Trading CFD’s With ContinueFX
CFD or contract for difference is a method of trading where the buyer is paid the difference between the buying and the selling cost. It is a popular form of derivative trading. The reason why many traders indulge in the contract of difference or CFD trading is because it allows you to be in position to trade in the global financial markets with currencies, shares, indices, foreign exchange, treasuries and commodities without owning any of them.
Traders often enter this market because of the leverage system. CFD’s allow you to make a purchase per unit of a commodity of your choice. But instead of paying for the entire commodity you must only pay a fraction of it to enter the market. For example, a CFD works by a CFD trade being entered with a small margin where the position will show a loss equal to the size of the spread. The underlying asset needs to appreciate to match this spread and break even as a trade-off. The trader then has to exit the CFD trade when it meets the bid price.
A CFD trader earns profit in this market by going long (buying a number of product when you feel they will rise in value), or by going short (selling a number of products when you feel there will be a decrease in their value). This is one of the few trading markets where traders have the chance of earning a profit even when the commodity is at a loss. The difference between the buying cost and the selling cost is called the spread. You can make huge profits if you sell your product at the right time but there is a possibility of incurring heavy losses if you buy and/or sell a product at the wrong time.
CFD are a great market to enter but it requires proper research and timely action. We constantly show you competitive spreads where the chances of a rise in the market value is much higher and therefore your chances of making profit is much higher as well.
Note: CFD trade does not guarantee future returns. Trading carries the potential for profits but also the risk for loss.