Steemit Crypto Academy Season 2: Week2 | Cryptocurrency Contracts For Difference (CFDs) Trading

Hello friends i am so excited to be here today to discuss with you my homework task, on the home work task i try to simplify and answers all the questions base on how i understand the lecture.

Homework Task Week2 Season2 given by professor @Kouba01 Cryptocurrency Contracts For Difference (CFDs) Trading

Homework tasks table of contents

(1) What is a cryptocurrency CFD?

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

(3) Are CFDs risky financial products?

(4) Do all brokers offer cryptocurrency CFDs?

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

What is cryptocurrency CFD?

Cryptocurrency CFD it is a method that is based on an agreement, that enable an individual to trade and invest in an asset usually a stock, cryptocurrency, index, or commodities the person do not actually own the asset or underlying asset, it enable the trader to take advantage of the Bitcoin price movement, without the need to own or buy the digital currency itself. When an individual trade on cryptocurrency CFD the person will expect that the value of the underlying asset will increase or decrease.

How do i know if cryptocurrency CFDs are suitable for my trading strategy?
Here are the following strategies to follow

• Tolerance in taking risks and trading in a hard environment, if an individual can endure in risk taking an stressful environment.

• The individual should have a short term strategies

• The individual will need to follow an investment target to make quick win on new price change

• One need to bear in mind that purchasing cryptocurrency is too expensive

• The individual need to look for a way in to the crypto-asset market without holding token or coins

• For one to from trading on margin and have a low initial money

• Finally one need to adapt a strategy to his or her personality, available, trading capital, tolerance to risk taking and trading objective

Are CFDs risky financial products?

It has been confirmed that CFDs are often financial products complicated and risky because they are built on the method of margin trading and leverage. It operate on the principle of leverage and margin trading.to trade in cryptocurrency the person need to understand leverage because it can make one to profit or loss, also the person need to understand margin trading which is the small percentage of the total trade value deposited, it can be 10% or even 20% of the total transaction and it's called margin requirements, your loses are magnified as they are calculated based on the full value of the deal, which means someone can end up losing more than the deposit the person made if they negative balance are not protected, it is a risk we should be aware of if we are engaging in to cryptocurrency CFD trading.

Do all brokers offer cryptocurrency CFDs?

Some service providers from brokers also offer contracts for difference against cryptocurrencies and some of the BTC/ETH. the broker is an individual or firm, that acts as an intermediary between the cryptocurrency markets to facilitate buying and selling. If the contract is closed on the profit the the broker pays the trader, but if the broker is closed on a loss, the broker fom take the money from the trader on the closing difference which means all brokers offer cryptocurrency CFD.

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

The trading with a demo account is very simple to learn and provide the person with secure environment, beside the demo account is very important, some one can trade CFDs in cryptocurrency with out risk, since demo account is free. It is also one of the way to improve one investment ability or skills. Finally they will make sure expertise that is well trained well be available to guide and give useful information that will enable some one to succeed in the world of financial market.

Conclusion thank you professor @Kouba01 for your wonderful lecture, it has made me to understand more about cryptocurrency contracts for difference (CFDs) Trading, I learnt a lot from it, indeed you are a wonderful professor. Thank you all for reading my homework week 2 Season 2 post i appreciate.