Learn CFD trading
Learn CFD trading
It is an over-the-counter derivative that can be traded on a wide variety of assets. In contrast to traditional direct stock exchange trading, CFD trading has several advantages and offers investors the opportunity to make an investment with small as well as large capital.
Advantageous facts about CFD trading:
- Tradable with professional & free software from the broker
- Start with small capital
- Invest in falling or rising prices
- CFDs are available for almost any asset
- Use leverage for higher profits
- Limited risk and almost unlimited liquidity
- Good execution and low costs (depending on broker)
- Quick and easy access to the markets
Are you looking for valuable information on the topic of "CFDs"? - Then you have come to the right place. With more than 7 years of experience in the financial markets, I will explain the exciting topic of contract for difference to you. You will get the basics and valuable tips from me on this page.
CFD trading is not risk-free. You can completely lose your invested capital!
CFD Trading Basics: The Facts about the Derivative
Contracts for Difference are over-the-counter contracts that can only be purchased from a broker. When you trade with the broker, you enter into a transaction on a contract. The contract is written out on an underlying asset (share, currency, commodity, etc.) and imitates its price 1:1. As an investor, you do not own the direct underlying asset, but only the contract or claim against the broker.
CFD trading always takes place between the two parties "broker" and "trader". In the following sections I will explain to you step by step how trading with contracts for difference works and what risks and opportunities there are.
What markets are there for CFD trading?
With CFD trading you can invest in almost all markets with https://trade-exness.com/mt4/. As mentioned above, CFDs offer a universal opportunity to invest in the financial markets. Going long or short with leverage works in just a few clicks. In the following points I will introduce you to the most popular markets.
Stocks Indices CFDs
In my experience, stock indices are the most popular among CFD traders. During CFD trading with stock indices you invest in rising and falling prices of the Dax, S&P500, FTSE100 or Dow Jones. The index reflects the economic development of a country. The markets are characterised by high liquidity, high volatility and low trading fees.
Stock CFDs are suitable for day trading or hedging a real stock portfolio. For example, if you want to hedge other positions with a short sale, you can use equity CFDs to establish short or long positions. Trade equity CFDs from almost all stock exchanges worldwide. Dividends can also be paid out.
Commodity CFDs are also a popular asset class. Trade oil, gold, silver or even wheat by contract for difference. Commodities also react very quickly to political decisions. This can lead to high profits.
Currencies (Forex) CFDs
Currencies (Forex) are also often offered as CFDs. The Forex market is the most liquid and largest part of the financial market. The volume of turnover is several trillion US dollars per day. Trade the Euro, USD, Pound and many more currencies in your CFD platform.
Cryptocurrencies CFDs are very hype at the moment as this new asset class has very high volatility. Brokers usually only offer a small amount of leverage for cryptocurrencies CFDs because the movements of the coins are so strong. Even without leverage, some cryptocurrencies move over 5% per day. Thanks to Contracts for Difference, cryptocurrencies are easy to short. But be careful with this investment, because these markets can be very fast and make unpredictable movements.