Let's learn about CFDs | season 2 week 2 | homework by: juanjo09

A big greeting to all the students and teachers of this community. On this occasion, thanks to @kouba01's assignment on CFDs, we learned practical criteria and basic concepts, however, this time we have to present some more points of equal relevance about CFDs. Let us begin

Before covering the subject, I want to clarify some basic concepts that will help us to have a better understanding of it, such as:

Trading

Seen as a new investment modality, trading is the purchase and sale of financial assets listed with high liquidity, which through an electronic and regulated market, seek to obtain a short-term profitability. The operation trading is speculative in nature and they obtain their benefits through the capital gain and loss of an asset in the market, avatrade.es mentions that

"If the price of the asset moves up, you will have to buy low and then sell more expensive before it goes down again. On the contrary, if the price of the traded asset moves down, the asset will be sold first at a higher price and it will be bought later at a cheaper price "
In the market there are all kinds of financial assets to trade, but among them we can highlight:

• Forex: it is a decentralized world market where all the currencies of the world are operated, its profits are obtained through bets on the value of one currency against another such as the Eur / DoL. *

• CFDs: or contract for difference is a financial derivative product that allows you to take advantage of the price variation in the market of an asset, granting benefits in both bullish and bearish markets, in addition, due to its high level of leverage, it allows you to carry out operations without having a large amount of cash. Now with this clear we can cover the following questions.

Now, with this in mind, we can cover the following questions

Cryptocurrency CFD trading is based on taking a financial position in the direction of the price of a cryptocurrency against the dollar or against another cryptocurrency. Without the need to acquire any asset, since this is a financial derivative and allows us to invest without owning it. This method allows greater versatility due to the use of leverage since it implies less outlay of the capital necessary to make the investment, and the profit or loss is given by the difference between the purchase price (bid price) and the sale price (ask price) of the position (spread).

Bid price, Ask price They are the demand and offer prices, that is, those that determine the price of a security. Bid is the highest price the buyer is willing to pay, and ask is the lowest price the seller is willing to sell at. The difference between the two is what is called a spread, margin or price differential, which is a good indicator of the liquidity of a security elconomista.es

We know that the cryptocurrency Cfd market is attractive thanks to factors such as its versatility, and the possibilities of operating with more money than you have thanks to leverage. But before knowing if they are suitable for you, you have to take into account some essential aspects such as that the forms of financial negotiation require studies, in order to acquire knowledge and skills that are sustainable for work, you must be able to read graphs and analyze the market instantly, in addition to having the necessary capital for investment.

If you do not have any of the above and still want to continue, my advice is that you follow a study methodology and practice with the demo that many trading platforms offer. You have to remember that there is no easy money, everything is based on how hard you try.

As mentioned above, having knowledge about the area to work is important, even more if you are investing your money in it, this will help you at the time when you must make a profit and loss control, because CFD trading involves a high level of risk to your capital compared to others. since the market has high volatility, its operations can take a drastic turn, giving the possibility of losing all the money invested in addition to having debts since it must be remembered that brokers have operating commissions.

From my point of view, walking blindly towards something that is unknown is 100% lost, it is best to seek professional advice and gradually soak up the subject, also you must have the critical reasoning to assume that CFDs may not be suitable for all people and which in turn are complex instruments associated with high risk.

There are all kinds of brokers dedicated to different markets, and some conventional brokers include CFDs in their list, but it does not necessarily imply that all brokers own it, so we can also find brokers that are exclusively dedicated to this type of product. Similarly, cfd brokers and conventional brokers do not vary in their work modality, they continue to act as an intermediary for investors, carrying out purchase and sale operations, and granting the trader, through their platform, the necessary financial instruments to his work. They are also responsible for the security of funds that belong to their clients and most of them usually have operating commissions.

There are many things to take into account when choosing a cfds broker, but it is best to choose the most reliable ones, with the best services, products and the best reputation, it must be remembered that it is a very complex and dynamic market.

5.- How we trade a CFD | in etoro

• Under your username change your account to a demo.

• go to the trade maker option and then select the cryptocurrency option

• look for the currency in which you want to invest, in this case binance and we click to enter

• inside we click on trade

• then a window will appear in which you must put the entry or exit price you want

• then you will be able to observe the movements that are taking place in your portfolio

-To finish if you want to close your contract, in the portfolio you click on the operation that is being executed and then you click on the x

Thank you very much to all this is my delivery, greetings and success for all

I made all the images using canvas except for the screenshots