On many sites, you can read the first steps to start trading CFDs i.e. Contracts for Difference, but only here can you get the best tips for getting started.
Stick with us until the end of the article to find out everything you need to know about it.
What is CFD trading? An overview of the subject
CFDs are one of the few methods left on the market to be able to invest effectively, without spending hours and hours in front of the computer. In terms of similarity, we can compare it to trading an asset, although technically speaking you are not trading a physical asset, but a contract that perfectly replicates a portion of the asset you duplicate.
What is a CFD?
As the name suggests, a contract for difference is in fact a contract: in this case, it is entered into between a broker (that is, an intermediary between the client and someone else), and the buyer himself. In fact, both the broker and the buyer undertake to respect the terms of the contract, which in this case relate to the price of the CFD at the time of its sale, by making up the difference with the price at which the position was taken, i.e. that is, the price at which the negotiation started. It is easy to see that if the price at which the CFD is sold is higher than the price at which it was entered, the buyer will have made a profit; otherwise, he will have suffered a loss. The subject is however very complex, which is why we recommend all those who are interested to continue reading on this interesting site on the CFD.
Our top tips
There are many advantages to CFD trading, we list the ones we think are the best, as well as our most valuable tips.
To begin with, let’s talk about short selling: in the more traditional financial product markets you cannot do this, while with CFDs you can: in practice you can sell without having bought the contract yet. , which makes sense, especially when you think an asset will lose value in the market over time. Next, we have to talk about leverage, a very common concept in trading. When it comes to CFD trading, most brokers offer a leverage of 20, compared to the classic 1-2 on virtually all other stocks. Thus, by investing 20 euros with a leverage of 20, the commitment is around 400 euros.
We believe that it is advisable to start investing with CFDs because you can start with a small capital, which is not the case with most other assets, and with CFDs you have access to a lot more products. , all with spreads lower than the stock market.
In conclusion, we believe that CFDs are a very attractive alternative to other types of products in the online financial market, especially since they do not have pre-set stop loss levels. It can generate huge profits, but you should also be careful with losses. That is why we recommend that you read everything you need to know in more detail at the aforementioned link.