Crypto Academy Season 2 weak 2 - Homework Post for Professor @kouba01

afrojin (52)mutedin SteemitCryptoAcademy • 3 years ago

Hello Professoer @kouba01 ,

Question 1 :

What is a cryptocurrency CFD?

Cryptocurrency is a type of digital asset or a digital currency. it does not appear in physical sense as is the case with regular fiat currencies such as the Dollar and the Euro. Cryptocurrency not regulated or managed by any financial authorities or banks in the same way as traditional currency, but is mostly self-regulated, using various encryption techniques.

CFDs works by an individual putting down a portion of his investment amount. So this simply means that leverages can multiply the prices change on what profit the investor has gained or loose. This could sometimes lead to you losing money rapidly.

Cryptocurrency CFD is then defined as a way in which an investor can hypothesize in the change of price of a cryptocurrency, examples are ethereum or Bitcoin.

Question 2 :

How do I know if cryptocurrency CFDs are suitable for my trading strategy?

So ,in trading a contract for difference, we understand that the true position is always a gain or loss since the trade forces would always be favorable or detrimental ie a profit or loss
In trading we should be sure if our crypto currency CFDs are suitable for our trading strategies .And there are ways to know as to if they are suitable including ;

Study and knowledge of the market ; the study of the market gives us understanding of the kind of assets before just grabbing holds of tokens or coins so that we can know how to manage the traded ,increase profits and manage losses

Ability to easy sell your assets/coins ; In the presence of a degrading or falling market ,the ability to sell a coin is needed to avoid total loss of the trade and this would be a great consideration for me while checking if a CFD ie suitable for trading strategies more especially in volatile assets that drop heavily and rise same way too

Leverage applications ; The outstanding features of leverages as seen in the lesson seems to be a great mind-blinder in the minds of some traders since they feel they can just trade and magnify their trade outputs even in relation to the original little amount deposited while they forget that the same way profits are magnified losses too would be magnified

Therefore we should consider leverages so that we won't be significantly deep in losses after a trade

Question 3 :

Are CFDs risky financial products?

Yes, CFDs are very risky financial products. As we all know, cryptocurrency is very volatile in nature and it can move very fastly to any direction, short or long. So, if the market goes opposite to the price forecasting of the trader, in this way, trader can face huge loss. As margin and leverage is part of CFD trading, it adds more risk to this trading. Proper knowledge of such trading is very essential otherwise, it can very risky and a trader can loose all of his capital. That's why every website of brokers show warning on the main page stating that trading involves high amount of risk. It may not be suitable for everyone. So, it can be said that cryptocurrency CFD trading is very risky and only risk capital should be invested.

Question 4 :

Do all brokers offer Cryptocurrency CFDs?

No all the brokers do not offer Cryptocurrency CFDs, it is banned in some the nations like America , so yeah there are some brokers who offer Cryptocurrency CFDs , and the name of the brokers are given below:

1.FXPro
2.Go Markets
3.XM Global
4.BDSwiss
5.OctaFX
6.eToro.

Question 5:

Explain how you can trade with cryptocurrency CFDs on one of the brokers

Go to https://www.etoro.com/login/? & signup and login

Go to Virtual Portfolio for Demo trading
You can learn without any problems .

Go To Market Trade

You can chose bitcoin/ Altcoin .

You can see how much unit or aseet you are buying in tue cryptocurrency ,trading or investing in. Then click on open trade.

Conclusion

*CFDs are processes that give users, investors and cryptocurrency enthusiasts the opportunity to make large amounts of profits or in the worst cases large amounts of losses based on the flow of their own value.

It is necessary to take into account all the risks involved in investing in a cryptocurrency since the best investor is the one who does not invest what he is not willing to lose.*

@kouba01