Homework. Steemit Crypto Academy Season 2: week2 | Cryptocurrency Contract For Difference(CFD) Trading

Crptocurrency CFD

A contract for difference (CFD) is a financial derivatives which allows one to be able predict or forcast if a price of an asset will rise or fall without actually owning the asset itself.

You can long which means forcasting the price will go up or sell short which invariably means you think the price will go down.

We can in a way compare CFD to spread betting because we predict the movement of the price of an asset in crpto if it will rise or fall, being able to know when to enter a position and exist to take profit that is.

Is Cryptocurrency CFD Suitable For Me

Well to answer that, let's first consider seeming benefits of Cfd and if it appeals to my kind of person.

Well Cfd ensures that a trader can take a long position on a bull market and a short position in a bear market. This goes to show that with cfd they are more trading opportunities than in other crpto exchanges.

With Cfd trading, traders can choose to enter a market with small capitals than they would if they were trading crptos on exchanges. To beginners like us this is most beneficial as it would enable one start small and and gain more positions as we gather experiences.

Cfd's also ensure a trader can close his position at will. They also allow traders trade multiple asset all from a single account.

Now with some of these benefits listed i think that for my kind of person, a beginner who don't have more financial power i would tend to lean torward cfd as a trading strategy.

Are Cfd Risky Financial Products

Well you could make the case that it is kind of. You could also make the case that it's balanced. Yes Cfd offers leverage on margin with allows one to make profits even with small capital if your forecast is correct. But, if it is not one could easily lose as much as he would have gained.

So yes it comes with it's own risk. You stand a chance to win huge rewards and an equal chance of experiencing big loss. One can get greater returns on small deposit and can ad well loss all his money even more than his innitial deposit in a case where one does not use stop loss or sometimes too while stop losses can be allocated to each trade, they may not neccessarily get filled in extreme violatile markets due to slipping which could result in enormous loss. So yes while cfd trading offers huge reward it is not without it's risk.

Do All brokers Offer Crptocurrency CFD

Simply no, not all brokers offers CFD in crpto.
We already know the unique nature of cfd. What it offers, enabling one to trade on an asset without owning the underlying asset. Not all brokers or crpto exchanges offers this opportunity.

How to trade with CFD Using Etoro

First of we go to the site or can download the app through playstore which i did by simply searching for eToro.

After that we signup and complete our profile which is very neccessary then we want to make sure we are using a demo account since we have not deposited yet.

Then we should click on trade markets

When we do, we will a wide variety of markets or assets available in the markets for trading but seeing as we are interested only in crpto we come down to where we see crptocurencies and let's say we chose Btc.

We click on btc and it will take us here

Then we click on trade and input our trading amount and click on buy or sell depending on which we want to do.