SUMMIT TRADE CFD’s
CFDs (Contracts for Difference) offer investors an excellent way to trade financial assets online; rather than owning the underlying assets they are trading; investors only speculate on an asset’s price movement. As derivative products, CFDs can be traded with leverage. That is, only a small margin capital is required to control a bigger position. In addition, investors can speculate on the asset’s price movement in either direction, which means one can make money whether prices rise or fall. It is important to note that CFDs are traded over-the-counter (OTC) and not via exchanges, with various liquidity providers responsible for fair and transparent pricing. CFDs are available for virtually all types of financial assets and asset classes: Currency pairs, such as the EURUSD pair, Stocks, such as Microsoft and Facebook, Indices, such as the S&P 500 and the Dow Jones, Commodities such as gold and oil, Cryptocurrencies such Bitcoin, and many others.
CFD traders agree to exchange the difference in the price when they open a trade on their favorite financial asset, up to the time they close the trade. Profits and losses are determined by the position size as well as by how far prices have moved away from the entry point. CFDs are regulated products, which is why leveraged trading is allowed. Leverage can boost your profits immensely, but it also effectively amplifies your risk exposure.
Previously an unknown investment instrument, CFDs are now very popular, even among the retail investing public. Leverage and price volatility are surely the biggest appeal, but there are many other practical benefits for this market.
CFD trading promotes efficiency in the markets. It allows for fair and transparent pricing of financial assets, and also enhances liquidity in the markets. Liquidity ensures that there is ease when it comes to the buying and selling of financial assets. It also ensures that there are low spreads between the bid and ask prices. Furthermore, the CFD market allows for easier hedging of positions opened in the traditional or mainstream financial markets.
To learn more about trading CFDs effectively, visit the SUMMIT TRADE Co. Trading Academy.