What Is Online CFD Trading?
If you have any experience in trading financial instruments you may find online CFD trading very interesting and a new option to trade on financial markets. With traditional trading methods like stocks, indices, commodities, Forex and others, the hassles of owning the assets and transferring costs were significant. But in CFD trading you do not need to own any of the assets and you just make profits due to changes in the prices of the underlying instruments. Let us take an example- You trade in stocks by owning the stocks in the traditional method of stock trading. But what online CFD trading is all about is that you just buy CFDs, contracts between the buyer and the seller to exchange in the difference in the prices between the opening and closing of the contract.
What is the reason for the popularity of online CFD trading?
- Online CFD trading today provides a number of opportunities for trade without actually owning the assets underlying. That is why this newer way of trading is more popular these days than traditional trading. Here are the multiple advantages given by the CFD trading.
- Leverages- through Leverages you can control the trading of assets of values many times greater than the marginal deposit required. Your CFD trader allows you to trade in multiplied ratios which can as greater as 100:1. This means that if you have 100 dollar as margin, you can trade with 10000 dollars as the trade order. This means that your profit margin is multiplied by 100 times greater. Thus a very small amount of capital can control higher trading amounts.
- Taxes and commissions- In online CFD trading, there are no stamp duties and other taxes associated with the ownership of assets since there is no ownership of assets here. Also there are lower commissions and low amount of charges taken by the CFD traders, therefore your trading costs are saved in CFD trading method.
- Placing trades in multiple markets from a single account- The other best advantage of CFD trading is that you can chose any type of preferred market of your choice and you can trade even in multiple markets from a single account.
- Trade anytime you want at your convenience – In online trading of CFDs you can trade anytime you want. CFDs can be traded in multiple markets and many CFD traders allow you to trade at the convenience of your timings. So you can trade even after your office hours at the convenience of your home. The online CFD trading is so convenient that you can trade in any part of the world with the same account. You can make CFD trading as your part time job and trade whenever you like with the broker of your choice.