Steemit Crypto Academy Season 2: Week2 | Cryptocurrency Contracts For Difference (CFDs) Trading assignment submitted to @kouba01

The era of cryptocurrency in our world today is booming in the sense that many investors have seen it fit to engage themselves on trading therein. Many investors first analyze which of the cryptocurrencies they can actually invest to make more profit than loss in the crypto market.

Many at times investors find it difficult to predict the uncertainties involve while investing in cryptocurrency, but even at that, many through experience had found the rudiments and bases for forcasting the flunctuation in prices, hereby making profit without actually owning the assets. Trading on cryptocurrency Contract For Difference, CFDs, is the best choice for investors who desire to make more profit while trading without owning such assets.

WHAT IS CFD

Contract For Difference is a deal that is based on the buying and selling of implicit commodity, stocks or cryptocurrency. It enables an investor to speculate or predict the flunctuation of price ( rise and fall of price) in the global market and hence, make profit.

When trading with CFDs, the investor expect the value of the cryptocurrency, whether Bitcoin or Etherum, he is trading to either increase or decrease without owning the underlying assets; and the investor is paid in each right prediction he made while trading.
For every forcast he made, whether up and down, the investor is paid. When the prediction of the value of the assets goes in the direction the investor predicted, he will make profit; while if the prediction goes in the opposite direction the investor predicted, he will lose his funds.

HOW DO I KNOW IF CRYPTOCURRENCY CFDs ARE SUITABLE FOR MY TRADING STRATEGY

Trading strategy is said to be a fixed plan or principles that is constructed by an individual or organisation to achieve a profitable result in the global market.
Every business firm or organisation that don't make more profit than loss is liable to close or shutdown. So one of the major importance for trading is that the investor or trader will make profit or gain.

Contract For Difference has made the crypto market to be increasingly attractive in the sense that it offers a risk-free environment where the traders can earn continuously on each of the forecast they make, as long as their prediction is correct.
CFDs is suitable for my trading strategy in the sense that I am faced with only two options, purchase and sell. So for me to make profit while trading on CFDs, it is expedient as a trader to watch out the movement or direction in the flunctuation of price in the crypto market. The principle of leverage and margin trading has made trading with CFDs system a lot easier sense that it allows you to trade in a margin or boundary line whereby you can maximise your profit for every deposit you make while trading. This also makes your returns to be larger than the little amount you invested or deposited.

So predicting if the price of the cryptocurrency will rise or fall in the future will determine if am to make profit or not. So if am skilled in forecasting or predicting the rise or fall in the cryptocurrency, I will make more profit than loss in the global market.

Contract For Difference,CFDs, is suitable for my trading in the sense that it gives the trader the opportunity to earn both ways. As long as your prediction is correct, you can earn when you buy and also when you sell, as long as the price of the cryptocurrency you are trading either increase or decrease respectively.
CFDs is profitable to my trading because it give s the trader or investor the opportunity to make their choice: the choice of cryptocurrency to invest in, the choice to purchase it sell, the amount to invest and other things. Most of the transactions involve in CFDs is majorly done and conducted by the trader.

ARE CFDs A RISKY FINANCIAL PRODUCT?

CFDs is not suitable to every investors because if its high level of risk. As much as you can maximise your potential returns through the principle of leverage and margin,thus making more profit more than the minimal amount you invested, there is every opportunity and possiblity for you to lose.
CFDs is a very risky financial product. If the trader or investor is not skilled at predicting the direction of the price in the cryptocurrency correctly, it is possible that he can lose more than he invest in CFDs.
CFDs is like a sport bet, in the sense that you can bet on a particular movement of price of stock to either increase or decrease. So when your prediction is wrong you are liable to lose your funds, and most times the potential losses involve in CFDs system may be unlimited.
In cryptocurrency trades, it is good for every investor to invest a limited amount of money that he can afford to lose. But while trading on cryptocurrency CFDs, the trader can lose more than his capital if the trade does not go according to his prediction.

DO ALL BROKERS OFFER CRYPTOCURRENCY CFDs?

Trading on cryptocurrency CFDs is not that easy as it may appear because there are ups and downs. There are many cryptocurrency brokers who offers different trade in cryptocurrency but not all of them can offer trade on cryptocurrency CFDs because of its high level of risk.
Since CFDs allows the trader to invest in cryptocurrency using leverage, in the sense that you can deposit a capital that is above what you have at hand, it makes it difficult for brokers to trade on CFDs. So only but few brokers offers cryptocurrency CFDs.

EXPLAIN HOW YOU CAN TRADE WITH CRYPTOCURRENCY CFDs ON ONE OF THE BROKERS (USING A DEMO ACCOUNT)

1. MAKE YOUR CHOICE ON HOW YOU WILL LIKE TO TRADE YOUR CRYPTOCURRENCY.

In trading in cryptocurrencies there are two ways: you either trade by predicting the prices without owning the assets (CFDs) or you can buy and store a cryptocurrency with hope that it will increase in value in the future.
The latter talks about buying, owning and storing cryptocurrency in your wallet with the aim of making profit as the value increases; while the later talks about making profits while predicting correctly the price movement of the cryptocurrency correctly without owning the underlying assets.

1. OBSERVE AND UNDERSTAND HOW THE CRYPTO MARKETING WORKS.

This process is very much important to every investor who trades on cryptocurrency. Unlike any other financial trade, cryptocurrency has its own rudiments in how the transaction are being conducted.
Cryptocurrency trade is highly volatile, meaning that there is always flunctuation in prices, and every investor must observe and learn in order to know when the trade is favourable to him.

1. OPEN AN ACCOUNT (A DEMO ACCOUNT)

Opening a demo account help the trader to learn practically how the trade or transaction works. It gives the investor a clearer view in what he should be expecting while trading on cryptocurrency.
The trader don't need a digital wallet to to start trading, he can just start from the bases by inspecting and predicting the price via CFDs trade.

1. MAP OUT YOUR TRADING PLAN

By default, every trader ought to have a trading plan for profit or success in his business. The same goes with cryptocurrency, where there is high rate of volatility in price. It is expedient that as a trader to have a plan on how to maneuver the risk, uncertainties and loss involve while trading for a successful trade.
You must outline your goals, the cryptocurrency you want to trade, your method for trading, and the amount you will be Investing; all these makes up your trading strategy.

1. SELECT A CRYPTOCURRENCY PLATFORM WHERE YOU CAN TRADE

Not every environment is conducive for trading on cryptocurrency. The trader or investor ought to observe and make selection on which platform will be favourable for him to trade.
This platform can encourage a better and faster way of trading on cryptocurrency.
For me I recommend chrome as a good browser or you can use any of the mobile apps as a platform for trading cryptocurrency.

1. OPEN THE APP, OBSERVE AND THEN BUY AND SELL.

Once you have opened your account ( demo or real account), inspect the price movement on your screen and then start trading on the cryptocurrecy you chose, whether Bitcoin, Etherum or any other cryptocurrencies.

When the margin goes up or increases then you can purchase or buy a cryptocurrency, and when it goes down or decreases then you can sell. You earn in both ways only if your prediction is correct.