What is a cryptocurrency CFD?

Maybe there are still many of us who don't know that hearing the word from CFD. Indeed, CFD is an activity that is rarely known by many people. Usually, those who know about CFD are traders who have been in the trading world for a long time.

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CFD is an agreement contract made by a trader with a broker, the agreement in question is an agreement in determining the direction of movement of the value of an asset. The assets that are frequently traded in CFDs are stocks, commodities, ETFs, oil, gold, and many more. If the trader's guess is correct, he will benefit from his guess.

However, over time and with technological developments, the assets traded on CFDs are increasingly varied, now we can trade cryptocurrency assets on CFDs or often called Cryptocurrency CFDs. This is done the same as trading other assets, it's just that we have to be more careful in trading with cryptocurrency assets because the movement of cryptocurrency is very fast.

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

We have to consider if we want to do everything, this is no exception for trading activities on Cryptocurrency CFDs. Especially for people who are very new to Cryptocurrency CFDs, they must be very careful in determining their choice whether Cryptocurrency CFD is suitable for the way they trade.

The most important thing before entering the world of Cryptocurrency CFDs is to first understand what is in it, all you have to know is that playing trading on Cryptocurrency CFD is not the same as playing trading normally, this trading has a higher risk than trading. Conventional, if you don't study it well and just go along with it then get ready you will experience a lot of losses.

There have been so many people who have suffered losses from trading on Cryptocurrency CFDs, on average they don't really understand what CFD Cryptocurrency is and how to trade in it first before trying it. I myself have experienced losses in trading on Cryptocurrency CFDs, although I did not experience "real" losses because I just tried it on a demo account. But it has become a lesson for me that we should not go straight into something that we do not understand at all, study first slowly and find the point of advantage that we can take.

Are CFDs risky financial products?

As I have explained in the answer to question number 2 that CFD Cryptocurrency is very risky. This is because when we trade on Cryptocurrency CFDs, the assets/money we use will be held by the broker, and we don't have any holding assets as collateral. If our guesses are wrong, then our money held by the broker will be forfeited and we will have nothing left because this is what many people think that Cryptocurrency CFD is a gambling activity.

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Because of that, many brokers made a disclaimer at the beginning when we were going to trade on Cryptocurrency CFDs, the contents on average said that trading activities on Cryptocurrency CFDs had a very large risk, and we had to be prepared for that risk. So for friends, you have to be very careful in trading on Cryptocurrency CFDs.

Do all brokers offer cryptocurrency CFDs?

If you see my answer to question number one then it is answered that not all brokers trade crypto in their markets. Because since the beginning CFD was intended for trading real assets such as stocks, forex, gold, ETFs, etc. Meanwhile, cryptocurrency is something new to be traded on CFDs.

There are several examples of brokers who trade assets other than cryptocurrency, including Libertex, eToro, RoboForex, Plus500, XTB, etc. You can search on google for other brokers.

How you can trade with cryptocurrency CFDs on one of the brokers? (Using a demo account)

I'll take IQ Option as broker example for steps to create a demo account and how to trade on Cryptocurrency CFD

1. The steps to create an IQ Option account:

• Visit the website IQ Option and click on the "Get Started For Free".

• You will be taken to another part of the page to register. Enter your email and create a password, then don't forget to check the box to agree to the terms and conditions. Then click on the "Sign Up" button.

• Wait until your account creation process is complete.

2. The steps to trade at IQ Option:

• After your account has been created, you will choose which account to use, choose the option "Start Trading On Practice Account" on the left.

• You will be taken to the home page of your trading account. Then click on the type of asset that is currently being traded in the yellow circle.

• Choose a crypto option and choose the crypto asset that you want to trade. Here I am trying the Ethereum coin.

• Fill in the amount you want to trade, then don't forget to fill in the Take Profit and Stop Loss options. Finally, choose what activity options you want, here I am giving an example of wanting to sell ETH, aka I think that ETH will experience a price decline.

• The chart will show you the predefined "Take Profit" limits.

• To check the amount of money on our demo account, click on the tool at the top right of the page and look at "Equity". Here my amount has decreased from $10,000 to $9,951.23.

Conclusion

In my opinion, if you are the type of person who doesn't like to take big risks then don't trade on Cryptocurrency CFDs, because the risks that I think are too big. But on the other hand, if you like to get big profits and don't really care about the risks that will be obtained, then try to study cryptocurrency CFDs first, and use a demo account as learning material.

cc: @steemcurator01
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