Surely, if you have been in the topic of binary options or forex trading for a long time, then you began to notice that brokers on platforms began to appear an opportunity CFD trading. At the moment, the phenomenon is not massive, but I suppose that in the future contract for the price difference, appear at each broker. If you are only interested in the financial markets, then you have a question, is it really worth the tool or marketing ploy to frustrate you more money. This article will be useful for both novice and experienced traders, to enhance education.
Forex and CFD binary options
If you and I still do not know, my name is Anna Alexandrovna, I am a trader and author binaroption.com site, I'll tell you:
- What is CFD;
- How to trade CFD;
- Well, you know my opinion about CFD.
In the network a huge number of definitions of this tool. Some of them are quite difficult to understand. I always set myself the goal, accessible language to explain simple things. CFD - (From English, contract for difference, translated as Contract for Difference) is a contract, which is two sides. On one buyer (trader) on the other hand, the seller (broker). The essence of the contract that the positive difference between the purchase and sale of a particular asset paid by the seller to the buyer, and the difference is negative - the buyer to the seller.
CFD - it's the same derivative instrument, As well as binary options, which allows you to earn, both on the fall and at an increase in the price of the asset. As an asset for trading, there may be currency pairs, shares of companies, stock indices, raw materials. A distinctive feature of CFD is that, when trading, ownership rights to the asset are not acquired. For example, by buying a CFD contract for a company's shares, it does not mean that the buyer will receive dividends on shares, let alone join the board of directors. The owner of the contract for the difference buys the contract itself, and then necessarily sells it, the profit is extracted only from the price change of the asset. The advantage is that the contract you can buy and sell in full, at any convenient time.
For the first time the contract for the difference appeared with the English brokers in 90 years. Thus, they decided to bypass the mandatory tax on the purchase of shares by their customers. A CFD contract is not a deal with a share, so there is no obligation to pay tax. Later this financial instrument became ideal for those who do not have large capitals to enter the financial market. Subsequently it turned out that the CFD turned out to be more profitable, more profitable, faster than the trade in the asset itself. What is very important for us, the contract trading for the difference does not require huge deposits for players, thus it is an affordable tool for virtually all people who have reached the age of majority. In addition, CFD trading, like Forex trading, implies the use of leverage. This means that a trader can increase his capital many times. Yes, this is a very profitable tool, but please do not ask me questions of such a plan if I put 200 $, then through how much I can earn my first million. Set real goals for yourself, get a profit of 100 per month, it's very cool and I do not always get it.
Of course, increasing leverage involves increased risks and, so, as in any other case, it is necessary to approach to trade wisely. Keep in mind that the minimum deposit implies extreme caution in the amount of your investment.
Since I started talking about the risks, ie the set of financial instruments, which quotes are correlated with each other. This property can be used for hedging (insurance) of your transactions. CFD contracts may be entered into for the purchase and sale, which means that you can use them to hedge. If you read my earlier strategy on currency correlations, You know, some of the forex pair is strongly dependent on each other, I even made a special strategy to the online spreadsheet with updated correlation coefficients that you have seen, you should look at how couples. This quality can be used for hedging, opened a few trades with different currency pairs, correlated with each other.
At the moment, I recommend you the following brokers who trade the CFD is available:
In conclusion I would like to leave feedback about the CFD. This financial instrument is very interesting, and will suit players who do not have big capital. You can easily start trading with all major assets, having only $ 300 on the trading account. Whereas, if you traded shares on the stock market, you would have to have a deposit of ten thousand dollars. If you are willing to make the effort to become a successful trader, you can earn money here on a monthly basis. You will still learn the basics fundamental и technical analysis, And you can start working in this area. Additionally, read the best of my authoring strategies:
- Forex and CFD robots: Binarobot-Lady