Cryptocurrency CFD trading – profit in both directions


Dear traders, I continue now with the lecture where I will explain to you what means CFD trading because this is exactly what we are doing. And now I have the two platforms on my screen. There is the one that I had from the beginning. It’s actually the very same thing. Only you can see there is difference on the colors. So, I will close this one that I have used to show you how you can download and install the Meta Trader and open a demo account. So, here I have set the colors white. I will show you in the next section of the course, how you can modify the charts and you can actually change every color there. The way that you feel comfortable, the way you have it more visible. And now, what is CFD trading? If I put my mouse on the Bitcoin, guys, you can see that I have Bitcoin versus the American dollar, Calculation: CFD. And this means Contracts for difference. OK? Let me just type it in here. It is CFD and it stands for contract for difference. This means that when we are trading, we don’t actually buy Bitcoin, Ethereum, Litecoin, Dash. We don’t, actually, buy Copper or Gold or any index, or any currency on the top. But what we do, is we make a contract for difference with our broker. So, let’s take an example with the Ethereum. Let’s say you buy at a certain level, I would just put it somewhere randomly. Let’s put it around 1000. So, let’s say you buy at 1000. And then the price goes up and you close your trade at 1200, for example. Where is it? Right over here. Let me just put vertical lines to make it more visual. OK? So, I will also zoom it, I will show you in the next lecture as I said about the lines, how you can draw trend lines, vertical, horizontal lines but now I just want to explain you what is CFD trading. OK? So, if I put one line here, you can see the price was right over there. And if I buy at this moment one Ethereum at 1000 and when the price goes up to 1200 and I close the trade, I will benefit the difference of $200. So, I am not actually buying the Ethereum as a cryptocurrency but I am trading on the difference of the price of this asset. If the price goes against me and I lose, I will lose the difference from the moment I have bought till the moment I close the position. So, very simply said, we trade on the value of the asset. Every time we buy, we make a contract with our broker that if the price goes in our favour and we close the position at a certain level, the broker will pay us this difference as profit. And in the same time if the price goes against us and we lose we will pay the broker the loss. So simply, we will lose, if the price goes against us. So, very simply this is a contract for difference. You can read much more about it over internet but it is simple as that. We have amount of money into our account, no matter is it real money or demo money. As I have selected here to use 10 000 of a demo account. We trade with this money and when we open a trade and we close it, we will either benefit the difference or we will lose the difference, if the price goes against us. OK, guys, thank you for watching. That’s the CFD, it’s nothing hard. Hope it’s clear. Cheers.

Leave a Reply

Your email address will not be published. Required fields are marked *