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  • Home
  • News
    Central bank gold demand reaches record high in first quarter

    Central bank gold demand reaches record high in first quarter

    Snap Inc. does not see a light at the end of the tunnel (quite the contrary)

    Snap Inc. does not see a light at the end of the tunnel (quite the contrary)

    Big losers of 2022: Bernard Arnault, Elon Musk and Jeff Bezos

    Big losers of 2022: Bernard Arnault, Elon Musk and Jeff Bezos

    Authentic Brands Group beats Bluestar Alliance to buy Boardriders

    Authentic Brands Group beats Bluestar Alliance to buy Boardriders

    Retail spending dropped 1% in March

    Retail spending dropped 1% in March

    Will Europe’s commercial real estate sector be the next to fall?

    Will Europe’s commercial real estate sector be the next to fall?

    Elon Musk plans to compete in AI with Microsoft and Google

    Elon Musk plans to compete in AI with Microsoft and Google

    BlackRock’s warning to investors about interest rate cuts

    BlackRock’s warning to investors about interest rate cuts

    Mercado Libre invests millions in Mexico and Brazil

    Mercado Libre invests millions in Mexico and Brazil

  • Markets
    Intel stock in 2023: good entry point?

    Intel stock in 2023: good entry point?

    Possible Fed pause not a buy signal, BofA says

    Possible Fed pause not a buy signal, BofA says

    Iberdrola targets U.S. and Europe after sale of assets in Mexico

    Iberdrola targets U.S. and Europe after sale of assets in Mexico

    What factors drive Shopify stock?

    What factors drive Shopify stock?

    Jack Ma’s return to China and the (good) reaction of Alibaba shares

    Jack Ma’s return to China and the (good) reaction of Alibaba shares

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    Investing in Lululemon: buy or wait and see which way the stock goes?

    Will Europe’s commercial real estate sector be the next to fall?

    Will Europe’s commercial real estate sector be the next to fall?

    Investing in Playtech? High growth potential in the United States

    Investing in Playtech? High growth potential in the United States

    BlackRock’s warning to investors about interest rate cuts

    BlackRock’s warning to investors about interest rate cuts

  • Investing
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    Real estate investing strategies: How to simplify mortgage settlements for savvy investors

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    What factors drive Shopify stock?

    Why Adidas and Beyoncé are splitting up and what it means for investors

    Why Adidas and Beyoncé are splitting up and what it means for investors

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    Mercado Libre invests millions in Mexico and Brazil

    Mercado Libre invests millions in Mexico and Brazil

    Big Technologies has large margins and the advice is to wait

    Big Technologies has large margins and the advice is to wait

    Warren Buffett’s best advice to Bill Gates

    Warren Buffett’s best advice to Bill Gates

    What are AT1 bonds and why did Credit Suisse make them news?

    What are AT1 bonds and why did Credit Suisse make them news?

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    Hedging hurts more than stock market declines, study says

  • Technology
    What’s behind the drop in C3.ai shares?

    What’s behind the drop in C3.ai shares?

    Huawei boosts China in chip wars

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    Binance victory lasted only a few weeks, says Kevin O’Leary

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    Do Kwon and Chang-joon apprehended trying to escape to Dubai

    Do Kwon and Chang-joon apprehended trying to escape to Dubai

INVESTOR TIMES
Home Markets

Getting started with CFD trading

David Romero by David Romero
1/24/2023 - 12:09
in Markets
Reading Time: 2 mins read
Share on FacebookShare on TwitterShare on LinkedIn

A CFD, or contract for difference, is known as a derivative, which means you won’t own the underlying asset even if you trade in them. Instead, you make a deal with your broker that is based on a change in the price of an asset. Using CFD trades you can explore several financial markets, including forex pairs, commodities or stocks, and speculate on the performance of a particular asset. Specifically, you consider whether the price will increase or decrease in a short space of time. Usually, CFD trades take place in less than one day.

How does the trade work?

CFD contracts replicate the current prices on financial markets, be it forex, shares or stocks. In terms of your position, buying a single Tesla CFD share is equivalent to purchasing a single Tesla share, for example. By opening a CFD, you agree to trade the difference in share price between when you opened the position and when you closed it. That’s why traders refer to them as contracts for difference. As a buyer, you make a profit on CFDs when the market goes up, or a loss if it falls. As a seller, you receive a profit when the market price is dropping, and upward trends can leave you with losses.

What closes a CFD trade?

To close a CFD, you simply trade the opposite way to your opening position. So, if you decided to buy ten Microsoft CFDs in the morning, you would need to sell ten later in the day to exit.

Are CFDs leveraged?

Yes, leverage is one of the defining features of CFDs. You don’t own the asset you buy or sell, so you don’t pay for the asset when placing a trade. Instead, you speculate on price changes and are trading on margin or using leverage trading.

A margin requirement represents a percentage of the value of the position and is the amount you need to have on deposit to make the trade. As a result, you can open a position that your budget would not usually reach. However, your profit or loss will still be based on the full value of the position.

CFDs offer more freedom to ambitious traders

Compared to the regulations which govern a standard exchange, the CFD market is far less regulated. You can open a brokerage account for less than you’d have to pay on the traditional market and gain immediate access to any market on their platform.

If you’ve always hoped to invest in a limited commodity, such as gold, but have been concerned by the sensitivity of this market, CFDs could offer a way in. Asktraders.com have all the resources you need to get started in their gold trading guide, as well as hints and advice on many other aspects of investing in the markets.

Are CFDs right for you?

Despite the slightly more complex trading style involved, CFDs are popular instruments that make a great short-term investment. Before you start, do some thorough research on CFDs, then begin with small trades while you develop a more advanced strategy.

Tags: cfdcommoditiesgoldgold tradingleveragemarketstrading

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