Are you an active investor looking for new opportunities constantly? Trading CFD is one of the best options for you in which you just have to trade on the movement of asset prices without owning any asset. CFD trading is one of the newest trading tools and is on constantly growing popularity, even more than foreign currency trading. CFD stands for contract for difference and is a contract between the two parties to exchange the difference between the opening and closing price of a contract. Trading online has some good advantages over other ways of financial trading like share trading. Let us go over some of the top reasons for trading CFD instead of share trading.
Trading CFD costs less than investing in shares
When you are trading CFD at https://www.xtrade.com/, it allows you to enjoy less cost than owing shares. In CFD trading you are not owning any share and due to this when you trade CFDs you are paying a less number of costs which apply when you own shares. The stamp duty, securities transfer tax and other taxes are reduced in CFD trading whereas they cost more for foreign currency trading. The brokerage costs are also cheaper than share trading in case of CFDs. The only thing you need is to look for a good CFD broker.
Money multiplier effect
CFDs are leveraged instruments and therefore you can take the advantage of high CFDs which can be as high as 100:1 which means for trading $10000 you just need to deposit $100 as margin money with your CFD broker. If the trade goes well in your direction you can make multiplied profits since you are trading with money 100 times more than what you have deposited.
But of course trading CFD with high leverage can also multiply the risk equal number of times as your profits are multiplied, which is different than foreign currency trading. Therefore you have to very careful when you trade with high leverages in CFDs.
You can benefit in both the directions
You can go long as well as go short in CFD trading. This means that if the price of asset you trade is falling in CFD, you can short it and this can give you benefit even in falling markets.
CFDs do not have an expiry date which means that you don’t have to worry about the closing of your trade automatically. There is no expiry date for CFDs and you can trade as long as you want.
These were the top reasons why trading CFD can be more beneficial to you than trading on stocks or foreign currency trading. CFD trading is a newer trading method and provides many benefits to traders. Lack of regulatory authorities for CFD trading is only a big drawback but if you trust a CFD broker and know about his history and reputation you are good to go for CFD trading with him.