@smakadi's homework for Crypto Academy Season 2: Week 2

Hello there, and welcome to Week 2 of Season 2's homework post. I'd like to express my gratitude to our Professor for giving us such a fascinating lecture this week.

1.WHAT IS A CRYPTO CURRENCY CFDs?

It is a contract based on an underlying asset, which is typically a stock, index, commodity, or cryptocurrency. When you want to sell a CFD, you anticipate that the underlying asset's value will rise or fall. You don't own the asset; instead, you expect it to rise or fall and trade on it.
You will be charged multiples of the number of units you purchased or sold at any point the price shifts in the direction you specify. However, if the price moves in the opposite direction to what you anticipate, you will lose the same amount of money as you gain in units.
A contract for differences (CFD) is a financial derivatives trading agreement in which the difference in compensation between the open and closing exchange rates is settled in cash. CFDs do not require the distribution of physical products or securities.

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You are exchanging a given number of units when you trade a contract for difference. In this situation, you have two choices.

Purchase, also known as a "long position." In this case, you expect the cryptocurrency's price to increase in the future. Even if the price movement is minor, if you are good at forecasting, you will make significant profits.

A "short spot" is when you sell something. You're selling the asset in this case because you expect its value to fall. You can repurchase the same asset after its value has dropped. He

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2.HOW DO I KNOW IF CRYPTOCRRENCY CFDs ARE SUITABLE FOR MY TRADING STRATEGY?

CFDs on cryptocurrency are leveraged products that allow you to profit from extremely volatile asset price changes. They are not suitable for all investors.
If you:

•Remember that buying cryptocurrency is out of your price range.

•Find ways to gain exposure to the crypto-asset market without having to keep any coins or tokens;

•You want to make money by trading on margin but only have a small amount of money to start with;

•To make fast wins on minor price changes, stick to an investment target.

•You've devised a trading plan for the short term.

•Attempting to achieve high (long or short) and low (short or short) cryptocurrency rates;

•You want to trade in a secure environment with a controlled CFD broker that offers investors some protection;

•Enjoy taking chances and trading in high-stress situations.

3.ARE CFDs RISKY FINANCIAL PRODUCT?

Trading CFDs is risky, and the benefits can often outweigh the counterparty risk, market risk, client money risk, and liquidity risk. Other factors, such as poor industry regulation, possible lack of liquidity, and the need to maintain sufficient margin due to leveraged losses, can make CFD trading risky.

Leverage risks increase your potential gains while also increasing your potential losses. Many CFD providers offer stop-loss limits, but they can't guarantee you won't lose money, particularly if there's a market closure or a sharp price movement. Execution risks may also arise as a result of trade lags.

4.DO ALL BROKERS OFFER CRYPTO CURRENCY CFDs?

Many brokers, but not all, sell crypto currency CFDs. The following are some examples of brokers that have crypto currency CFDs:

eToro is the best cryptocurrency trading platform in general.
Swissquote is a globally recognized company with a wide range of products.
IG - A fantastic deal from a well-known business.
City Index - Excellent value for money.
AvaTrade - AvaTrade offers a number of different trading platforms.
XTB - Outstanding customer support and a fantastic forum.

5.EXPLAIN HOW YOU CAN TRADE WITH CRYPTO CURRENCY CFDs ON ONE OF THE BROKERS(USING A DEMO ACCOUNT)

For my case am going to use XBTF broker to explain how you can trade with cryptocurrent CFDs using a demo account.

Go to Google search and type in XBTF trade and search.

Sellect the first option as shown below and click

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Enter your email and password in the spaces provided and login

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Scroll down to sellect demo account if already registered

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To conclude,margin trading and leverage, CFDs provide more exposure to the digital currency industry.
You don't need to become master in the gcryptocurrency trader. It's simply a matter of deciding on a strategy that suits your personality, trading goals, availability, trading resources, and risk tolerance.