TRADING PRODUCTS CFD TRADING

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Contracts for differences can be traded on a broad range of financial instruments, depending on

the access that your CFD broker has to various underlying market price feeds and the range of

markets available to trade is constantly expanding.

What Markets do CFDs Cover?

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The main CFD market types include:

Share CFDs

These contracts are the

most commonly traded

CFDs in the

marketplace. In these

types of contracts, the

CFD price comes from

the price of the

underlying stock that is

the subject of the CFD.

Sector CFDs

CFDs allow you to

profit wherever you find

a growth area,

regardless of where in

the world it may be. As

it is as easy to go short

as long, you can also

profit from a declining

economic sector. With

sector CFDs you take

an overall view of the

economy, choosing for

example healthcare as a

solid growth industry.

They save you having to

analyze the individual

companies, and you

only need to see the big

economic picture to

select profitable areas

to trade.

Index CFDs

These types of CFDs

are attached to the

performance of a

specific index. Traders

prefer contracts-based

on index performance

because of the high

leverage possible,

liquidity, and volatility

these types of

investments offer.

Those who trade

indices believe that a

specific market will rise

as a whole. CFDs

include the high trading

volume, low margin,

high leverage, low

trading costs, and

access to international

markets that would

otherwise be difficult

or costly.

Commodity CFDs

Commodities are

physical assets that are

in demand. Investors

divide commodities into

two categories: hard

commodities and soft.

Simply said, hard

commodities are mined

and soft are grown.

These assets are

typically uniform in

quality from one item

to the next. CFDs with

commodities as the

underlying asset give

traders the opportunity

to trade the futures

market with the

benefits of CFDs. While

trading commodities on

an exchange are

complicated due to

varying lot sizes,

different exchanges

carrying different

commodities, and expiry

dates, the advantage of

CFDs is they reduce the

complexity of trading.

Treasury CFDs

When a trader wants to

speculate on the value

of treasury notes, he or

she would choose a

treasury CFD.

Treasury notes that

are commonly traded

include Treasury Notes

of varying years, Bonds,

Euro-Bund, and

Australian Treasury

Bonds.

Short Position

The short position happens when the trader

believes there will be a decline in the assets value

and a ‘sell’ is selected, but, there is an intention

from the trader to buy the contract back at the

following stage. This type of trades can be

profitable from short time spreads even up

to minute-to-minute moves. Defining financial

costs is an advantage in this type of trading.

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Long Position

We will call a long position in trading CFDs the

situation when a trader purchased the asset. This

mean that the asset will rise or see an increase in

its value over the time of life of the contract. In

long term trading, as it has a higher level of

forecasting ability will allow traders to act on

lower price market moves. Trades usually last

from month to more than a year.

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Past performance is not necessarily indicative of future results. All investments carry risk and all investment decisions of an

individual remain the responsibility of that individual. There is no guarantee that systems, indicators, or signals will result in

profits or that they will not result in losses. All investors are advised to fully understand all risks associated with any kind of

investing they choose to do. Hypothetical or simulated performance is not indicative of future results.

 

RISK WARNING - TRADE RESPONSIBLY: Derivatives are leveraged products that incur a high level of risk and can result in the loss of all your capital and may therefore not be suitable for all investors. You should not risk more than you are prepared to lose and before deciding to trade, please ensure you understand the risks involved, take the level of your experience into consideration and seek independent advice if necessary. We strictly do not provide trading advice. To read our full risk disclosure statement, please click here

 

 

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