Steemit Crypto Academy Season 2: Week2 | Cryptocurrency Contracts For Difference (CFDs) Trading
Hello my beautiful people of Steemit, this time I will be participating in the task that the teacher @kouba01 has left us on the topic CFD, I welcome him for his incursion into this new stage of the workshop as a new teacher and for sharing with us his knowledge about cryptocurrencies. I hope I can do a good task and have understood the topic well, so here I leave you my presentation.
1. What is a cryptocurrency CFD
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First let's identify what the acronym CFD means, this means "Contract for Difference" or Contract for Difference, and is your type of contract that allows the investor or trader to take advantage of price changes of a cryptographic asset, without having to buy it, these underlying assets can be commodities, stocks or cryptocurrencies, is another way of trading in the world of cryptocurrencies. Here the trading is based only on the price of the underlying asset.
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This type of trading allows the trader to open a contract to take advantage of changes in the price rises and falls of a financial instrument, these are called long or short trades, these instruments can be the purchase price or the sale price of an asset. This type of negotiation allows a trader to win in both positions, depending on the action he decides to take, he can win in the purchase or win in the sale of the asset, that is, if the price of the asset goes up or down the trader can win in both cases.
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Let's speculate on an underlying asset, let's assume that Samsung shares are going to go up in price, so we open a purchase contract, after a while we may trade short or long, we decide to close the contract, if it turns out that Samsung shares went down we will have lost a small percentage.
2. How do I know if cryptocurrency CFDs are suitable for my trading strategy?
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Everything will depend on the type of business you have and your business vision, first we must be clear about what we want to achieve and study the possibilities of profit or loss that CFD can offer us, therefore we must investigate whether we should do this type of negotiations or not.
- - So we must take into account our total capital and if we have the possibility to buy cryptocurrencies or not, because they are very expensive assets to invest if you do not have the economic possibilities.
- - You should take into account if you are a trader who likes to take risks in the field of finance, if you are fearful or distrustful it is better not to do it.
- - If you don't have any knowledge about investments, leveraged trading or margin, it's better not to risk it. But if you are an expert or have a little wisdom, you can easily cope with it.
If you set a short-term investment strategy and you can manage it, it will surely be right for your business.
- - You have to have two capitals, the one you are going to use to invest or trade CFD's and the backup capital that is from your business, because you have to keep in mind that the cryptocurrency market are very volatile, and you could lose everything including your business if you don't trade the right way, it is a very important consideration, because you can also earn a lot.
On the other hand, if you do not have a large capital, you know that CFDs can give you the possibility to invest with a small amount of capital.
3. Are CFDs risky financial products?
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People who are in this world of cryptocurrencies have enough knowledge to know that if they are risky financial products, it is a matter of knowledge, practice and experience to be clear that it is a field where you run many risks and you can also have many gains, it all depends on the strategy you handle as an investor, if you are someone prudent you will invest in a safe way to not lose everything in a single investment. Therefore, it is very difficult for someone who does not have knowledge to take so many risks with financial products such as CFDs that he does not know, because everywhere people are always warned about the actions they are going to take in this field.
4. Do all brokers offer cryptocurrency CFDs?
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Only a few brokers offer CFD, here I am going to mention some of them that I found in my research, I apologize if I missed any.
- eToro
- ForexTB
- SimpleFX
- Iq Option
- Trade.com
- Plus500
- AvaTrade
5. Explain how you can trade with cryptocurrency CFDs on one of the brokers
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This time I did the same example as the professor using eToro, because I don't really have the budget to do this kind of trading, so I did it virtually. I opened my free eToro account.
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Luego fui a fondos de deposito y utilice la transferencia, solo para probar algo diferente.
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I went to the virtual portfolio in order to trade.
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After that I went to trading markets and looked for a crypto , in this case BTC.
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After choosing the crypto, he went to the market to make the trade
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And that was it, I think I hit the button three times because the sum was $15,000.
Conclusión
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The truth every day I think that the world of trading is very wide and you have many possibilities or options to invest and earn, whether you have a lot of capital as if you have little to start, I see this world of CFD that allows traders to operate and generate profits without having at hand the cryptocurrencies. And we can learn step by step to get into this world and profit from it.
Hi @danay
Thanks for your participation in the Steemit Crypto Academy
Feedback
Good work. Well done with your research on Cryptocurrency CFDs
Homework task
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