Tag Archive | "CFD Trading"

Why trade CFD(Contracts for Difference)

What are the main reasons to trade in CFD when you can trade in the shares directly?

Leveraging to increase investment capacity

You can create a larger position without having to fund yourself in full. We leverage leverage for a variety of CFDs with a maximum leverage of 200: 1. And CFD CFD trading is not charged a commission, and if the transaction has a CFD CFD at maturity, there is no need to pay overnight financing costs.

Trade at your own timing

You can easily buy and sell gold and silver, stock indices and other products through your trading account, or invest in global equities according to local indices to see the CFD market for CFDs. Such tools can be traded 24 hours, so that retail investors can trade during timings they are not able to for shares.(example: when the stock exchange is closed for the day)

Easy to do more, short or hedge

You have a chance to make a profit, whether down or up. You can trade long or short with CFDs. If you believe that the price of an asset will fall, you can now use the CFD to short (sell) and then expect to buy back at a lower price in the future. Direct short selling of shares is not legal in many countries.

However, trading prices may also move in the opposite direction as you would expect, causing a loss.

Flexible contract size

You can choose the number of units to buy and sell. Unlike other markets, CFD investors do not have to be constrained by contract size. In addition, the use of  CFD trading, investors can also be sold in the relevant units of the index or commodity.

For example, a silver futures contract requires a minimum investment of 1 ounce. For some CFD trading platform, silver futures contracts require a minimum investment of 100.

 

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CFD: what it is?

Contract for Difference (CFD) is an over-the-counter trading instrument that allows traders to take advantage of leverage in the spot market to trade on indices and commodity markets without actually buying the underlying securities.

CFD is essentially a financial derivative product in which both parties (brokers and customers) trade at the difference between the opening and closing prices of the products covered by the CFD at the end of the contract.

CFD trading allows you to profit from the equity (such as dividends, price, etc.), but you do not actually hold the stock. CFDs are over-the-counter transactions and are not traded on exchanges.

CFD is an ideal trading tool for short-term technical trading and hedging of spot market positions, and it also attracts long-term investors.

How the CFD Market Works

CFD is an open contract. If you do not close your position on the trading day, you will trade to the next trading day. At this point, pay interest or get interest (depending on whether you are holding more than one single or empty one). You can hold your open positions indefinitely as long as you maintain sufficient margin available.

Margin and CFD Markets

CFD is a very popular margin product. You only trade a small portion of the total amount (20% for CFD, 7.5% for ETFs), which allows you to trade with the actual stock trades in the market Greater potential investment. Thus, for example, a $ 10,000 equity transaction in a CFD transaction costs a maximum of $ 2,000. If the $ 500 profit from the deal is only 5% for full stock trading, the return on CFD trading is as high as 25%. But the loss is also amplified.

 

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Symbol Bid Ask Spread
EURUSD 1.19930 1.19950 2
GBPUSD 1.35350 1.35380 3
USDCAD 1.22550 1.22580 3
USDJPY 111.400 111.420 2
USDCHF 0.96080 0.96110 3
AUDUSD 0.80520 0.80550 3
NZDUSD 0.73650 0.73700 5
EURGBP 0.88590 0.88620 3
EURCHF 1.15250 1.15280 3
EURJPY 133.610 133.640 3
AUDJPY 89.700 89.750 5
GBPJPY 150.770 150.830 6
XAUUSD 1311.40 1311.80 40
XAGUSD 17.267 17.281 1.4