CFD trading has plenty of brokers who are eager to provide you with a lot of benefits, seemingly more than there are for other types of trading. Let’s focus on the main advantages that can be enjoyed on CFD accounts.
The first advantage that comes to mind is the Direct Market Access (DMA). Some providers offer DMA, allowing you to trade directly into the underlying order book of equity exchanges throughout the world.
CFD trading can be unlimited. That means that you can access trading opportunities 24/7, with different brokers. This is called ’round-the-clock trading’, which means that you can even open and close positions when the underlying market is closed. Furthermore, trading with CFDs also means that there is no fixed time period involved. Whilst some markets may have expiry dates built into the trade, share CFDs do not. In turn, this implies that you can close your share CFD positions at any time you wish.
CFD trading can be executed extremely quickly, however, this does depend on the broker you use. Some brokers offer trading platforms where you can open and close positions in the blink of an eye. You should keep in mind that on a good platform, prices are live, and that different automated systems can handle most transactions immediately.
You can also use leverage when trading CFDs. This means you only have to put up a fraction of the value of a position to open each trade, permitting you to free up some of your capital for other important uses. You should remember that even though there is an actual purchase involved when trading contracts for difference, you still get exposure to the markets you are currently trading on.
The list of benefits is far from over. Traders are able to benefit from falling markets as well as rising ones when trading CFDs, unlike the majority of traditional forms of trading. Do not forget that you can usually gain access to low commission rates on the contract value for some share CFDs. If you prefer short-term trading, then we have good news for you. CFD is fully suited to short-term trading. As you can trade CFDs on margin, you can capitalise on short-term market volatility, without having to put up a large starting investment.
What are the Risks of Trading CFDs?
The main risk of CFDs is a market risk. If the market moves against you, the value of your position will reduce. This is no different to the risks you run with most traditional forms of trading. So once again to recap, what is CFD trading? CFDs are leveraged products, and this can substantially increase the risk of larger losses you may incur.
Why trade CFDs with Master-Trade.Pro?
Trading CFD instruments offers certain advantages such as:
- Leverage – a retail client can trade positions up to thirty times of their deposit. A trader who is categorised as a professional client can trade positions up to five hundred times their balance.
- Trade in any direction – go long or short on a market in order to trade through different and ever-changing market conditions.
- Access global markets – trade global stock markets, commodities, stock market indices and the Forex platform all from one account.
How to Trade CFDs with Master-Trade.Pro?
Step 1: Your Trading Platform
Picking the right trading platform is one of the first things to consider when trading. While having access to global markets is important, other factors such as stability, user-friendliness and accessibility are also factors to consider. With CFD trading you can start trading on the most popular and well-known trading platforms in the world such as:
- MetaTrader 4
- MetaTrader 5
- MetaTrader Supreme Edition plugin – exclusive to Admiral Markets offering intraday trading ideas from Trading Central’s pattern recognition software, advanced order functionality and trading indicators and much, much more.
- MetaTrader WebTrader
Step 2: Your Trading Methodology
CFD trading is a simple form of speculation on the financial markets. However, with so many potential trades available across so many markets – where some even trade 24 hours a day – how can a trader identify the best reward to risk opportunities? By having a plan that includes:
- Your routine: When will you look at the markets each day?
- Your style: What kind of trader are you? Day trader, scalper, swing trader or will you manage trades more like a longer term investor?
- Your markets: Which markets will you focus on? Shares, Forex, Commodities, Indices?
- Your methodology: How will you make trading decisions to buy, to sell, or to exit a position at profit or loss?
- Your support: How often can educate yourself by reading the library of educational articles and tutorials on offer to further develop your skills?
With Admiral Markets, there are some additional benefits for CFD traders, including:
- High security of investments – trade knowing the fact Admiral Markets UK is regulated by the Financial Conduct Authority and other leading European regulators.
- Negative balance protection policy – Admiral Markets can help keep your account balance from sliding to a negative balance with an unlimited negative balance protection policy for retail clients and a negative balance protection of up to ?50,000 for professional clients.
- Free SMS trading notifications – stay up to date with all the information you need regarding deposits, withdrawals or possible margin calls by registering for the free SMS-service found in the Traders Room.
- Education – enjoy a library of educational materials and market analysis from our Trader’s Blog so you can stay up to date with all the latest market developments.
With so many different brokers available, you have access to a wide range of markets, particularly shares, options, CFDs, commodities, and interest rates. Knowing that you never own the underlying market, you can trade on markets that would otherwise be untradeable, e.g. cash index products. The markets we have mentioned are the most popular and common markets where you can trade CFDs. However, the full list is vast, encompassing a growing number of ETFs and ETCs, not to mention the consequences of economic and political data releases.
Trading CFDs can be an opportunity to make investments and possibly profit from the financial markets but, as with every investment, there is the potential to lose capital. That being said, as with all types of trading, you should ensure you have a good knowledge of the markets and all of its aspects to maximise the chances of profitability.