Steemit Crypto Academy Season 2: Week2 | Cryptocurrency Contracts For Difference (CFDs) Trading



Introduction :

The cryptocurrency market is an increasingly attractive market for traders. However, knowing how to get started is not always easy. Especially since there are several options to participate in this new market.
For those who wish to profit from the fluctuation in the price of cryptocurrencies without actually owning the underlying assets, trading CFDs on cryptocurrencies can be an attractive option.

In this article, we will discuss the different aspects of cryptocurrency CFDs theoretically, and practice using the broker eToro, considered a leader in this type of trading, but let's first quickly define what CFD (Contract for difference) is in general?


What is a CFD?

It is an agreement that is based on an underlying asset, usually a stock, index, commodity, or cryptocurrency. When you decide to trade a CFD, you expect that the value of that underlying asset will increase or decrease. You don't actually own the asset, but instead expect it to go up or down and trade on it.

For every point the price moves in the direction you set, you will be paid multiples of the number of units you bought or sold. However, if the price moves in the opposite direction to the direction you expected, you will lose as much as you move in units as well.


Trading a contract for difference means that you are trading a specified number of units. You are faced with two options here.

  • Purchase, or what is called a "long position". In this scenario, you expect the price of the cryptocurrency to rise in the future. If you are skilled at forecasting, you can make big profits even if the price movement is negligible.
  • Sell or what is called a "short position". In this case, you are selling the asset because you expect its price to decrease. You can buy back the same asset after its price has actually decreased.

long short.PNG

CFDs offer, unlike traditional trading, the opportunity to earn both ways (when buying or selling).


What is Cryptocurrency CFD Trading? How does it work?

Cryptocurrency CFD trading allows you to predict the future change in the value of the currency you will choose, whether bitcoin or other popular currencies. Many CFDs allow you to open trades on the performance of cryptocurrency in fiat currency, usually in US dollars, but some service providers from brokers also offer contracts for difference against cryptocurrencies and some of them, for example BTC / ETH.

To understand what contracts for difference in cryptocurrencies, we have to understand well the mechanism of creating and working these contracts, which can be explained by the following points:

First: The trader (Investor) selects the asset that the trading broker(CFD Provider) offers it as a contract for the difference to the traders.
Second: During the buying and selling process of the chosen asset, the trader opens a position for the purchase that he makes and specifies the following matters (whether the position is long or short-term, the amount of leverage, the amount he wishes to invest in, and other criteria that differ from one broker to another)
Third: Both the seller and the trader participate in a contract where they agree on the opening price of the established position, and on the fees that may be added to the rollover fee, for example.
Fourth: Now the position for this process is opened and remains open until the trader decides to close it, or it may be closed automatically in a predetermined way, such as reaching a specific profit point or a specific loss point, and it may close automatically in the event of the expiration of the previously agreed contract period.
Finally, the profit or loss is determined, if the contract is closed on the profit, the broker pays the trader, but if the broker is closed on a loss, the broker’s fom takes the money from the trader on the closing differences.


Ethereum CFD Trading Example:

ou want to take a position on Ethereum thinking that the price of the currency will go up.
You buy 1 Ethereum CFD contract = $ 1 (each point is equivalent to $ 1) during $ 1980.
After aa little, while te Ethereum ends up at $ 2020, you sell your Ethereum CFD contract. You will earn $ 40 (40 points x $ 1).
If your scenario is not the right one and the prrice of Ethereum drops t $ 1940, if you sell your contract you will lose $ 40 (40 points x $ 1).

Remember that you can keep your Ethereum CFDs as long as you want, there is no expiration date. You sell when you want!

In this example
, an Etheeum contract is worth $ 1 but it will depend on the broker on which you decide to trade.


Cryptocurrency CFDs, leverage and margin trading :

It can be confirmed that CFDs are often financial products considered complicated and risky, as they are based on the principle of leverage and margin ttrading.

Leveage* is one of the key concepts that you need to understand before trading cryptocurrency CFDs, which is one of the most important benefits and drawbacks of this type of derivative. To trade in cryptocurrencies with a CFD system, you only need to deposit a small percentage of the total trade vaue.

Soo with the 20x leverage, if you are opening a position of $ 2,000, for example, you may only need a deposit of $ 100. However, you can still get 100% of the gains if the price moves towards your expectations.


It also allows you to trade on margin by using leverage to maximize your returns, providing the potential for a return much larger than the relativly minimal amount you deposited. It also means that your losses are magnified as they are calculated based on the full value of the deal. This means that you could end up losing significantly more than the deposit you made if the negative balance was not protected. This is a major risk you should be aware of before entering into cryptocurrency CFD trading.


How to start trading Cryptocurrency CFDs with a free demo etoro account ?

You can try trading CFDs in cryptocurrencies without risk with a free demo account. It is the perfect way to find out if you are good at investing. The process of trading with the demo account is useful and easyto learn and proovides you with a safe environment to ensure that you are provided with all the expertise and information necessary to successfully start in the world of financial markets.

