What are CFDs?
A Contract for Difference (CFD) is a trading instrument which allows you to make a profit by reference to fluctuations in the price of an underlying financial asset without actually owning it. The amount of the profit will be the difference between the price when the CFD position is opened and the price when it is closed.
Even though entering the contract requires a deposit, it is much smaller than the actual contract size. This is made possible by the power of leverage and allows you to maximize your potential profits.
A position is opened by ‘BUYING’ or ‘SELLING’ a CFD:
BUYING If you expect an asset (such as a stock, currency, commodity, index or cryptocurrency) to rise, you buy the CFD.
SELLING If you expect an asset (such as a stock, currency, commodity, index price or cryptocurrency) to fall, you sell the CFD.
Gold is quoted at $1160.00 (SELL) to $1160.50 (BUY). You predict that the price of gold will drop. You open a SELL position by selling 25 ounces (amount) at the offered price ($1160.00) and make a profit of $125.
How is that possible?
The price of gold plummeted and is now $1155.00. You close the position (i.e. you BUY back the gold) and your profit is the sum of pips dropped:
$1160.00 – $1155.00 = 5.00
+5.00 x 25 (amount) = $125 profit
WHY TRADE CFDs?
Unlike traditional trading with an investment house or a bank, trading CFDs gives you the freedom of opening trades on hundreds of top underlying financial assets with fixed spreads and zero commissions. As a result, this eliminates the need for any paperwork or contractual agreements with any third parties.
Our leverage is very flexible and allows you to maximize your investment by up to x200. this means that each time you invest $250, you can actually trade with $50,000, allowing your potential profits to be respectively higher.
Benefits of CFDs
One of the biggest benefits of CFD trading is that you can start trading with a very small amount of capital and potentially earn considerable profits. Other than that, there are 4 distinct benefits to CFD trading:
LeverageLeverage enables you to gain a large exposure to any financial market with only a small amount of your capital. By doing so, you are able to increase your overall profits only because they are based on the total investment amount of the position.
DiversificationSpreading your investments across different asset classes creates a well-diversified portfolio, lowers the volatility of the market with direct relation to your trades and reduces your overall risk exposure.
Risk managementExercising smart money management is always possible thanks to the stop loss/take profit parameters. By automatically closing any open position in case the price either drops or rises beyond a predetermined point, you can continuously maintain your risk levels conservatively.
Profit opportunitiesIt is possible to profit from CFD trading in both rising and falling markets. You can either open a “SELL” position and profit as the asset price drops or open a “BUY” position and profit as the asset price rises.
Other benefits include:
Transparency and ease of execution
Easy and simple to learn and master
Covers over 1,000 top financial assets
Fixed low cost spreads with zero commissions
Opening up to 30 positions simultaneously
Safe, secure and exposure free
Who Can Trade CFDs?
Generally speaking, everyone can trade CFDs. People who trade CFDs are looking to profit from all 5 major financial markets without having the need to rely on an actual financial institution, such as a bank or an investment company or buy actual shares and bonds.
On top of that, there is no real need of any financial experience to get started. Our traders range from experienced investors to people with no financial background, who learned to trade CFDs with the help of our premium training package.