CFD is a specialized, over-the-counter financial derivative of stocks. Investors can trade price fluctuations in stock index futures, commodity futures, stocks and exchange-traded funds.

What is CFD ?

Through this product, investors are free to trade without actually taking possession of real assets or acquiring any rights or obligations related to the actual assets. The main benefit of trading CFDs is the flexibility to trade price volatility without actually trading physical tools.

The contract for CGC Global Markets is derived from the actual asset price. If an investor believes that the price of a financial instrument may rise (strengthen), and if the price is thought to fall (weaken), CFDs can be traded. The profit or loss of trading CFDs on the internet depends on the difference between the buy and sell prices of investors.

CFD trading method

When trading CFDs, there are many common strategies. Even if the traders are not skilled, they can understand these strategies. These involve numerous trading methods, the most popular of which are long and short.

Long position

The long position in CFD trading is buying an asset. This means that the value of this asset will rise during the contract period or it is predicted that it will rise.

Long-term trading Because of the high forecasting ability, in such transactions, traders can act when the lower market fluctuates. The duration of normal trading is from one month to more than one year.

Short position

A short position is created when the trader feels that the value of the asset will fall and chooses to “sell out”, but the trader intends to buy back the asset later.

For example, the trader predicts that the asset price will fall during the contract period and will therefore be short. If the forecast fails and the asset price starts to rise, the open position will experience a loss, calculated by the opening price of the asset minus the closing price during that period.

Conversely, if the open position shows that the value of the selected asset will fall, the forecast is accurate. Short-term trading can be profitable in a short period of time, even at the minute level. The advantage of short-term trading is to limit financial costs.

The advantages of CFDs

The main benefit of trading CFDs is the flexibility to trade price volatility without actually trading physical tools.

No transaction fees

Investors do not need to possess actual assets nor need to acquire rights or obligations related to actual assets. This is a contract between the customer and EncoreFX

Leveraged Trading

Relatively possession of real assets, you need less capital to open an exchange. Of course, leverage is a double-edged sword that can significantly increase losses and profits.

There is no stamp duty

For many people, CFDs do not have to pay stamp duty (this may vary depending on your personal environment and jurisdiction, may vary).

Both up and down markets can be traded

You can short or do more depending on market conditions and your trading strategy.

Multi-tool investment

Can trade rich tools on the same trading platform

CFDs will not expire

Generally speaking, the market generally follows a decline after rising, which is a continuous uninterrupted market cycle.

Hedging Potential

If there is no preset trading direction, you can open equivalent positions in the opposite direction, which is a buffer for your trading.