Benefits of CFD Trading - CFD’s also referred to as contracts for difference has gained huge popularity in the past few years. |
|
Business Related Topics...
Computer Related Topics...
Entertainment, Recreation & Sports Related Topics...
Health & Fitness Related Topics...
Home & Family Related Topics...
Shopping Related Topics...
Would you like to submit articles to our site? Have a question or a problem?
You are here: DIME Home > Investing > Benefits of CFD Trading
CFD’s also referred to as contracts for difference has gained huge popularity in the past few years.
Author: Percy Smith
Date: Apr 11, 2011 - 9:56:39 PM
CFD’s also referred to as contracts for difference has gained huge popularity in the past few years. CFD is nothing but an agreement between the buyer and seller agreeing to exchange the difference in the current value of a share, currency, commodity or index and its value at the end of the contract. As long as this difference is positive, the seller would pay the buyer. On the contrary when this difference becomes negative, the buyer loses his money.
These contracts were developed during early 90’s in London and were used for hedging funds by institutional and retail investors. However, trading in these instruments is not permitted in US due to restrictions imposed by US Securities and Exchange Commission.
Despite the restrictions imposed in few countries, spread betting is highly popular. Unlike share trading, investors trading in share CFD enjoy high growth rate while lowering the financial commitment of an individual. In other words, CFD trading spreads the risk of losing money thereby allows the investors to speculate price movements. Unlike shares, CFD trading is done on a margin. So, investors only need a small proportion of total value of a position to trade.
Besides this, contracts of difference provide an excellent opportunity for short term trading strategies and this is why they are most preferred amongst hedge funds. One of the most attractive features of CFD trading lies in the access it provides to foreign markets and various other trading instruments. Since the risk involved in this trading is negligible, beginners are encouraged to trade in these instruments. However this does not mean that these investments are risk free.
Investors stand a chance to lose money because of the highly volatile nature of these instruments provided they do not use stops. In fact almost all providers suggest their traders to use stops in order to minimise their risks, control their leverage and enjoy the benefits of best trading.
There are few disadvantages of CFD trading as well. First and foremost being unregulated nature of this market. As a result there is no real undertaking asset being purchased to which legal rights can be obtained. Another major threat is, levying of overnight fee for holding these instruments for longer period of time.
Benefits of CFD trading include:
Unlike share trading, there are no fixed timings for contract trading, so investors can place their trades almost at any hour of the day.
Execution here takes place almost instantly so you need not wait hours or days together.
Another advantage of this trading is that you can make profits both from rising and falling prices but only if you have mastered the art of dealing in these securities.
A responsible risk manager with an ability to conduct more realistic trade can alone assure you guaranteed results. Another form of trading that is growing in popularity is Forex trading. This deals with trading currencies from different countries against each other. This kind of trading allows trader to choose a pair of currency which you expect to change in value and place in which you trade.
Percy Smith is the author of this article on Share Trading. Find more information about Singapore Shares here.
Apartments & Villas in DubaiJul 10, 2011 - 9:40:06 AM The Dubai real estate and property market is known for its high standard quality and luxurious life style that it offers to the residents of Dubai. There have been a number out class and fascinating construction projects in Dubai that has made the world adore Dubai’s property developers, constructors, engineers, and architectures. In Dubai real estate, its not about constructing a project but about being the best developing some thing extraordinary, unique, while maintaining high standards of quality and comport and these qualities have become a big reason for the attraction of investor and buyers in the real estate and property market of Dubai.... [Read the full story] |
Oil & Gas Investments Risk ProfilesJul 7, 2011 - 11:14:13 AM Unity Resources Oil & Gas Education Series - Free White Papers... [Read the full story] |
Bamboo Investments - The Greener Way to Make MoneyApr 19, 2011 - 4:17:19 PM As the news is constantly full of information supporting scientific papers on global warming, people are increasingly looking for ways to generate money whilst saving their conscience and bamboo is an ideal medium term investment. It is an extraordinary plant in that it sequesters four times more CO2 than ordinary timber, and produces up to 35% more oxygen thanks to its quick growth.... [Read the full story] |
Benefits of CFD TradingApr 11, 2011 - 9:56:39 PM CFD’s also referred to as contracts for difference has gained huge popularity in the past few years. CFD is nothing but an agreement between the buyer and seller agreeing to exchange the difference in the current value of a share, currency, commodity or index and its value at the end of the contract. As long as this difference is positive, the seller would pay the buyer. On the contrary when this difference becomes negative, the buyer loses his money.... [Read the full story] |
Search for articles: |
Latest Articles in All Categories |
Putting Up a Small Commercial Printing Business |
So You Might Be Unemployed And Desire To Become A San Francisco Real Estate Investor Now |
Meditation and Mindfulness: Dealing With Emotion |
CPA Websites: Five Essential Ideas for Composing Convincing Articles |
Set Goals In Order to Come Up With Your Action Plan |
Is the Air in Your Home Safe to Breathe? |
Coarse Fishing Tackle Review: The JW Young 13ft Trotter Rod |
Section 1031 Exchanges For San Diego Real Estate Investors |
Phoenix Real Estate Investing For Highest Possible Earnings |
Legendary are the Volk Racing TE37 Wheels |
Developing the Next Generation Wall Station (ChaseDesk™) for Healthcare - A Case Study |
What are step down transformers? |
Introducing Sharehype, the Revolutionary Tool for Online Marketers |
Rewards To Shopping For Austin Real Estate On The Web |
Hydroponics for Beginners |
Would you like submit your articles and have them approved on a priority status? Find out more about how you can become a Priority author for pennies a day! Click here.
Dime-co.com Home |
|
|
|
|
|
|
|
|
|
|
|
|
|
Disclaimer: Dime-Co.Com is an online information article and video article network. All articles, video articles, comments, and other features herein are for informational purposes only and are provided "as is" without warranties, representations or guarantees of any kind. The views and opinions expressed in an article, comments, links or blogs are the author's own, and not necessarily those of dime-co.com's owners. For full disclaimer, please read our TOS.