Summer heat always makes us think of the seaside with its unforgettable cool breeze and splashes of waves breaking off your feet. However, very often instead of riding the Hawaiian Banzai Pipeline, we “ride” the financial market’s price swings. Which is no less exciting, by the way.
Tear into the world of CFDs
CFDs stock trading opens a huge pool of opportunities, sometimes providing thousands of markets to trade. You can carefully choose the instruments that suit you best among the extended collection of shares, commodities, indices, Forex and crypto markets.
- CFDs on shares. You can trade share CFDs, speculating on specific market areas or particular stocks you find promising.
- CFDs on indices. Speculate on a market’s extensive changes, following the world’s indices ups and downs.
- CFDs on commodities. Choose from a huge variety of natural resources that will never go out of fashion.
- CFDs on Forex. Trade international currencies through CFDs, enjoying the major, minor and exotic currency pairs.
- CFDs on crypto. The hot trend is still running. Therefore, get all the benefits of trading Bitcoin, Ripple, Litecoin, Ethereum and many others without owning the coins.
Profit from trading CFDs
A flexible alternative to traditional trading, contracts for difference (CFD) attract vivid interest among traders. CFDs represent an impressive list of advantages that sound rather convincing, while choosing the way to spend your money and earn more.
Still, you should never forget about the reverse side of CFD trading – losses – that may happen to any trader and constitute almost inevitable part of the business.
Benefit from up and down price swings
The market’s price fluctuations can bring good opportunities for profit. High volatility does not only mean the future risk of a significant instrument’s price movement in either direction, but also provides great opportunities to speculate and hedge.
Many traders choose the strategies that focus on volatility trends. They can benefit a lot by accessing the information on the stocks’ volatility in real time.
CFD profit: long and short positions. How do they work?
Regarding the direction of the market’s price movement, you can choose the appropriate strategy, either buying a CFD – going long, or selling it — going short.
Let’s take a closer look on how both positions may work.
Example of going long:
Imagine that market forecasts have convinced you that Google’s shares (GOOGL), which are traded at $1,210 seen in July 2018, will go up. You decide to buy 50 shares with the total price of $60,500. In several days the price reaches $1,220 per share, bringing you $500 profit ($61,000 – $60,500).
In case the price goes in the opposite direction, your losses will also match the change in price plus the trading costs.
Note! Remember that the good thing with CFDs is that you don’t have to pay $60,500 and actually buy something. You only speculate the price difference, trading on leverage and using your margin capital.
Example of going short:
Let’s assume that the Google has received a negative price forecast and you expect the price will soon drop. Still, you can always benefit from the downward price move. With the same price of $1,210 per share and the same total value of the position for 50 GOOGL shares equal to $60,500 you decide to short sell them.
Though CFD trading sometimes may sound very attractive, and rather easy to understand, it’s not as simple as that. Please, remember that trading is always risky and requires careful consideration.