Hello fellow members of this community,

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it is a great blessing to be part of this week cryptocurrency homework week2.

I will like to talk about, cryptocurrency CFDS.

CFDs in cryptocurrency simply means contracts for difference. In this regards I will this introductory part to commend and thank our able professor @kouba01 for putting up this interesting topic. I will like also, to touch on the basics of some of the question before answering.

Question one

What is cryptocurrency CFD?

Let me begin by explaining cryptocurrency in brief.

Cryptocurrency is digital computerized form of currency which verify and record transaction. Cryptocurrency is a decentralized system in the blockchain, which uses the cryptography.

It is not a physical currency asset unlike our local currency such as euro, dollar and Ghana cedi.
Cryptocurrency CFD can be explained as the legit in which investors can exchange prices for cryptocurrency.

Example of cryptocurrency exchange in CFD include bitcoin, litecoin, etheruem and binance ETC. CFDs works through individuals putting part of investment amounts. The investors leverages can multiply in a price change in the coin market or lose profit.

This most at times leads to rapid loose of money or funds.

how CFD cryptocurrency work

CFDs are available for assets underlined, they shared for foreign exchange and commodities. One can owe CFD without owing the physical or the actual delivery assets.

They trade over the counter with high security firms, which is known as CFD provider.

List of the process of how CFDs work

1. Spread and commission; prices are writing on it thus buying price or bid price and the selling price or offer price.

2. Dual size; traded contract varies depending on the underlying assets.

1. Duration; the time of usage will determine your charge.

2. Profit and loss; in order to calculate your profit or loose in CFD, the following formula can be used.
   Profit loss = (number of contracts * value of each contracts) * (closing price-opening price).

Question two

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

We will be able to determine if investor cryptocurrency CFDs is suitable for my trading strategy. My presentation will be based my research. One can determine if cryptocurrency CFDs are suitable for his trading strategy if;

1. The investors should have a short term strategy in trading. The investor should not make a long term plan. This is because you don’t know what might happen next. So the best decision is for the investor to make a short term plan so incase anything happen the investor does not loss much.

1. Also an investor must put its backside of his mind that buying, cryptocurrency is expensive for the fellow. In this regard you can quiet certain wills with people you are dealing with. Since you know that buying cryptocurrencies is too expensive you know what you are dealing with.

1. Furthermore, investors can also know if their cryptocurrency CFDs the best option for their trading strategy. if they want to make profit from trading but with very low initial startups capital.

1. In addition, investors can endure the cost taking risk of trading in unconducive environment. It means that the investor should be prepared to take risk whenever possible, in this regard you can know if cryptocurrency CFDs are suitable for your strategy.

Question three

Are CFDs risky financial products?

In life there is risk in everything we do in daily bases, so I will like to highlight the risk involved, advantages and the disadvantages of trading cryptocurrency CFDs.

RISK INVOLVED

1. Charges and funding costs: the charges and funding in CFDs cryptocurrency significantly goes higher comparing to other CFDS position.

1. Price volatility: the unreality in price change due to unreasonable series of events transpire leading to change in market value.

1. Another risk I will like to also talk about is, its transparency. There is mostly variation in prices of cryptocurrency in determining the value of your CFD position. In this regard there could be greater risk of you not receiving a fair accurate price for the transaction.

Advantages of cryptocurrency CFDs trading

In CFDs cryptocurrency trading, investors have the option benefits over the direct buying and selling of cryptocurrencies.

some of the advantages of cryptocurrency CFDs are explained below:

1. Better regulation: companies with high reputation, have financial watchdogs to protect the interest of the investors. Thereby preventing investors from been scam.

1. Leverage trading: leverages is more reason why most people go for CFD cryptocurrency. This means that you only need half the percentage of the amount they needed for the trading.

1. Easy setup: CFDs cryptocurrency does not make their systems complex. These systems can even be used by somebody who have less knowledge in technology. CFDs have easy setup procedures for thie4r trading strategy.

Disadvantages of CFDs cryptocurrency trading

as I have done justice to the advantages I will like to also take same chance to talk about the demerits of the CFD cryptocurrency.

1. Trust considerations: the is based on trust gain by the CFD cryptocurrency investors. Some CFD brokers have already withdrawn their investments from cryptocurrency due to the less trust they have for CFD cryptocurrency trading.

1. Price consideration: the price consideration marks the gap between buying and selling. Moreover, all CFD brokers are charged a fees for taking a CFD position day by day.

Question four

Do all brokers offer cryptocurrency CFDs?

Not all brokers offer cryptocurrency CFDs, but at times a middleman or an agent is needed to stand between an investor and the cryptocurrency seller to perform the transaction.

One can trade without having to pay a fees for centralized exchange. So not all brokers offer cryptocurrency CFDs.

Question five

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

I will be using the creating the etoro to demonstrate this trade.

1.To begin with, I will open etoro's official website here

2.After which I will open an account, before switching from real account to virtual account.

1. I visited the profile page to complete my profile.

4.I then filled in my details with my credit card to continue.

1. After filling my card details, I returned to my virtual profile.

6.In my virtual portfolio, I proceeded to the trade markets.

7.Then I searched for BTC and selected and opened my trade.
A trade of $8000.00

Below are the screenshots of the steps I took.

Conclusion

Cryptocurrency CFDs are a fun way of making huge marginal profit.
Don't get it twisted you can equally make huge losses.

An Investor who is looking for a quick way to make money money without having to keep all theses coins and going through all the hustle should invest his time into CFDs.

note; all pictures not cited are from etoro's official page.

Thank you.