Pros of CFD

A contract for difference (CFD) is a financial derivative instrument that allows traders to profit from the price movements of an underlying asset. They are usually used for speculation in the market. A contract for difference is a leveraged instrument that uses its own potential profits and losses. For example, when the underlying asset is equity, the contract becomes an equity derivative instrument that allows traders to speculate on stock prices without owning the equity. Contract for difference holders face tracking error, counterparty risk and high leverage risks. Investors face the possibility of being liquidated (forced to close) before the price moves in the expected direction. Contracts for difference can be traded in markets in countries and regions such as the United Kingdom, the Netherlands, Poland, Portugal, Germany, Switzerland, Italy, Singapore, South Africa, Australia, Canada, New Zealand, Switzerland, Norway, France, Ireland, Japan and Spain. Because of the restrictions imposed by the U.S. Securities and Exchange Commission on over-the-counter financial products, CFDs cannot be traded in the U.S. market.

Advantages of CFDs

Two-way Trading

The CFD market uses a margin mechanism (similar to a down payment for buying a house), so it can be done by selling first and then buying short (buying down), which is more fair than the traditional market that relies on buying up to make money, because every market has highs and lows, and shorting (buying down) allows all ups and downs to create opportunities and profits.

Trading Flexibility

The CFD market adopts a T+0 trading mode, where you can trade freely without any time limit or price limit within a day.

Time Freedom

Since the contract for difference market spans different time zones around the world, and the main markets in each time zone are connected to each other, the entire contract for difference market can be traded continuously at any time of day or night.

Market Fairness

Unlike other markets, the products traded in contracts for difference belong to a single global market, so it is basically impossible to manipulate the entire market by relying on one or two corporate institutions. Therefore, the huge trading volume makes the product quotes in this market relatively fair, and the sources of news that affect the quotes are mainly concentrated on the financial and economic data of various countries. Therefore, the price changes corresponding to the news are more accurate than other investment products. 

Risk Controllable

The risk supply capacity of CFDs far exceeds that of other similar products, mainly reflected in two aspects. One is that there is no delivery time. For products that have delivery time, there will be large price fluctuations in the week before and after delivery, which can result in losses or liquidation. The other is the minimum margin limit. When the principal loses 50%, the system will automatically close positions to protect the principal.

Product Quantity

The CFD trading platform gathers all the popular products in the world. Investors do not have to worry about missing out on popular investment products because they do not have corresponding accounts. Investment types: The investment types of contracts for difference platforms include stocks, stock indices, gold, silver, crude oil, natural gas, a full set of foreign exchange, more than 20 cryptocurrencies.

Conclusion

In summary, CFD trading is a flexible, diverse, efficient and fair financial derivative instrument that allows traders to trade contracts for difference in different markets and products, thus obtaining various investment opportunities and returns. Of course, CFD trading also involves certain risks and challenges. Traders need to have sufficient knowledge and skills and manage their funds and risks reasonably.