Traders have a chance to take an advantage from price moving up and down. In case of prices moving up they can open long positions and while the price moves down similarly they are free to open short position speculating on the market.
CFD trading is realized by individual traders and CFD providers. As there do not exist standard contract conditions each CFD provider specifies his own. It is opened when starting to trade on a specific instrument with the CFD provider.
When closing the position the difference between the opening trade and the closing trade turns out to be loss or profit. In case the CFD does not expire those positions that are remained open overnight will be rolled over.
Since CFDs are traded on margin the trader should keep the minimum margin level all the time to keep the position open. In case the sum of money deposited falls below the minimum margin level the trader will get a margin call and he will have to pay additional money into account. In case of not quickly covering these margins, the positions will be liquidated.
CFDs give you an opportunity to open long and short position. You choose Long Trade when buying an asset and expecting its further rising. In case of Short Trade you sell an asset expecting the price falling as you will be able to buy it back at a cheaper price. In the ordinary share market shorting is hardly possible, however CFDs let you go short as easily as you go long. It provides you with the ability to make profit even if the asset price drops but you trade in the right way.
Advantages of Contracts for Difference (CFDs)
- Availability to trade on margin which will help you enhance your trading capital
- Making profit from market rising and falling
- Lack of taxes and hidden commissions which results in cost reduction
- Availability of at least 80 stock CFDs, major Equity Indices and commodity CFDs
- Availability of unique Golden Instruments
- Providing favorable and beneficial Swap conditions
Risks of Contracts for Difference (CFDs)
- Availability of trading on margin not only increases the extent of profit but also losses. Therefore you should place stop loss order to escape large losses in case your position moves against you.
- It is more risky for long term investors; by holding a CFD open over a considerably long time the costs may increase and it would be more beneficial to have bought the underlying asset.
The whole logic of CFD trading is quite simple and has much in common with traditional currency trading. You can find Equity CFDs on Equities, Stock Indices and Commodity CFDs, containing more than one hundred trading tools, on the trading platform NetTradeX.
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.
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