Why start with a demo account?

  • Demo trading is 100% free.
  • You will get started in minutes.
  • The results are completely real.
  • Learn how to invest.
  • There are no risks or costs

Here are the steps to open an eToro account:

  1. Visit and click on the “Join Now” option.
  2. On the “Sign-up” page, you mst enter: your ffirst name, last name, e-mail, and then set your password --> Agree to eToro’s “terms and conditions” as well as eToro’s privacy and cookie policies --> Click on the option “Create an account”, and your account will be created.
  3. On the “Sign-in” page, Enter your username and pssword, then you will be automatically taken to the main page where you can deposit funds into your account, start trading or copy successful investors.
  4. You must go to the “Complete Profile” page, where you must fill in all the requested information.





To fund your real portfolio you must follow the following steps:


You can now switch from live trading to demo trading by clicking on the “real” or “virtual” options available on the home page. Your virtual balance will be $ 100,000 to learn about the CFDs trading environment.



Here, I opened a trade by buying 2.05 units of Ethereum worth $ 5,000. To achieve this task, I followed the following process:

  • Click on Trade markets
  • Choose the crypto asset
  • Select as cryptocurrency Ethereum
  • Click on Trade
  • Enter the desired amunt and click on Open Trade






Benefits and risks of trading cryptocurrency CFDs

Advantages of cryptocurrency CFDs:

  • No need to go through the complex process of buying cryptocurrencies or securing tokens in wallets;
  • You can trade the cryptocurrencies underlying CFDs with your fiat currencies;
  • Possibility of winning during bullish and bearish phases of the market;
  • Take advantage of leverage and margin trading to trade a larger amount;
  • Better risk management with many tools and functions such as the classic,trailing, or guarraneed stop-loss;
  • Trade in a safe environment with a regulated broker offering certain protections;
  • Faster account opening process than with an exchange;

Disadvantages of cryptocurrency CFDs

  • If the margin trading and the effect are poorly controlled, then it can lead to very large losses;
  • The sum of the financing fees paid when you hold a position overnight can sometimes exceed the amount of profits made over the long term;
  • RRisk of
    a margin cll or account liquidation if you incur significant losses and do not have sufficient funds in your trading account.

    Who is suitable for trading CFDs on cryptocurrencies?

Since cryptocurrency CFDs are leveraged products that allow you to profit from highly volatile asset price changes, they are not suitable for all investors.
Trading CFDs with cryptocurrencies can fit your trading strategy if you:

  • Bear in mind that purchasing cryptocurrency is too expensive for you;
  • Find expsure to the crypto-asset maarket without holdng coins/tokens;
  • You want to profit from trading on margin and have a relatively low initial capital;
  • Follow an investment target to make quick wins on small price changes;
  • You have a short term trading strategy;
  • Aiming at high (long or short position) and low (short or short position) of cryptocurrency rates;
  • You want to benefit from a safe trading environment via a regulated CFD broker that provides certain protection for investors;
  • Enjoy taking risks and trading in stressful trading environments.


Conclusion :

Cryptocurrency CFDs are popular products. They allow crypto-traders to make short-term profits by monetizing the bullish and bearish movements of cryptocurrencies without owning them.
Besides, CFDs offer greater exposure to the digital currency market through margin trading and leverage.
To become a successful crypto trader, you don't need to have the best trading strategy. It is simply necessary to adopt a strategy adapted to your personality, your trading objectives, your availability, your trading capital, and finally your risk tolerance.


Homework tasks :

Write an article in which you must answer the following questions:

  • What is a cryptocurrency CFD?
  • How do I know if cryptocurrency CFDs are suitable for my trading strategy?
  • Are CFDs risky financial products?
  • Do all brokers offer cryptocurrency CFDs?
  • Explain how you can trade with cryptocurrency CFDs on one of
    the brokers (Using a demo account)


Rules :

  • Try to read the lesson and the assignments carefully before you start editing.
  • You must write an essay that contains at least 300 words.
  • Make sure that you post your homework into the Crypto-Academy community.
  • Use copyright-free images with mention of its source, if possible, produce your own.
  • Plagiarism is forbidden in Steemit Crypto Academy, and its perpetrators may face serious penalties.
  • This homework assignment runs from April 19, 2021 throughApril 25, 2021*.
  • Include in your post among the first five hashtags #kouba-s2week2 #cryptoacademy.
  • Review your article as if you are the reader. When you do the last review, try to assume the role of a person who sees the article for the first time. This greatly helps you to know how others will receive your thoughts.




Comments 154

This is a great one from you professor @kouba01. I enjoyed every bit of this lecture, more grease to your elbow, sir. I have a quick observation in the screenshot below.


From the above, you mean "the price of Ethereum drops to $1940", right?

Thanks for the lecture once again, sir.

18.04.2021 14:39

thank you my dear. i will fix it.

18.04.2021 14:46

It's okay professor.

