What Is CFD Trading
When you trade CFDs, you don’t buy or sell the underlying asset (e.g. a physical share), you buy or sell a number of units, depending on whether you think a product’s price will go up or down.For every point the price moves in your favour, you gain multiples of the number of units you have bought or sold.
For every point the price moves against you, you will make a loss. Please remember this loss can exceed your deposits.
Some of the benefits of CFD trading are that you can trade on margin, there is no stamp duty to pay, you can go short (sell) if you think the price will go down, and you can use CFDs to hedge an existing physical portfolio.
Advantages Of CFD Trading
24-Hour Online Dealing
We recognize the importance of being able to access your account and trade whenever you want, wherever you are, particularly when market prices are moving.You will have unrestricted access to your account 24 hours day, 7 days a week.
Go Long or Short A CFD
CFD trading enables you to go long (buy) if you believe market prices will rise, or go short (sell) if you believe market prices will fall. So if you believe that a company or market will experience a loss of value in the short term, you can use CFDs to sell it today, and your profits will rise in line with any fall in that price. However, if the market moves against you, your losses will also increase. CFDs are therefore a flexible alternative to trading the movements of market prices as they enable you to benefit from any move, regardless of whether the markets are rising or falling.High Leverage Trading In CFDs Market
CFDs are traded on leverage, meaning you pay only a small fraction of the total trade value to open your position rather than paying for it in full, this is known as margin. For example, you can trade Apple shares by depositing a margin of just 5%.You can use leverage to magnify your return on investment as your full trade exposure is much more than the initial deposit required for your trade. However, your losses are magnified in exactly the same way if the market moves against you and can lead to losses exceeding your initial outlay.
Please ensure you understand the risks involved and seek independent advice if necessary.
Hedge Your Physical Portfolio
If you believe your existing portfolio may lose some of its value, you can use CFDs to offset this loss by short selling. For example, let's say you hold $5,000 worth of Vodafone shares in your portfolio. You can short sell the equivalent of $5,000 worth of Vodafone shares through a CFD trade. Should Vodafone share prices fall by 5% in the underlying market, the loss in value of your share portfolio would be offset by a gain in your short sell CFD trade. Many investors today use CFDs to hedge their portfolio, especially in volatile markets.
CFD Trading Online Platform
To trade CFDs you need online trading platforms, you can download trading platforms free of charge.You just need to choose a broker and sign up then you can use online trading platforms to trade CFDs.
Diversity of Markets
In CFD Trading you can trade on thousands of individual markets including shares, indices, currencies, commodities, interest rates and sectors.You can use CFDs to gain instant exposure on all major global markets including the UK, US, Europe, Asia, Australia and New Zealand.
Just Find A CFD broker with competitive commissions, tight spreads and margins in the market, ForexSQ team will be happy to help you to find the best CFD trading broker, just contact us if you need our help.
