Crypto Academy ||Week-10||Homework Post for @kouba01 || Cryptocurrency Contracts For Difference (CFDs) Trading

Hi! I hope you all well and having a good day. First of all, Bundle of thanks to Prof. #kouba01 for out standing lecture about Cryptocurrency DFD. In this lecture, I have learned lot of things about cryptocurrency. In this post I try to put all the answers of the given question by professor. I hope you find it helpful. Let’s start the homework.

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What is a Cryptocurrency CFD?

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Before talk about CFD, I will explain cryptocurrency. It is a digital currency that have not physical existence. No one own this currency. It is computer programs or algorithms that run on the computers. All the transactions and trading done online by the help of computer algorithms. Every digital currency has its values according to his demand. Its price depends on the demand of specific currency in market.

Let me explain the what is exactly mean CFD. CFD is an abbreviation of Contract for Difference. It is a term in which trading is done even you have no crypto asset in your wallet or in your account. Trading is done on the basis’s crypto asset price. As we know that all the cryptocurrencies have huge nature of volatility. Prices of these crypto currencies are fluctuated with every minute or even second. In CFDs Trader experience that the value of crypto is increases or decreases. They open the position of Buy o Sell. They see the Long term or Short-term position of the crypto asset on the bases of fluctuation of specific crypto asset. In CFD term, they take advantage on both sides even price increases or decreases. In this contract agreement is done between the trader and broker.

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Key Point of Contract for Difference

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• Trade is based on contracts.
• Contract involved the Trader and broker.
• Trader decides the position either Buy or Sell.
• Trader also decide to pick the contract based on bullish or bearish tendency.
• Trader done the agreement by picking the position at the end of contract.

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How do I know if cryptocurrency CFD’s are suitable for my trading strategy?

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If want to do trading in CFD then we need to do some research on it. We should know that is Cryptocurrency CFD trading is suitable for me or not? So, to do this we need to consider following points take in to count.

1. As compared to other crypto trading there is huge risk in CFD trading.
2. Contract for Difference is suitable for short period of trading.
3. You can only invest, if you afford to lose the invested money. Because crypto market is highly volatile.
4. Through a regulated broker, we can make the trading environment safe.
5. If we want to trade, we should have the proper knowledge about leveraged trading.

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Are CFDs risky Financial Products?

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Yes, it true that CFD is very risky trading term. According to my perception, it is only suitable for those traders who are risk taker. Cryptocurrency is highly volatile in nature. Its price is highly fluctuated up and down. If the traders do the Technical analyses and price forecasting. If it goes wrong then they face the huge amount loss. In this type of trading the trader should have altogether complete knowledge about CFD Trading. If they predict in wrong way then they lose all the asset that they invested in it. It is only suitable for those who have enough money to invest.

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Do all the Brokers offers cryptocurrency CFDs?

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The Answer is No. Not the Broker offers cryptocurrency CFDs. Only a few brokers offer cryptocurrency CFD. Brokers that are currently offers the services to traders are listed below. These are all the top-rated brokers that offering the cryptocurrency CFDs.
XTB
It is the one them that offers cryptocurrency CFD. It provides outstanding services to the customers. It offers about 25 cryptocurrencies. In this about 82% of retails investors lose their money in CFDs Trading.
Swissquote
It is another broker that come in 2000. It is located in Switzerland. It offers cryptocurrecy CFDs.
eToro
It also offer cryptocurrency CFD. It is come in to being in2006. Its headquarter located in Tel Aviv in Isreal.
AVATRADE
It is the most trusted global brand that offer cryptocurrency CFDs. In this the 73% of retails investors lose their money.
HYCM
It is a broker that is located in UK. It offers about 60 cryptocurrencies. They clearly mention that CFD is highly risky trading.

Advantages	Disadvantages
Process of buying cryptocurrencies is simple there is no need to make token or wallet secure.	If trading is not properly controlled, it leads to huge loss.
Trading is done in safe environment in which broker offers several protections.	Sometime the amount of profit is gained or exceeded the profit line that made over large term when you hold the position over night.
Making the account Is easy in exchange.	It is very risky trading.
We can buy the cryptocurrencies CFDs even with fiat currency.	It leads to lack of ownership

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Explain how you can trade with cryptocurrency CFDs on one of the brokers (Using a demo account).

I will create Demo account on eToro step by step in more easy way. If you find any difficulty in creating the demo trading account on eToro then this post is for you. It provide guide to create an account on eToro.

Steps For Creating Account

Step:1

1. Visit the site eToro
2. Click on the Join Now Button.

Step:2

1. Put the User name, Email Address and Strong Password.
2. Then Check the Two check Boxes that is satisfy the Term and conditions of Site.
3. After that Hit the Create Account button.

Step:3

1. Find Real Under the Profile.
2. Click the Real dropdown.
3. Click the Virtual Portfolio in order to make it demo account

1. Hit the Go to Virtual Portfolio

Step:4

Now we have the Virtual or demo Account.

1. Click on the Trade Market Left Menu Bar.

1. Select the Crypto Button on Top as shown in Figure.

Step:5

In market I Select the Binance for demo trading.

1. Click on the Sell Button as shown in figure.

Step:6

1. Confirm that coin you have selected.
2. Put the detail that how much we want to sell. Amount of $750 i have inserted for trading.
3. Hit The Set Order Button

After Clicking on the button our order is placed on the portfolio.

As we can see that our order is placed on our portfolio. In this way we can create a account on eToro and make a demo trade on it.

Conclusion

Cryptocurrency CFDs is well known product. It makes the crypto trader able to make a short-term profit. It provides the huge exposure to the crypto market by margin trading. In CFDs trading we do not need to have much experience and depth strategy. In this trading you just have risk taking mind set. In this you will be successful.

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Bundle of Thanks to Dear Prof.

@kouba01

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Best Regards
@abdulsabor

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