Defining CFD Trading
CFD stands for Contracts for Difference. It is frequently offered by financial markets to their customers. Even though traders in CFD are more likely those who have experience, it does not require any experience in joining this field. In fact, you can start by trading small and go big overtime.
CFD Trading: Long and Short
In CFD, you can trade in a large number of different types of financial markets. In this type of trading, you are to observe and predict the fluctuations of prices of assets. Furthermore, it allows you to trade different kinds of assets such as gold,and other holdings.
Here in CFD, you are not required to invest a large amount of money, it just depends on you how much you would want to invest. The best thing about it is that you don’t need to buy the assets. As mentioned earlier, you will just predict the price fluctuations of the assets.
How to start CFD trading
Starting to trade in CFD is not that complicated. You just need to create an account under a certain company. When you start trading, it is normal that there would be a small charge on every transaction, but don’t worry because when you open an account you don’t need to pay a single amount of money.
And if you are looking for a good company, Investor Gold also known as IG is one of the best options. Why? It accepts small contracts especially if you are a new client. And there, when you start trading, you’ll realize how you can earn a lot of money with a low capital although the other side of the coin is that it is risky.
Tip: It would be better to hire an advisor and ask for advice when you start trading. But if you want to learn through experiences, there’s no problem with that.
Illustrating how CFD trading works using Gold in the market
Gold is a precious thing in the market because of its uses. You can use it in making jewelry, electronics, and other things to be made in the industry. However, research shows that there is a drop in prices of gold during the year 2017 which drops to a thousand dollars per 28g grams.
In this scenario, some would sell their gold if they predict that the price is about to go down. Others will tend to buy when the time comes that the price is cheaper and will eventually sell it when the price goes up. Quite an investment right? Same goes in CFD trading, if you predict correctly the price changes then you would probably make profits.
What most people admire about CFD trading, is that you are allowed not to deposit all of your investments. Hence, you can deposit a little amount than you are actually investing. Holding the CFD depends on your earnings in the so-called profit margin, but if your prediction goes wrong you would lose the amount you deposit and there’s even a chance of your position being held since it is an open ended trading.
If you are planning to start trading, you should also understand its risks. However, if you master it over time and build a strategy you would probably make profit most of the time.