Contract of difference trading or in more popular terms “CFDs” are financial derivatives that allow traders and investors to speculate on price movements of various financial instruments. And yes, you read that right! VARIOUS, which is why this is a perfect trade that’ll help you diversify your portfolio!
And the thing about CFD trading is, you only own a fraction of a specific asset so that means you don’t need to worry about dealing with any physical assets. Basically, you only own the underlying asset of a financial instrument which is pretty convenient if you ask us.
Plus in CFD trading, you’re met with tons and tons of financial instruments so your options on assets to invest in aren’t limited! To give you an idea of what financial instruments to expect, here they are in a list:
1 - Stocks
First on the list is the most common tradable instrument in CFDs–Stocks. And what gave traders and investors the ability to trade individual company shares without holding the underlying stock is through CFDs. The price swings of equities listed on significant international exchanges like the New York Stock Exchange (NYSE) or London Stock Exchange (LSE) can be the subject of traders to speculate on.
What are the benefits of trading Stocks through CFDs?
- Access to a wide scope of stocks.
- Gives you leverage and margin.
- Allows you to profit from bear and bullish markets.
- No need for physical ownership.
- Available for short selling.
2 - Commodities
With the help of CFDs, traders and investors may follow the price changes of a variety of commodities. Commodities such as industrial metals like copper and aluminium, crude oil, wheat, maize, natural gasses, precious metals like gold and silver and energy goods.
What are the benefits of trading Commodities through CFDs?
- Trading flexibility.
- Availability for short selling.
- Has risk management tools.
- Is pretty liquid.
- No need for physical ownership.
3 - Indices
Because of using CFDs, traders and investors may make predictions about the price changes in stock market indexes. Including the FTSE 100, DAX 30, Nikkei 225 and S&P 500. These indexes offer a broad overview of a specific market and reflect the overall performance of a selection of stocks.
What are the benefits of trading Indices through CFDs?
- Access to global markets.
- Gives you leverage and margin.
- Diversification.
- Broad market exposure.
- Allows you to speculate on market movements.
4 - Bonds
Treasury bonds, corporate bonds and government bonds are all accessible through CFDs. With CFDs, traders and investors can make predictions about these fixed-income products' price fluctuations and yield adjustments.
What are the benefits of trading Bonds through CFDs?
- Allows you to speculate on Bond price movements.
- Access to global bond markets.
- Is liquid.
- Gives you leverage and margin.
- Diversification.
5 - Currencies
When you say currencies in trade, this automatically means foreign exchange, A.K.A– Forex. Through CFDs, traders and investors may speculate on changes in exchange rates between various currency pairings and engage in forex trading. CFD trading is accessible for major currency pairings including EUR/USD, GBP/USD, and USD/JPY as well as smaller and exotic currency pairs.
What are the benefits of trading Currencies with CFDs?
- Market news and analysis.
- Volatility opportunities.
- Speculation of currency price movements.
- Global market access.
- Liquidity.
6 - Options and Futures
Exposure to trading options and futures contracts on a variety of underlying assets may be made possible using CFDs. Without actually owning the contracts, traders can make predictions about the price alterations of these derivative products.
What are the benefits of trading Options and Futures through CFDs?
- Leveraged trading.
- Access to a range of markets.
- Cost efficiency.
- Trading flexibility.
- Liquidity and market access.
7 - Exchange-Traded Funds (EFTs)
ETFs are investment funds that can be traded on stock exchanges, and CFDs enable traders to trade them. ETFs are an array of underlying assets, including stocks, bonds, or commodities that are well-diversified.
What are the benefits of trading EFTs through CFDs?
- Cost efficiency.
- Access to global markets.
- Flexible trading.
- Gives you leverage and margin.
- Liquidity and market access.
8 - Cryptocurrencies
Last but one of the latest ones on the list–Crypto! Popular cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and many more may be traded using CFDs. Without holding the underlying digital assets, traders can make predictions about the price changes of cryptocurrencies.
What are the benefits of trading Crypto through CFDs?
- Access to multiple cryptocurrencies.
- Regulatory oversight.
- Seamless trading experience.
- Liquidity and market access.
- Leveraged trading.
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