The Advantages of CFD Trading

Posted by Marina Chase on January 28th, 2017

CFD trading is similar to the regular trading of derivatives. However, CFDs have certain features that put the investor at an advantage. While there are still risks involved, with the right strategy, an investor can benefit tremendously from CFD trading. As a derivative instrument, a CFD allows the investor to participate in underlying price movement of an asset without actually owning that asset.

There are several advantages to CFD trading. These benefits include buying and selling from a single trading account.This means that in order to gain, an investor cannot only buy low and sell high, but he/she may also sell high and buy low. This allows you to adopt a flexible trading strategy and to therefore adjust your position according to changing market conditions.

Leveraging is one of the more attractive features of CFDs. With CFDs, you get much greater leverage than with traditional trading. Margin requirements are usually much lower, even sometimes as low as 2%. On the other hand, traditional trading margins can reach as high as 20% in some cases.

With CFD trading there are no fees or day trading requirements asCFD brokers do not charge a fee. However, they do earn from the spread between the bid and the ask price. Also, there are usually no day trading restrictions like in traditional trading markets.

CFD trading has very compelling advantages over regular trading. With the right strategy, an investor can realize substantial gains by participating in the CFD markets. Brokers can help to guide you expertly through the trading process especially if you are new to CFD trading. CFD trading is becoming increasingly popular and is a great way to participate in forex trading.