Check Out The Infographic Version Of This Article : What is CFD Trading? 7 Benefits of CFD trading you should know

Among the several existing trading methods, Contract For Difference is one of the most effective ways to earn profits. Millions of people around the world would have entered into a CFD position while reading this phrase. But statistics reveal that half of the trading community is still unaware of the fundamentals and they start trading with very little or no knowledge. So, before you start off with CFD trading, it is highly recommended that you know what CFD trading is and how you can be benefited from it.

WHAT IS CFD TRADING?

The one-liner is, “ CFD Trading is an agreement between two individuals who exchange the difference price between the opening and closing position of a contract”. CFD trading becomes profitable if you are aware of the basics and you are capable of taking wise decisions. It has certain important and unique benefits which could be a boon when used appropriately.

1. GAIN PROFIT IRRESPECTIVE OF THE MARKET’S RISE AND FALL

   If you are knowledgeable enough to predict the rise and fall of the market, you can earn a fair profit from CFD trading. With the help of tools like indicators, you can predict the movements of the market. If you assume that the price of a commodity may rise, you can go long and buy the required number of units or go short(sell) if you assume that the price may go down. The higher the market moves in the chosen direction, greater is the profit.

2. TRADING ON MARGIN

   CFD trading offers you a low margin requirement feature which means that the capital outlay would be less and the returns would be high. This also means that losses can be huge when the high leverage turns against you due to the market fluctuations.

3. GAIN ACCESS TO THE BROAD RANGE OF GLOBAL FINANCIAL MARKETS

   Trading with gold, silver, currencies, metals and other commodities have become possible with the introduction of CFDs. CFD trading helps you gain knowledge about trading different commodities and diversifying your trading portfolio.

4. TRADE FOREX & CFDs TOGETHER

   If you have been trading Forex all the time, switching to CFD trading might not be a big issue. Almost all Forex brokers offer CFD trading facility on the same trading platform. You can start trading CFDs with the tools you are already familiar with.

5. TRADE ENDLESSLY

   CFD trading markets allow you to avail the market opportunities 24 hours a day, 5 days a week and thus can help you gain greater profits.

6. FLEXIBLE LOT SIZES

   Unlike other trading practices, CFD trading offers you the freedom to buy the required number of units that you are comfortable to trade with. You can plan your own strategies and make the maximum out of a trade.

7. TRADE WITH PRICE MOVEMENTS, NOT THE PHSICAL COMMODITY

   There is no physical movement of the commodity in the CFD trading structure. Everything is based only upon the market price. You can buy or sell commodities without having to carry or protect anything physically. CFD Trading serves as a perfect alternative to future contracts and for both long and short-term investors. But it is up to each individual to understand what suits them best and be discerning in their trades so that they can reach dizzying heights in their trading career.