Trading on the stock market previously required a large capital, so it was engaged in a limited number of people: only those who could afford to spend a serious amount. In the XXI century, trading has become much more affordable pastime, and some financial transactions - and at all public. In continuation of previous articles about CFD tradingI want to talk about CFD-contracts more.
CFD contracts: what is it?
First, of course, you need to decipher the abbreviation. Explanation is as follows: Contract for difference. "Contract for difference" Literally it translates. This rather modest and imprecise formulation conceals one of the most profitable stock trading tools. CFD scheme does not oblige the parties to the transaction to have a lot of free transactions - and thus enables quick money.
Through CFD-contract transactions carried out in the trading stocks, and their can make every trader, even one who does not have much trading capital. Thanks to these features CFD market is developing a fantastic pace, literally on a daily basis will increase the new players.
CFD-contracts can be Under what conditions? The essence of this system: the seller and the buyer enter into a contract, which specifies that the relations of purchase and sale of the goods (or goods) moving the second side. Thus there is a direct trade financial instruments, including stocks and bonds. If it refers to derivative financial instruments (such as derivatives), then the subject of bargaining - are certain conditions.
Advantages of CFD trading on stocks
The main advantages of this system include:
- Leverage. A trader can make trades, in terms amounts to several times more than the actual amount in his account. Suffice it to add funds to the minimum amount, which allow brokers to become a full participant in the auction.
- Universalism. Trading CFD contracts can be used when working with a variety of financial instruments: with currency pairs and with stocks and raw materials. Work on different profiles quite profitable: in this case the trader become less dependent on the state of specific assets.
- Hedging (insurance) risks. This goal can serve the CFD, and futures and binary options. In such a case, the parties enter into an agreement, according to which the growth or decline in asset value should lead to the transfer of the difference between the original and the proposed price of the property of the seller or the buyer (depending on how the contract will be made). Sami assets thus remain in the possession of the person who originally possessed by them.
To make a deal, a trader needs to determine the difference between the current and future value of assets: be it positive or negative? The same with the stock indices. Such assets are the most popular among investors. The initial currency deposits rarely exceed 100 US dollars, while the value of one share begins with 50 2000 and can reach US $ (in this case the package includes 10-100 pieces). Minimum deposits that exhibit brokers (when dealing with stocks), are from the 5000 dollars.
What are the specifics of CFD trading?
The main distinguishing feature: working with stocks, you do not buy! Do not become the owner of the company - and, accordingly, does not bear any liabilities. You can even earn a falling share price: it is enough to buy a CFD-contract «sell».
Recall of leverage: the trader's potential can be significantly increased, because it is able to carry out transactions on a large amount. At the same time with the participants of such transactions are charged a very low commission fees.
To start trading contracts, you need to register with one of the reputable brokers. The process is simple: we register, we deposit funds, we go to the trading platform, we settle there and start trading. I would like to suggest in my opinion the best program: 24option .
I'll tell you about what is required of a trader in such transactions, on the platform Example 24option . It attracted me in the first place simplicity and convenience: the benefits and appreciate the beginners and experienced professionals.
CFD broker: how to work
The algorithm here is not complicated.
- We go on the trading platform, select the CFD.
- Pay attention to the left hand column, where the filters are configured: Indices, Stocks, Commodities, Forex, or All.
- Choose a direction. What do the numbers in the "Buy / Sell" column? Items that need to dial for a successful transaction. For example, 1.1170 - a deal that would be successful if the closing level will be higher 1.1170.
- Choose a time frame. To do this, pay attention to the box "transaction / application". "Transaction" - is the immediate purchase of an asset. "Application" - deferred transaction (which can make under certain changes in the market). Choosing the "Application", you are not required to personally monitor the desired changes: You can configure the automatic transaction upon the occurrence of certain conditions. Thus, the program will make a deal for you, but not without your knowledge.
- Finally, look at the chart on the right. Green light - a sign that the CFD -. «Money» Red - "out of the money."
Trading CFD can bring no less profit than options: if you understand the mechanisms and accumulate the knowledge necessary for making transactions. Study relevant materials, improve yourself, try, make mistakes, win - and increase capital! And they will help you with this excellent strategy:
- Robots of the Forex market and CFD: Binarobot-Lady.com