18.04.2021 14:51

This isnt professor @yohab2on home task

19.04.2021 05:24

Buenas noches profesor @kouba01, acá le dejo mi participación. Gracias por la clase estuvó muy interesante.

20.04.2021 03:22

Saludos profesor @kouba01, acá le dejo mi participación, la clase estuvo perfecta aprendí mucho acerca de los CFD.

20.04.2021 05:37

Respected Sir, It is an extraordinary lecture about CFD. Here is my submission for your kind consideration. Thanks

20.04.2021 08:03

A great lecture in deed prof.

20.04.2021 10:08

It's good to be part of your class professor @kouba01. I have made my entry for the task given and I am sharing the link with you below. Thank you, sir.

20.04.2021 14:14

Hola profesor @kouba01, aquí le dejo mi tarea sobre las CFD, gracias por la clase fue de máximo probecho para mí.

20.04.2021 19:12

Hello professor @kouba01, please this is my entry

20.04.2021 21:12

Sir @kouba01
I do my all home work .I have written my four answer .
But the question 5
The link cannot be opened .

21.04.2021 10:06

My pseudo is: @kouba01 not @koubao1
also correct the hashtag #kouba-s2wee2 by #kouba-s2week2

21.04.2021 13:27

My post was graded but it is not curated till now and is expired so i have made same post again and this is the link attached @steemcurator01



New LINK :

PLEASE CURATE IT @steemcurator02

Below screenshot is of my post with grade attached:


GRADE = 6;


21.04.2021 21:18

kenapa postingan saya belum di tinjau sudah lima hari ke belakang oleh pro @yohan2-on @koba01

22.04.2021 17:20
22.04.2021 18:30

Hi @kouba01. My name is @allbert. First of all congratulations on your class and thanks for the time you have invested in it.

This research has been long for me, but it has been worth every hour of effort. Here is the link to my first assignment.

22.04.2021 23:43

Hello professor @kouba01, thank you for the amazing lesson, I learnt a lot from it. Please, below is a link to my assignment.

23.04.2021 01:08

Hello dear professor, I have made my homework task and this is the submission below

23.04.2021 01:27
23.04.2021 07:18
23.04.2021 15:05

Respected Professor @kouba01 I really learnt a lot from this episode.
Pls here is my homework submission. Thank you

Steemit CryptoAcademy Season 2: week 2// Cryptocurrency CFDs Trading Homework Submission for Professor @Kouba01

23.04.2021 17:38
24.04.2021 06:50
24.04.2021 15:40

Hello respected professor. Thank you for your lecture about trading.

Here is my homework when you are available then please look at this:

Steemit Crypto Academy Season 2, Week 2 Homework Post For [@kouba01] || Cryptocurrency Contracts For Difference (CFDs) Trading


24.04.2021 18:48

Good day Professor @kouba01, thanks for the great lecture. Here is my homework

24.04.2021 19:38

Good day Professor @kouba01. Please kindly find the link to my homework post below.
Best regards.

25.04.2021 09:36
25.04.2021 09:36

Hello dear sir. Here is my homework of this week.

Thanks a lot.

25.04.2021 12:46
25.04.2021 14:24

Thanks @kouba01, this is quite an interesting lecture. Here is my submission for your consideration.

25.04.2021 15:42

I trust you are having a great day professor.

this is my submission

25.04.2021 16:53

Respected sir, here is my link to the home work, Hoping positive remarks from you

25.04.2021 16:57

What a wonderful privleidge to partake in this lecture.

This is my submission

25.04.2021 19:57

Hi Professor. It's a pleasure to greet you. Thank you very much for this class.

My Homework

25.04.2021 22:39

This is such an amazing lecture,though i had issues with my smart phone which is why i did my homework on the last day,please kindly review my work @kouba01,thanks.
Here is the link to my work.

26.04.2021 00:02

Hello professors @kouba0 and @yohan2on, kindly review my Week 10 Homework task. It is already 4 days old and has not been reviewed by you

26.04.2021 06:15

My professor my work have been rated 7 without curation or voting and i have a day left for it to expire, please look into it @kouba01

28.04.2021 07:00

My Week 10 Homework Submitted To Professor @kouba01 was verified and rated 10/10 by @yohan2on but was never voted on by @steemcurator02 until it payout. So, I have resubmitted it for voting. Here, is the link to the resubmitted post Steemit Cryptoacademy Week 10 Homework Re-submitted For Voting To Professor @kouba01| Cryptocurrency Contract For Difference (CFDs)| By @bukkyi4u. As an evidence, you can find the old post here

29.04.2021 15:53

My Week 10 Homework Submitted To Professor @kouba01 was verified and rated 10/10 by @yohan2on but was never voted on by @steemcurator02 until it payout. So, I have resubmitted it for voting. Here, is the link to the resubmitted post Steemit Cryptoacademy Week 10 Homework Re-submitted For Voting To Professor @kouba01| Cryptocurrency Contract For Difference (CFDs)| By @bukkyi4u. As an evidence, you can find the old post here

29.04.2021 15:59
26.05.2021 20:31