1Trading, not investing.

Capital.com allows you to trade the world’s biggest and most popular markets through contracts for difference (CFDs). CFDs are a type of derivative, meaning you do not buy the underlying asset itself. Instead, you buy or sell units of a given financial instrument depending on whether you think the underlying price will rise or fall.

2Leverage: what is it and how do I use it?

CFDs are also leveraged, which means you are able to take on a bigger position with a smaller amount of initial capital. In other words, you only put down a deposit of the value of your trade and borrow the remainder from your broker.

Leveraged trading is also referred to as trading on margin. This is because the funds required to open and maintain a position – known as the margin – are only a faction of the total trade size.

3You can go long or short.

CFD trading allows you to profit from a rising or falling market. You can make money on an appreciating or depreciating asset by going long (buying if you think the market will rise) or short (selling if you think the market will fall).

4What can I trade?

When CFD trading, you can open positions on a variety of different asset classes, including shares, indices, currencies, commodities and cryptocurrencies – all in a single platform.

5How much risk is involved?

All trading is risky. It’s just a fact of the matter. While trading with leverage means that your opportunity to profit increases, your chances of losing are also magnified. 

Luckily, Capital.com implements negative balance protection for all clients, so you can never lose more than you put in. Additionally, stop-loss and take-profit orders allow you to ensure that you make risk-aware trades – protecting you from any unforeseen downturns in the market.

6How does a stop loss work?

Stop-loss order is a key risk management tool. It closes an unfortunate position when a specified price is reached. Stop-losses are widely applied for two major reasons – to prevent losing money or to lock in gains. 

Stop losses can be useful tools to reap profits when positions turn out favourable, and they may save you from losing too much when the trend changes its direction against you. When the markets are volatile, stop-losses may become an investor’s best friends, helping to limit trading risks.

7What are margin requirements?

Trading on margin you pay only a fraction of the actual price. For example, a 10% margin requirement means that you have to deposit only 10% of the value of the trade you want to open, and the rest is covered by your CFD provider.

Margin requirements differ depending on the market you want to trade. The lowest margin requirement ratio we offer currently is 2% (max leverage 1:50). 

If the value of money in your account falls below a certain level, you get a margin call requesting to fund your account or reduce positions. In extreme cases, a broker may be forced to close investor’s positions.