Many traders are familiar with trading in stocks, rather than trading with CFDs. This means that CFD’s are met with some apprehension when considered for trade, especially if one does not know the differences as to why they are better. When you choose to trade a share, then you will own it until such a time that you sell it. With CFD trading, you do not own the underlying shares. Instead, you go into a contract between the CFD provider and yourself.
In addition, when you are trading with a CFD, you are doing so on a margin which means that the entire market value does not get tied up when you are buying a stock. This means that as a trader, you open yourself up to a larger position that you would normally be able to with your capital.
Here are some reasons that will help you consider CFDs when trading: –
You will receive excellent returns when you choose CFDs as opposed to stocks. This is because they never expire making it easier for a trader to enjoy the returns that they can receive.
When you trade with CFDs, you will experience much higher leverage than if you try traditional trading. This also means that you need less capital and you will be able to receive more returns.
Access to the Global Market
With CD trading, you will be able to gain access to products from all of the major markets in the world. As long as the market is open, a trader can access the commodities that are available on the broker’s platform.
Lower Fees, if Any
There are many fees that traditional brokers charge when they are trading, and these apply to the different order types that are executed. These order types include limits, stops, and contingent orders. When trading with a CFD, one can choose to apply for these orders without having to pay any additional fees. When trading, CFD brokers are unlikely to charge for entering or exiting a trade as they will make their money by insisting that the trader pays the spread. Normally, it is a fixed spread giving an idea of how much they are able to make.
A Number of Trading Options
There are a number of trading options that one can choose from when considering CFDs, and these extend beyond just stocks. They also include an index, treasury, commodity CFDs and currency. This means that traders who are familiar with a range of financial vehicles will find it possible to trade CFDs with ease.
When you are looking at trading but have a limited amount available to you in terms of capital, then you will appreciate the chance to explore CFD trading. This is because, with stock trading, your options would be limited, but with CFD, the options open up considerably. Furthermore, you will be able to access up to 3 times the total position that you would have if you were stock trading.