Crypto Academy Week 10 - Homework Post for [@kouba01] // CFD'S// BROKERS // DEMO ACCOUNT

Hello @kouba01 ,

I am delighted to be a part of your lesson this week, and I would like to take this opportunity to congratulate you on your appointment as a crypto professor. Please find attached my submission for the week.

CRYPTOCURRECY CFD’s

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CFD stands for Contract For Difference and refers to a type of trading that involves a contract between a crypto investor/trader and a seller, such as a broker, in which the buyer pays the seller the difference between the current value of a particular cryptocurrency and its value at the time of the contract.
In this type of trading, the investor/trader does not actually buy the coin, but they can profit from it by determining the correct price movement of the coin. Essentially, the seller does not focus on the price of the coin that the investor wants to trade on, but on the value between the price when the trade is open and when it is closed.

HOW DOES THIS WORK

To begin, you must understand that CFDs provide investors with trading platforms to forecast the price movement of a specific cryptocurrency, and if the prediction is correct, they profit, and if the prediction is incorrect, they lose the same amount as they would have won.

All CFD brokers consider the following:

• Traders and investors are charged a spread and commission when trading, which includes the bid and ask prices. Investors can find out how much they are charged per trade based on the broker they use.

• There are various types of crypto assets available for CDF trading; depending on which one an investor chooses, a deal size must be considered; each coin has a unique deal size.

• there is a commission to pay depending on how long a trade lasts in a broker, brokers charge for the duration of the trade.

• Brokers also calculate the profit or loss of an investor using this mathematical formula :

(Deal size x Value per coin x change in when trade was open and when it was closed) - Commission

The diagram below shows some countries that permit this kind of trades and others wich are not specified like Ghana SOOURCE

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Countries Where You Can Trade CFDs
CFD contracts are not allowed in the U.S. They are allowed in listed, over-the-counter (OTC) markets in many major trading countries, including the United Kingdom, Germany, Switzerland, Singapore, Spain, France, South Africa, Canada, New Zealand, Hong Kong, Sweden, Norway, Italy, Thailand, Belgium, Denmark, and the Netherlands.2

ADVANTAGES OF CRYPTOCURRENCY CFD’s

• Higher leverages are available to investors than on traditional trading platforms.

• It allows investors to invest in the global market through a single broker.

• There is actually no time limit in trading CFD’s , investors decide when to exit the market

• CFDs also provide investors with the ability to sell/short their contracts at any time without incurring short or borrowing costs because they do not owe the coin.

DISADVANTAGES OF CRYPTOCURRENCY CFD’s

• CFDs deduct the spread cost from the profits made by traders.

• There has no regulations or regulatory body that controls the CFD platform; traders consider the reputation and length of time a broker has been active before joining any; the money they invest is at risk.

• CFDs, like any other form of gambling, are risky, necessitating more time and careful monitoring.

HOW DO YOU DETERMINE THAT CRYPTOCURRENCY CFD’s IS SUITABLE FOR YOUR TRADING STRATEGY

It is actually a good idea to assess yourself before diving into this trading method; you will need more knowledge and experience,Aside from being skilled at technical analysis and price forecasting, you should also possess the following trading characteristics:

• Everyone knows that the more profits you make from predictions, the more likely you are to succeed. As a crypto trader, you must be a chameleon at heart, very patient, and let your profit run for a long period of time before closing trade; winning does not come easily.

• Being able to cut your losses shot when the price direction you entered is going against you in intervals that can drain your wallets, don't wait greedily for a turn, crypto is volatile and your delay will burn all of your capitals

• A CFD's crypto trader must be a good researcher and reader. Understanding how a coin is built fundamentally and reading current affairs about them makes you a perfect trader because you will be up to date with all information about them.

• A good money management habit is required to qualify as a CFDs Crypto trader; you do not need to put all of your eggs in one basket; instead, experiment with different platforms with a portion of your capital; putting all of your eggs in one basket can lead to bankruptcy.

ARE CFD’s RISKY

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I have always believed that everything we do in life is a risk, and that risk is also synonymous with success, and CFDs are, in my opinion also a risk.

Let look at some risk I see in cryptocurrency CFD’s:

• Due to the lack of regulation in the CFD industry, some brokers or middle parties may breach contracts at any time; keep in mind that you do not owe any money in your wallet but you are trading a contract offered by the broker.

• There is more risk in the market due to the volatility of cryptocurrency prices, which can result in a large loss in a trade.

• Investors' funds are also at risk, particularly in countries where CFDs are not legal. You are only safe when your trade ends and you receive your money back. In some countries, the government allows brokers to have a known account where investors' funds are transferred to first before their trade ends.

**DO ALL BROKERS OFFER CRYPTOCURRENCY CFD’s

I tried a broker like FXTM and discovered there are no cryptocurrency pairs available, but another one like Etoro accepts crypto, so not all brokers offer cryptocurrency CFDs.

CREATING AN ACCOUNT USING ETORO BROKER AND SETTING UP A DEMO ACCOUNT</center

• Visit etoro.com , on the home page click on join now if you already have an account just login

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• Fill the registration form and click on register as shown below :

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• Set a password using letter, symbol and numbers

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• Click on complete profile at the left right top corner to have your profile set , not brokers don’t support all countries

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• Next set up your watch list by adding your favourite coins , click on the watch list and hit on the plus sign to have list of coins

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• To switch to demo account or virtual account click on real below your username at the top left corner and switch from real to virtual

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• On the trading platform you are provided with indicators an tools for analysis

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• i selected a line and set a support for uniswap in the chart below :

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• You also have an option to study the past statistic of the coin you want to trade

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In conclusion, I believe that CFDs are a profitable investment for all traders who are skilled at forecasting and willing to take risks.