Contract for difference(CFD) is a kind of emerging financial derivatives. The investor trading only on the price of a specific commodity, without truely possessing the tangible product in the entire transaction. The commodity in CFD technically including every item that comes with floating price. For instance, global index,cryptocurrency, forex,stock and metal are commodities that can be trade in CFD. It has become one of the most favourite financial tools and some investors call it margin trading.
Why Trade CFDs
LOW SPREAD COSTS
Lower spread costs can help your strategy execute more trades.
ACCESS TO LEVERAGE
High leverage trading up to 1:50
Trade metals, cryptocurrency and etc
TRADE RISING AND FALLING MARKETS
CFD trading is flexible, allowing you to take advantage of both rising and falling markets.
Another benefit of CFDs is that it trade 24 hours a day, 5 days a week.
The Benefits of CFD Trading
- Higher Leverage
CFDs provide higher leverage than traditional trading. Standard leverage in the CFD market is subject to regulation. It once was as low as a 2% margin (50:1 leverage); but is not limited in a range of 3% (30:1 leverage) could go up to 50% (2:1 leverage). Lower margin requirements mean less capital outlay for the trader/investor, and greater potential returns. However, increased leverage can also magnify losses.
- No Shorting Rules or Borrowing Stock
Certain markets have rules that prohibit shorting, require the trader to borrow the instrument before selling short or have different margin requirements for short and long positions. CFD instruments can be shorted at any time without borrowing costs because the trader doesn’t own the underlying asset.
- Variety of Trading Opportunities
Brokers currently offer stock, index, treasury, currency, sector and commodity CFDs so speculators in diverse financial vehicles can trade CFDs as an alternative to exchanges.
- No Day Trading Requirements
Certain markets require minimum amounts of capital to day trade, or place limits on the amount of day trades that can be made within certain accounts. The CFD market is not bound by these restrictions and all account holders can day trade if they wish.
- Global Market Access from One Platform
Many CFD brokers offer products in all the world’s major markets, allowing around the clock access.