In this short CFD trading guide with XTrade or XFR Financial Ltd, we will start with the introduction to CFDs. CFD stand for a contract for difference. It is an agreement between two parties for the exchange of difference b/w opening and closing price of a contract. CFDs are used to trade on the price movements of thousands of available financial markets without worrying about the direction of the markets. CFDs provide a great deal of flexibility to the online traders and the traders can trade regardless of the direction of the price movement of the underlying asset.
CFD trading guide – Introduction to CFDs
The best advantage you get from CFD trading with XTrade or XFR Financial Ltd is that there is no ownership of asset. You can trade on any market like stocks, commodities, currencies or indices but you just speculate on the movement of the prices. If the speculation you make on the price direction is correct, you get the profit and it depends how much the price goes in the direction you took. Similarly if it goes to the opposite direction to that you predicted, you face losses and that goes to the extent of the movement in that direction.
CFDs at XTrade are leveraged products
Let us move forward with this guide with XTrade or XFR Financial Ltd. CFD trading is also a leveraged trading method and you can maximise your market exposure by depositing only a small fraction of the overall investment you have made. This way, your potential profit also gets multiplied. The leverage ratios depend on the CFD brokers offering the leverage ratio and that may go up to 1:400 with some brokers and the particular markets. This means that you put $100 as margin and it will allow you to trade with $40000 as the position if your trader allows 1:400 as the leverage ratio. Usually 1:100 is a common leverage ratio offered by most of the online CFD brokers.
Access to many global markets through XFR Financial Ltd
With CFDs, you get access to thousands of markets which would not otherwise be available to the retail investors from a single platform alone. You can access the market of different currency pairs, you can trade with indices as underlying instruments, you can trade with thousands of commodities markets and much more. CFD trading XTrade or XFR Financial Ltd brings all the channels to a single trading platform which is an outstanding feature. A trader who has a prior experience in trading on traditional markets of an asset can also use CFDs to trade with those markets and get the benefit of both CFD features and the traditional market features.
Thus CFDs provides a number of advantages to the trader as he can gain an edge over traditional traders. The benefits listed in this CFD trading guide are not just enough but there are many other features too which you can understand yourself when you start trading CFDs.