s going to make commerce much easier with much less friction and safer.”

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Today, Draper’s 30,000 bitcoins are worth $129.9 million. Considering that Draper had spent $19 million purchasing the batch of 30,000 bitcoins in 2014, Draper has recorded a profit of over $110 million in less than three years.

While Draper held onto his investment in bitcoin, the US Justice Department was quick all of the 144,336 bitcoins seized during the Silk Road operation. According to various sources, the US government sold the majority of its 144,336 bitcoins at a price of $336, at $48 million. If the US government had sold its bitcoins in 2017, it would have generated an additional profit of around $573 million, as 144,336 bitcoins at today’s bitcoin price of $4,330 are worth $624.9 million.

Bitcoin price was below $350 in 2014. Today, it is over $4,330.

Since 2014, in addition to purchasing tens of thousands of bitcoins, Draper has funded some of the most successful bitcoin companies in the cryptocurrency market including Coinbase and Korbit. Earlier this year, Coinbase secured a $100 million investment at a $1.6 billion valuation, while Korbit was acquired by the parent company of a $10 billion gaming company in Nexon at a $140 million valuation.

Furthermore, Draper has not sold his stake in Coinbase and earlier this year, Brian Armstrong, the CEO of Coinbase, revealed that Coinbase is still at an early stage in terms of developing and scaling. Armstrong noted that it will evolve into the safest and most trusted exchange in the global market.

“Digital currencies are having their ‘Netscape’ moment. The pace of innovation has been accelerating and we are now seeing exciting projects and companies being built on top of digital currencies. We’re beginning to transition into phase three of our secret master plan. Our goal is to be the safest, most trusted and compliant, and easiest to use. Not the first to market with new assets. Especially at scale, it takes time to ensure any new asset we add is well tested and secure,” said Armstrong.

Coinbase is also one of the two exchanges in the US market apart from Gemini that is targeting institutional and retail investors by providing sufficient liquidity. As Coinbase and its flagship cryptocurrency trading platform GDAX continue evolve, Draper will position himself at the forefront of cryptocurrency innovation and disruption.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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