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Many traders prefer CFD’s trading for the flexibility and the potential profit it offers. Because CFD’s are leveraged products you can trade on them at the same time by only paying a fraction of the total contract value, which means more profit potential than non-leveraged instruments. It is important to stress, that this comes at the price of high risk and substantial losses are possible if the market moves against your position. The ability to go long or short gives maximum market agility, making Contracts for Difference trading so popular amongst speculative traders who want to be able to adapt their strategy quickly.
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CONTRACTS FOR DIFFERENCE
CFD’s are leveraged products that allow you to trade while only paying a fraction of the total value of the contract. When you trade a leveraged product, you can potentially magnify your return on investment. But with greater potential returns also comes the greater risk. The higher leverage can result in losses that could exceed your initial deposit.
CFD’s (Contracts For Difference) trading allows investors the Capability to go long or short and the opportunity to make money in a falling market without the need to put up large amounts of capital, making them a more flexible way of investing. CFD trading is often used for speculative purposes. CFD’s can be used to contemplate on the future movement of market prices whether the price of the underlying product is rising or falling. If you believe the price is going to fall you can go short and sell the CFD and thereby benefit from falling prices if your prediction was right. Please see the following example of a CFD trade
If you believe that the UK 100 will rise in value you can request a price using your online trading account via ForexPrince MT4 trading platform. You will see the spread e.g. 5293.5-5294.5 points, and you then buy at 5294.5 for an amount (the minimum amount with ForexPrince is 1 CFD). This is equivalent of £1 per point movement of the index. If the price moves up to 5394.5-5395.5 and you sell at 5394.5, you would realize a 100 point profit of (the price you sell for 5394.5) minus (price you bought for 5294.5). As you have placed a 1 CFD trade, you would make a profit of £100 (£1 multiplied by 100). Please bear in mind had the market fallen in value you would have incurred a loss of (opening price – closing price x CFD amount).
Investors can use CFD’s to gain instant exposure to major global markets including the UK, US, Europe and Asia. See our range of CFD trading markets.
CFD traders can benefit from some of the lowest margin requirements in the industry, which means customers will only have to deposit a small percentage of the total notional value of the trade when looking to open new positions.
We ForexPrincerecognize the importance of clients being able to access their account and trade whenever they want, wherever they are, particularly when market prices are moving quickly. We, therefore, provide our clients with unrestricted access to their account 24 hours a day, 5 days a week via our MT4 platform support.