Key Advantages of CFD Trading

Key Advantages of CFD Trading


CFD trading offers some unique advantages to world traders. It is hard to find even one basic need that is not covered by CFD trading. The ten main advantages when trading with CFDs are presented below. Maybe the only disadvantage can be found when scalping Forex. Forex scalpers need EURUSD spreads no more than 1 pip including commissions.

CFD providers usually offer EURUSD at minimum 1.4 pip spread. That is the only disadvantage that can be seen as important, and only for this type of traders.


CFD Trading Advantages


Here are the main characteristics/advantages when trading CFD contracts:


(1) CFD Brokers Regulation

Today there are tens of high regulated brokers in the market that are offering CFD trading. Most of them provide also Bank Account Segregation to all their clients. In other words, if you choose wisely your CFD provider then you can achieve in a very high extend full safety of your money. Funds safety is always the most important issue for online traders. Some of these CFD companies are even listed in stock markets (mainly UK).


(2) Easy-To-Use Platforms, Accessible in Every Device

CFD brokers offer usually a web-trader platform that is purely internet-based and does not require installation on your PC. These web-platforms are so simple that can be used even by beginners. There are also separate versions for smart-phones and other mobile devices. In addition, some brokers offer CFD trading within MetaTrader-4. MT4 from MetaQuotes is a very interesting platform providing features such as automated trading, back-testing, advanced charting, trading-on-charts, and many others.

(3) Extremely Wide Asset Index

CFDs can simply trade every asset class in the world. You can even trade interest rates. There are hundreds of available assets for CFD traders including Forex Majors, Minors, and Exotic Currencies, 100s of world shares, 10s of indices and 10s of Commodities. What is important also is that you may trade the same asset in different instruments. For example, when you want to trade Dow Jones, German Dax or Crude Oil you may choose:

□ Trade it on Cash. That means you enjoy a tight spread but you pay overnight charges if you keep your positions after midnight

□ Trade it on a CFD Future. You pay a wider spread but you DON’T pay overnight charges if you keep your positions after midnight. That is a huge advantage for swing traders, like myself. If you are able to predict the direction of the market correctly and you leave some space for your stop-loss then you can make enormous profits by trading CFDs on Futures.



(4) Trade-in Rising / Falling Markets

CFD traders can open positions in both market directions.


(5) Capital Leverage

As in the case of other derivative products, CFDs offer high capital leverage starting at 50:1 and reaching even 500:1, or even more. The use of high capital leverage on CFD Futures can have great results given that you don’t pay overnight rates. Just remember to be sure about the trend and leave a lot of space for your stop-loss. High-leverage, of course, is a very risky practice and therefore you should use it with extreme caution.


(6) The Delta Factor Advantage

One of the key features of CFDs is its ability to imitate the price behavior of the underlying asset. CFDs follow their underlying asset more closely than any other derivative product. That makes monitoring your CFD positions and placing orders an easy task. This behavior of underlying asset price imitation can be described as Delta Factor equals one. In other words for $1.20 change of the underlying asset your CFD position will also be charged $1.20.


(7) Low Deposit Requirements / Many Different Fund Methods

CFD brokers offer today tens of different payment methods including cards, bank wire, Paypal, Skrill, Neteller, and many others. Most CFD brokers don’t charge any commissions on deposits/withdrawals (of course you may use the live chat service to ensure it). The deposit requirements are usually extremely low as you may start an account even with $10.


(8) Demo / Practice Accounts

Almost all CFD brokers offer a free practice account. Beginners should better start from there before moving into a real account.


(9) Promotions for New Clients

CFD brokers offer very good promotions for new traders. A welcome bonus shouldn’t be seen as priority number one for any trader but it can always prove useful. Remember priority number one is the Safety of Money. Choose your promotion only among regulated brokers, they offer a welcome bonus too. Some CFD brokers offer also No-Deposit Bonus. XM, for example, offers a no-deposit bonus of $30. That means that you can trade for real money and test their platform without any deposit. You can even withdraw your bonus if you trade it many times.

» The free promotion from XM is found here


Create Free and Export Indicators for MT4, MT5, or TradeStation to trade Forex, Shares, Indices, and Commodities


(10) Trading Rebates for CFD Traders

A trading rebate can prove very important for CFD traders. A rebate means receiving cash from your trading volumes no matter if your closed positions made a profit or not. These rebate plans are provided for free in order for the brokers to attract more clients. If you want to join a free rebate plan you just need an introducing broker. For example, is a free introducing broker that works with many regulated CFD Brokers:

» offers free Trading Rebate Plans for CFD traders



COMPARE CFD / Forex Brokers        
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Main Advantages of CFD Trading

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