Note: Please do your own research before investing in anything, but especially for high-risk investments.
You may already know every tip and secret for successful trading.
You carefully check the market every morning and can make forecasts for the upcoming day or even week with ease.
If you want to find out more about online CFD trading peculiarities, you’ve come to the right place.
Guide to the Online CFD
For many experienced traders, this is still a new type of instrument, and yet, it is quickly becoming incredibly popular in financial markets. The Contract for Difference Trading is a widely used procedure among traders around the world. The online feature allows all of them to get access to leveraged trades on a wide range of financial asset types, such as Forex, commodities, and spot metals.
Online trading still requires making contracts with financial brokers, a.k.a. sellers. The contracts are standard and must be agreed upon for any further actions. The price is arranged based on the current market conditions. So, basically, you trade the contract and make speculations on the asset’s price rise or fall. You don’t have to own any of the assets.
Pitfalls
No matter how successful you are in the market and how versatile your portfolio is, the danger can wait for you around the corner. This type of trading is surely risky. It can be even riskier than classic good old assets trading. Exposure to the market must be larger than the deposited money amount. And if the trade does not close in your favor, you lose more than was deposited.
Performing online CFD trading
To feel the benefits of CFD trading, you have to become skillful in it. After you open an account with the broker, follow these steps:
- Choose the instrument you need. It can be the share CFD, index CFD, cryptocurrency CFD, or commodity CFD, for example. Use some basic (on Investous or other CFD-related websites) guides to learn how to do it. Learn everything you need about CFD and its peculiarities;
- After you choose the asset, you have to decide on the position. If you expect that the price goes up, open a long position, which is another word for “buy”. If you believe the price for an asset must go down, opt for a short position or sell it. Don’t make blind decisions, calculate everything;
- Choose the platform. There are lots of great trading platforms. You have to pick one that is equipped with helpful tools.
Benefits of online CFD trading
There are many advantages of the online CFD trade. Here are some of the most beneficial features:
- The leverage is higher in online CFD trading. It can be up to 1:1000. It requires a lower margin than usual;
- A trader can choose to go short or long on the instrument. This type of trade is more flexible than others since no assets are owned;
- Brokers often offer more than one market for online CFD trading. This increases your chances to gain the profit;
- The stamp duty is not paid since you don’t own any assets. This is also beneficial since you don’t have to pay taxes. Yet, if you earn the capital gain, you still pay the tax;
- The entry to the CFD online trade is incredibly simple. You don’t have to own a big capital to take part in the action. Sometimes, all the trader needs are 5 percent of the value of the asset. The rest of the money is borrowed from the broker.
Many newcomers prefer online CFD trading because of the lack of stamp duty, low margin, and high leverage. However, they still need to choose the assets and position size. Experienced traders recommend going for the low leverage at the start, so you can decrease the possible level of risk.
Why Online CFD Trading?
If you are still not sure whether you want to enter CFD trading, remember that it’s less risky and more beneficial than other means of trading. But don’t hurry: learn the basics, choose your assets wisely. Go low from the very beginning and follow the changes on the market. You don’t have to risk everything to get rich. And online CFD trading is the perfect tool for getting rich step-by-step.