CFD trading online allows to speculate on market price movements without actually owning the underlying asset of the contract.
What Is CFD Trading online?
Contract for Difference or CFD, as it is shortly known, is an agreement between two parties to exchange the difference between the opening and closing prices of the contract. The difference between the opening and closing prices may cause either loss or profit.
CFDs can be used to speculate on the fluctuations of the prices. When trading CFD it is possible to get profit both from falling and rising prices. In both cases it is possible to open either long or short positions. Traders prefer long positions when the increase of price in future is expected and short positions, when it is expected that the prices will fall and it buying with lower prices will result in future. Short trade strategy is practically difficult on the stock exchange while in case of CFD both long and short positions may be opened quite easily. In case of a rational trading strategy it is possible to gain profit even on the falling market.
At the moment of closing positions the change of the asset price is calculated. If the asset price has increased, the seller pays the buyer the difference between the initial value of the asset and its current value. Whereas, if the asset price has fallen, the buyer pays the seller.
Benefits of CFD Trading Online
CFD trading online provides numerous advantages over directly asset trading. Here are some of the main benefits of CFD online trading:
- Possibility of enhancing the profits by opening leveraged positions
- Opportunity of opening long and short positions easily
- Quick access to different markets through one brokerage account
- Cost reduction due to the lack of taxes and hidden commissions
- Availability of large number of Commodity, Stock and Index CFDs
- Beneficial swap conditions
Main Provisions of CFD Trading
Through NetTradeX CFD trading platform traders have access to Commodity and Stock markets, as well as trading indices and numerous other trading instruments. The whole concept and process of CFD trading is very simple and is nearly identical with traditional trading. Traders buy CFDs expecting the price of the underlying asset to rise and in the same way they sell CFDs expecting the price of the underlying asset to decrease. This is the main process of CFD trading where traders make a profit or suffer a loss, depending on market fluctuations.
The overall concept of CFD trading is quite simple and by many features resembles the traditional stock, commodity currency trading. However, CFD trading has its own features and rules that are required to follow if you want to reach your trading goals.
IFC Markets is a leading innovative financial company, offering private and corporate investors wide set of trading and analytical tools. The company provides its clients with Forex and CFD trading through its own-generated trading platform NetTradeX, which is available on PC, iOS, Android and Windows Mobile. The company also offers MetaTrader 4 platform available on PC, Mac OS, iOS and Android. You may compare the advantages of both platforms.