CFD Trading | What is CFD Trading and How Does it Work in South Africa

Forex Trading South Africa ยป CFD Trading | What is CFD Trading and How Does it Work in South Africa
CFD Trading | What is CFD Trading and How Does it Work in South Africa 2020-05-09T12:41:06+02:00

What are CFDs

CFD which stands for contract for difference is an agreement to exchange the difference in value of a particular financial instrument between the times at which a contract is opened and the time at which in no doubt is closed. You can just as easily short sell CFDs owing to well and therefore profit from falling markets. This greatly increases the profitability of a trading system considering trading opportunities collect dramatically, and the fact that you constraint use from both ponderous again bear markets.

A CFD has many advantages and for any trader it is yet new useful tool to use in the business of trading. When traders plunge into a CFD trade they fall for the alternative to either instigate a long or short philosophy. A long position is when the trader buys into the field hoping shares to go up. A short position is when the trader sells to embrace the vocation hoping the shares cede fall fame price. CFD trading can be carried out in almost every bite of the economy.

CFD trading in foreign exchange is similar to trading through any FOREX platform. The contrariety here is that when trading for a broker all transactions can copy carried out from one place. Pricing of commodity CFDs are based on the force of the fixed part in the future market. There are various reasons that can be attributed to the growing rank of CFD trading.

Trading in CFDs offers access to a wide variety of financial investment trading options. Unique significant aspect of CFD trading is day trading CFD. The reasons why people take to present trading may be the following: practiced is no overnight risk compounded; it does not overcome interest cost; and it delivers terse mark out impression. CFD trading strategies in general make use of dummy patterns to explore the movement of the prices. Although it is not only the noticeable pattern that plays an important role. A trader needs to check other factors, indicators and volume of trading in command to perform right results from the activity.

CFDs on different instruments

Our Fore Trading partners have been in the financial services industry since early 2000s and have given many investors access to CFD trade through their forex trading platforms: Meta Trader 4 (MT4) and Meta Trader 5 (MT5). The two prime reasons that attract investors to the CFD trading scene are:

  • Pricing simplicity; and
  • Diverse underlying instruments.

CFD Trading through our brokers allow the use of many instruments. When you decide to trade with these brokers you get the benefit of choosing and combining the following classes of investment instruments:

Equity Indices: Our partners allow trading of African, US, European and Asian equity indices. Among the tradable US equity indices they have DJIA, NASDAQ, S&P 500; among European equity indices they have DAX, FTSE, CAC 40; and among Asian equity indices ASX, Nikkei, HIS.

Currencies: Currencies of the G8 countries (France, Germany, Italy, Japan, the United Kingdom, and the United States) are available for CFD online trading with our stock broker partners.

Instruments with fixed income: You may even include bonds and treasuries in your CFD trade plan. Gilts are also one of the options that can be included in CFDs and have a fixed income.

Commodities: Providing flexible trading opportunities for CFD online trading, online brokers allow the trading of commodities such as gold, silver and oil.

About the CFD Market

The CFD market is closely related to the futures and options market with regard to volume and trade transactions. However, there are some major differences that online brokers would like you to note if you plan to enter the CFD online trading arena.

  • The CFDs do not have expiry dates. This makes the concept of price decay redundant
  • CFD contracts are ideally one-to-one to the underlying trade instrument;
  • CFDs are unavailable for US investors;
  • The entry threshold for CFDs is very low. An investor can buy as little as one share CFD.
  • Creation of new strategies and instruments is not restricted by exchange definitions or geographical boundaries.
  • CFDs mirror the liquidity and volatility of the underlying instruments.

With our partners, CFD traders can access all the varied specialist trade instruments through a single trading account. Being an authorized CFD broker, they have been consistently bringing to their clients, competitive spreads, high leverages and margins to enable them to capitalize on profit making opportunities.

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