CFD stands for contracts for differences which lets you speculate on rising and falling markets both. You get full exposure to a vast number of underlying markets which is more than 10000 and the best part is that you don’t need to take the ownership of any type of underlying assets. With CFD trading accounts you are free to trade on any market provided by the trader but you just speculate on the movement of the prices and if the price goes in the direction predicted by you, you are in profit otherwise you have to face loss.
Types of CFD trading accounts
Most of the CFD brokers provide two types of CFD trading accounts ( see here ) – One is the live trading account and second is demo account. With Live trading accounts you can trade with the real money and get the benefit of moving markets while with demo account you can trade in a real like environment with demo money just for practice. Those traders who are beginners and novice can practice with the demo account provided by the CFD broker and practice trade until they get confidence to trade with the real money in live trading account. With demo account you test your trading skills and test strategies to find out the best strategies suitable for you.
Benefits of CFD trading
As compared to the traditional trading methods of trading on stocks, Forex, commodities, indices etc, you get a lot of privilege when you trade with CFDs. CFD trading is a modern way of trading on different financial markets without owning the real assets in the markets. There are a number of advantages when you trade with CFDs. Here are some of the most important ones.
You can trade in both the rising and falling markets – CFD trading allows you to trade with both the directions in the market with the expectation of profits. Whether the market goes up or down, you can buy or sell CFDs taking the advantage of the movement of the prices of the related assets.
Trade in more than 10000 markets- With CFD trading accounts you can trade with a variety of markets of your choice, whether it is currencies, stocks, commodities, indices or others. Many brokers allow you to choose from thousands of underlying markets and you can simply choose whatever suitable for you and build your CFD trading portfolio through XTradeAfiliates.
CFD allows you to trade on margin which means that you can trade by depositing only a very small amount of the overall trade order you want. The ratio is called leverage ratio and it can be as less as 1:100 or up to 1:400 with many brokers allowing it.
You can trade only with online CFD trading accounts available with almost all the CFD brokers available today.