A CFD, or Contract for Difference, is an agreement between two parties to exchange the difference between the opening price and closing price of a contract. You can use CFDs to trade and speculate on the price movements of thousands of financial markets regardless of whether prices are rising or falling.
CFD or contract for difference allows traders to open a contract for the difference of the price of an asset from the point of opening of the trade to when the trader closes the trade.
With CFD it is possible to trade a wide range of markets but there are risks involved which are important to understand.
Advantages of trading CFD's with FXtrade777
No limits on order placements, stop loss and profit taking
Leverage for up to 1:100, significantly lowering trading costs compared to actually buying the assets
Gain from small market movements
Profit even if the market falls
CFD trading is very flexible, go long or short, and takes a position on the future value of an asset. You can trade on CFD’s whether you think the market will go up or down.
Long and Short Positions
If a trader believes the price of the underlying asset is rising, she/he would open a “long position” and if it is believed that price of the underlying asset is falling, she/he would open a “short position”. In order to profit from a short position, the closing price must be below the opening price. At the time of the closing price, if the trader has predicted correctly with regards to the markets direction, the trader is paid the difference.