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    Bets increase on a soft landing in the U.S

    Bets increase on a soft landing in the U.S

    69% of investors believe metaverse entertainment will change social lifestyles

    69% of investors believe metaverse entertainment will change social lifestyles

    European oil companies want to follow in Chevron’s footsteps to operate in Venezuela

    European oil companies want to follow in Chevron’s footsteps to operate in Venezuela

    Amgen buys Horizon Therapeutics for US$ 25 billion

    Amgen buys Horizon Therapeutics for US$ 25 billion

    Europe prepares law to make airlines that pollute more pay higher costs

    Europe prepares law to make airlines that pollute more pay higher costs

    Why are Asian investors selling their tech stocks?

    Why are Asian investors selling their tech stocks?

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Are technology stocks coming to the end of their reign?

    Are technology stocks coming to the end of their reign?

    Amazon fined millions for manipulating algorithms in its favor

    Amazon fined millions for manipulating algorithms in its favor

  • Markets
    Bets increase on a soft landing in the U.S

    Bets increase on a soft landing in the U.S

    What are CFDs and what are their advantages?

    Getting started with CFD trading

    Goldman Sachs lands with more strength at Santander and BBVA

    Goldman Sachs lands with more strength at Santander and BBVA

    With inflation in recession, what stocks should you consider?

    With inflation in recession, what stocks should you consider?

    Should payment for order flow be maintained in the stock market?

    Should payment for order flow be maintained in the stock market?

    Why are Asian investors selling their tech stocks?

    Why are Asian investors selling their tech stocks?

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Here’s what the economy and markets will look in 2023, according to JP Morgan

    Are technology stocks coming to the end of their reign?

    Are technology stocks coming to the end of their reign?

    Inflation is starting to ease but not enough

    Inflation is starting to ease but not enough

  • Investing
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    Two biotech stocks that could explode soon

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    Ideas for investing in the electric vehicle industry

    Mercado Libre could be one of the best investments for the long term

    Mercado Libre could be one of the best investments for the long term

    Three cheap tech stocks for 2023

    Three cheap tech stocks for 2023

    Where to invest in 2023? These are the most likely trends

    Where to invest in 2023? These are the most likely trends

    Will Ford shares be profitable in 2023?

    Will Ford shares be profitable in 2023?

    Some interesting options for investing in leisure and travel companies

    Some interesting options for investing in leisure and travel companies

    Plug Power’s commitment to green hydrogen

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    Investing in Auto Trader: vehicle sales at a turning point

    Investing in Auto Trader: vehicle sales at a turning point

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    Banning TikTok in the U.S. could benefit Meta

    Microsoft leads the ranking of the best-managed companies in 2022

    Microsoft leads the ranking of the best-managed companies in 2022

    Apple: consequences of the Foxconn conflict will continue until 2023

    Apple: consequences of the Foxconn conflict will continue until 2023

    5 must-have skills to get a job in 2023

    5 must-have skills to get a job in 2023

    UK changes strategy on Internet content control

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    EU organized a party in the metaverse and nobody attended

    EU organized a party in the metaverse and nobody attended

    The metaverse companies with the highest revenues in 2022

    The metaverse companies with the highest revenues in 2022

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    Nintendo sells 10 million Switch in 3 days and its shares rise

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    69% of investors believe metaverse entertainment will change social lifestyles

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    Bitcoin falls after Fed decision to raise interest rates by 0.50%

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    The future of cryptocurrencies, according to Larry Fink

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    How Much Bitcoin Should You Buy: 5 Factors to Consider in 2023

    How Much Bitcoin Should You Buy: 5 Factors to Consider in 2023

    Between two extremes: what will the price of Bitcoin be in 2023?

    Between two extremes: what will the price of Bitcoin be in 2023?

    FTX crash spreads and affects BlockFi

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    EU organized a party in the metaverse and nobody attended

    EU organized a party in the metaverse and nobody attended

    Why does The WSJ continue to question Tether’s financial health?

    Why does The WSJ continue to question Tether’s financial health?

    Brazilian Congress approves bill to regulate cryptocurrencies

    Brazilian Congress approves bill to regulate cryptocurrencies

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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