Get the latest news, exclusives, sport, celebrities, showbiz, politics, business and lifestyle from The VeryTime,Stay informed and read the latest news today from The VeryTime, the definitive source.

CFD Contract For Difference Trading

14
In my opinion one of the most effective ways to leverage a portfolio, is probably also the most volatile and is certainly not for the faint hearted! The advantages of CFD day trading? Here are five main advantages in trading CFD's in comparison to other trading products.
1.
Incredible Leverage: By laying out an average of only 5% of the capital the investor is able to take 100% of the adjustment in price.
In other words purchasing 1000 shares at £1.
00 each would normally amount to the princely sum of £1,000 however with CFD day trading the share purchase would only cost £50.
00.
(at 5%) But here is the exciting part - should that share price rise by 5% to £1.
05 then you will receive the total rise of 5p which equates to a 100% gain on a CFD costing 5p, (Keep in mind however - a drop in the share price has exactly the same effect in the opposite direction!).
Look at it this way, £1000 will buy you 1000 £1 shares whereas £1000 worth of CFD's will buy you 20,000 of these same shares.
2.
Volatility: Yes that's right - with CFD trading volatility is your friend.
What do I mean by that? Well the fact is that you are not in this for the 'long haul' profits are dependant on movement there-fore it stands to reason that a volatile market means potential profit.
With CFD trading you have of course the right to go 'short' or 'long' and so even in a falling market it is just as possible to lock in profits.
This aspect of trading can and does lead to real opportunities in any time of uncertainty where the markets can be extremely volatile.
3.
Free Financing: If you buy and sell your stock before the close of the trading day then there is no financing charge! This is standard practice with most if not all brokers.
4.
No Time Limit: Traded options - possibly CFD's biggest 'competitor' have a huge disadvantage over contracts for difference in that they have a definite 'life span' and value is directly related to the life of the Traded Option CFD's on the other hand continue to reflect the trading value of the share itself.
The most important thing is that you maintain a 'margin' which means surplus funds in your account to cover any movement - typically between 1-15% if you use online traders such as CMC markets.
5.
Free/No Commission! Another of the great advantages of using such dealers as CMC markets is the fact that they offer commission free trading on index, commodity and treasury CFD's.
In summary, if you are CFD Day Trading within certain parameters then you have no commission to pay on the trade and no interest to pay on the capital if you buy and sell in the same trading day.
Source...
Subscribe to our newsletter
Sign up here to get the latest news, updates and special offers delivered directly to your inbox.
You can unsubscribe at any time

Leave A Reply

Your email address will not be published.