HOMEWORK TASK WEEK 2 SEASON 2 BY PROF. @kouba01 ||CRYPTOCURRENCY CONTRACTS FOR DIFFERENCE (CFDS) TRADING||

WHAT IS A CRYPTOCURRENCY (CFD)

CFD(CONTRACT FOR DIFFERENCE)

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It is an agreement that is based on the underlying assets made in financial derivatives such as index or cryptocurrency. When you trade in this you have to guess that the value of the thing will increase or decrease. If it increases according to your guess you got profit which will be the multiples of the number of units you bought or sold. But if the value of the underlying asset decreases instead of your expectations you will get a loss according to units. The two options you face in the trading. PURCHASE which is called a long position in this case you expect the price of the boons to increase if you are skilled in forecasting you can also make big profits.Sells In this case you will sell the boons because according to you their price will decrease. If it actually decreases you can also buy them back if you want.

CRYPTOCURRENCY CFD TRADING

CFD trading allows you to guess the price of the cryptocurrencies which may be the bitcoin, binance , etherum, or other coins of crypto in the faint currency, especially in the US dollars .

In it, the profit is not given by the price of cryptocurrency itself. But is gained by the difference between the initial price at which the contract is generated and the level at which the value of cryptocurrency increased or decreased when the contract is closed.

Advantages:

• It is easy to set up and access high-leverage opportunities. It contains advanced technical instruments in trading so it proved so beneficial for traders.

• Investors have access to large markets that can not be accessed their initial low capital.

• Allows investors to take benefits of short-term position when they are sure that the market price will rise.

• The chances of profitability are higher.

[2]

How can I know if cryptocurrency CFDs are suitable for trading strategy?

The answer to this question depends upon you because it depends on the emotions, strategy of investors. if you are the person that can buy the assets at a low price and can wait for a long time for their price to rise. This is not good enough for you. A not good strategy for you if you don't have strong emotions.

If you are short-time investors that you can rapidly detect the changes in the prices and get the advantage of it so this may be the best option for you. Because we are talking about the volatile market.

YOU SHOULD SELECTCFD CFD INVESTMENT IF YOU...

• Know the advantages and disadvantages of CFD trading.
• Want to get benefit from the large investment universe.
• Want to trade on a short-term basis.
• want to trade on leverage.
• Don't want the maximum deposit limit.
• Enjoy taking risks and making a large investment.
• Want to benefit from the safe trading environment.

YOU SHOULD NOT SELECT CFD TRADING IF YOU ...

• Don't have strong emotions.
• Want to trade on a long-term basis.
• Can not bear the expensive trading.
  The risk of the CFD trading we will discuss below so before selecting the CFD trading for you you have to keep the site on all its aspects.

[3]

ARE CFDs RISKY FINANCIAL PRODUCT

YES CFDs trading is a risky financial product.
As we get the profit in CFDs trading it also has a great loss and may cause the loss of your assets. So care is very necessary for the contract for difference trading. In it, there might occur system blunders and your account may be closed in the favourable era. In it, the prices may move opposite to you and you will get the loss of money So you can lose the higher money if you make the higher investment so this is the risky financial product. There is a double risk in the cryptocurrency difference contracts because the leveraged transactions and sharp changes in the crypto prices cause an extra risk for the traders to lose their product as compared to other financial products. So it is very necessary for the trader to have sufficient experience in the field and be careful to observe the ups and downs in the prices to take the action in time and avoid huge risks.

[4]

DO ALL BROKERS OFFER CRYPTOCURRENCY CFDs

NO all brokers do not offer contracts for different trading in cryptocurrency. a few years ago there were no more brokers that offer CFDs but now there are many some of them are following.

• Ava trade it is regulated by the central bank of Ireland and trade cryptocurrencies

• eToro regulated by financial conduct authority and trade cryptocurrencies, stock, indices, etc.

• Easymarkets regulated by CySEC and ASIC.

• Plus500 is another broker that offers cryptocurrency CFDs.

[5]

Explain how you can trade with cryptocurrency CFDs on one of the brokers.

In the last question, I will answer the question that how we can trade with cryptocurrency contracts for difference on any broker s. So I will show you to trade on the eToro which is one of the famous brokers to trade contracts for difference. It allows users to make transactions on the demo account. to gain experience.

=> First of all search on google for etoro.

=> click on the link

=> click on join icon.

=>now log in or create the account.as I have created my account in the screenshots.

=> you can also change your profile and can deposit funds by clicking on the blue option.
=> you can use a real portfolio if you want to make the investment I have to activate a virtual portfolio.
=> You can trade by clicking on the trade option .

You can trade in any cryptocurrency you want I have selected tesla.

So by following the method you can trade in the contract for difference.

CONCLUSION

so before start CFDS in cryptocurrency, you must know the risk in trading or all the aspects about it to get a good result. If you start trading then be careful in the ups and downs of the market to take action on time

So this was my complete homework task for professor @kouba01.I hope to get good marks on the task.

Special mentions :

@kouba01
@steemitblog

Author : @qamarsudagar