TRADING HOW TO TRADE CFDs

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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

The main CFD market types include:

What Markets do CFDs Cover?

 

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.

 

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.

 

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.

Leverage

 

The advantage of leverage, due

to which you enhance your

potential return is high.

 

Dividend payment

 

Like stock providers, CFD

providers also pay dividends

to traders in long positions.

 

Low commission

 

Low commissions, charged by

CFD brokers, can also make it

quite attractive to enter this

market.

Trade on both rising and falling markets

 

This means that both rising and

falling markets can equally bring

you gains.

No expiry date

 

You can trade them without any

expiry date, you can keep your

positions open as long as you

wish; no limitation, no restriction.

Access to international markets

 

If you wish to trade American

stocks, being in Australia at the

moment, you do not need to

change your location.

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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