Press "Enter" to skip to content

Category: Opinions

Appreciating Leverage in CFD trading

CFDs are a derivative traded on the financial markets around the world. Unlike traditional financial instruments such as stocks and bonds, CFDs have no backing by a specific asset. Instead, CFDs represent contracts that give you the obligation to buy or sell the asset at a pre-agreed price by a particular date. CFDs allow investors to trade on price movements of various assets, including shares, commodities, currencies, and indices. You may also trade CFDs on fixed-income products such as government and corporate bonds, as well as mortgage-backed securities. CFDs are leveraged products, which means that they offer investors the potential to earn high returns, but carry a high level of risk. Types of CFDs There are two main types of CFDs: cash CFDs and spread betting CFDs. Cash CFDs allow investors to buy or sell the underlying asset at an agreed price immediately. Spread betting CFDs allow investors to speculate on price movements of various assets, including shares, commodities, currencies, and indices. Spread betting CFDs are essentially contracts for difference, in which the investor may either take or make markets in the underlying asset. The benefit of spread betting CFDs is that investors don’t have to pay commission or stamp duty, which significantly reduces the overall cost of trading. Understanding Leverage A leveraged product is a security that derives its value from the assets of the underlying company. Assets can be actual property or underlying intellectual property. In addition, it can be anything that can leverage, such as a company’s…

Comments closed

Comparing Spread Betting and CFD (Contracts for Differences)

Contracts for differences enable investors to trade the price flow of futures even though they are not futures contracts. CFDs do not come with an expiry date and comprise preset prices. However, they trade with sell and buy prices, as is the case with other securities. Contracts for differences trade over the counter via a chain of brokers who plan the market supply and demand for CFDs and develop prices accordingly. This article covers the similarities and differences between spread betting and CFDs How Spread Betting Works When traders spread bets, they choose whether a financial instrument or product’s price is likely to rise or drop and determine the amount to bet. The products, in this case, can be stock index, share, commodity, or currency pair. For instance, suppose an investor is spread betting foreign exchange, and the currency pair’s price fluctuates in their favor. To calculate their profit, they will need to multiply their initial share size by the total points the product has moved. If it moves against their preference, their loss will be calculated in a similar formula. It is worth mentioning that losses can surpass deposits. Understanding the Similarities Between Spread Betting and CFD Spread bets and CFDs are leveraged derivative instruments whose value comes from a fundamental asset. In these instruments, an investor does not own the underlying market assets. When trading CFDs, investors speculate on whether the underlying asset value will fall or rise in the future. CFD providers bargain contracts with the option…

Comments closed

Is Forex Trading a Profitable Venture?

Most people who join the forex trade hope to make big profits in the tweak of an eye. However, the reality is that most average retail traders experience a rocky path to riches. Massive losses and potential penury mar this path. Nonetheless, hedge fund people with deep pockets or uncanny trading skills quickly make significant profits enough to make them wealthy.   About three-quarters of investors globally make net losses from trading currencies each year. While a quarter of them do not, it doesn’t mean that all of them get rich trading forex. Unexpected events could inflict massive losses that could render a forex trader broke or bankrupt.   This article examines seven risks you should know about as a retail trader before you invest in forex to get rich. Risks of Forex Trading Asymmetrical Risk Reward Most retail traders are unable to keep their losses small compared to seasoned forex traders. Experts in trading also know how to offset losses with sizable gains when they get profits. Most retail traders do the opposite. They hold on to a losing trade for longer than is necessary, thereby incurring substantial losses. At times these losses turn to be greater than their initial investment. Excessive Leverage There is a considerable risk of excessive leverage in forex trade. Real leverage has the potential to expand your profits as much as your losses. The greater the leverage on the capital you invest, the higher the risk of assuming it. While this risk is not…

Comments closed

Trading With Technical Analysis Tools and Strategies

Forex trading does not have a single formula to assure you of success. However, irrespective of the trading skill level, every forex trader needs trading tools, practical implementation, hard work, and even patience to succeed.  Luckily for forex traders, there is a wide range of trading tools to choose from, with the most effective being technical analysis tools.

Comments closed

CFD Trading In Australia

Some years back, Cfd trading Australia was introduced by the Australian foreign exchange. This move meant that retail investors could use contracts for differences to enter the foreign exchange market with minimum brokerage fees. Contrary to what was the standard fee by then, cfd providers initiated a $10 fee for each transaction.  This reduced the fee a great deal and enabled more traders to trade.

Of course the fee attracted numerous popular retail traders who came with various methods of trading such as over the counter option, which was executed as a trade counter and market provider party. In order to counter the competition, some share brokers came up with an alternative and indexed exchange traded cfds. This move was seen to enhance knowledge and interest in cfd trading in Australia.  

Comments closed

Knowing the different states of Forex markets

People have been trading in this currency market for many years. They know it is risks but they cannot step away from the fact that they have got the chance to make money online through their internet. The states of currency trading markets are important when it comes to making your profit. If you were acting in a movie and there were no safety nets when you would be jumping from one building to another, there would be questions in your mind if this jump would be the right thing to do. This jump could also be the last jump not in your career of acting but also in your life. When the market stares come, it is very important that you know the condition when it is ideal for the traders to invest their money and place the trade.  You cannot expect that you will get a warm ambiance all the time when you trade but you have to know when you should take risks and when to avoid it. Knowing what the right thing is to do in this industry can save you money. This article will tell the different states that a Forex market can have in the life of a trader.

Comments closed