Education

Education

How to Trade CFDS? Explore Leverage and Risk Management
Explore Leverage and Risk Management
How to Trade CFDS

How to Trade CFDs

Learn the Ins and Outs of Trading CFDs

A contract for difference (CFD) allows individuals to speculate on the price movements of various financial markets, such as forex, equity indices, commodities, crypto and shares.

How to Trade CFDs

Learn the Ins and Outs of Trading CFDs

A contract for difference (CFD) allows individuals to speculate on the price movements of various financial markets, such as forex, equity indices, commodities, and shares.

Explore Leverage and Risk Management
How to Trade CFDS

What Exactly is a CFD?

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Understanding the Basics of CFDs

CFDs provide an opportunity to express your opinion on the future direction of a market. Essentially, you are making an agreement with us to trade the value of an instrument based on its opening price and the price at which you decide to close the trade in the future.

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CFDs allow to use financing for the trades at the institutional investors low rates

CFDs, also known as derivatives, allow traders to gain market exposure without owning the underlying asset.

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Most Versatile Trading Option

Global Market Access with CFDs

CFDs provide you with the opportunity to trade global markets in both bullish and bearish conditions, allowing you to take advantage of both upward and downward movements.​

Flexibility of Cash-Based CFD Trades

Unlike other financial instruments, cash-based CFD trades do not have an expiry date.

What Exactly is Leverage?

Leverage and Market Exposure

When trading CFDs, you’ll need to allocate a portion of the total market value of the position as its exposure. With a small initial capital outlay, you can gain significant market exposure through margin or deposit.

The Benefits and Risks of Leverage

Understanding leverage allows you to make your capital work harder, but it’s important to be aware of the potential for greater fluctuations in your portfolio’s profitability.

Higher Risk with Leverage

However, it’s important to note that CFD trading carries a higher level of risk due to the use of leverage, which means there is a possibility of incurring significant losses beyond your initial investment.

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Trading Expenses

Understanding the Costs of CFD Trading

The cost of trading CFDs with us varies based on your selected account type.

The spread, or the difference between the buy and sell price

 It’s important to take into account any additional commission charges when comparing accounts.

An interest charge/rollover

Calculated based on the corresponding swap rate. Many traders holding significant positions often close out before this time, which can be a crucial consideration.

Timeless Qualities exhibited by a CFD Trader

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Traits of Successful CFD Traders

Successful CFD traders come from various backgrounds and possess unique qualities. They are driven, enthusiastic about financial markets, and always eager to expand their knowledge.

Risk Appetite and Management

Our clients typically have a greater appetite for risk and are aware that using leverage can amplify both gains and losses. A successful trader understands the importance of effectively managing risk.

Preference for Shorter Duration Trades

Given the significant leverage involved, CFD traders often prefer to hold positions for shorter durations, necessitating closer monitoring of their positions and portfolio.

Managing Risk

Importance of Risk Management in CFD Trading

Given the nature of CFDs, it’s important to be aware that there is potential for significant gains or losses that may surpass your initial investment, potentially exceeding your deposits.

Utilizing Stop-Loss Orders and Webinars

To ensure success in CFD trading, it is crucial to prioritise risk management. We suggest taking advantage of our extensive collection of webinars that focus on managing risk.

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Explore Further with a Demo Account

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Test Your Strategy with a Demo Account

Opening a demo account allows you to assess if CFD trading aligns with your goals and refine your trading strategy.

Are You Prepared to Engage in Trading?

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Getting Started with CFD Trading

Getting started is a breeze. Apply quickly and easily with our streamlined application process.

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Trading forex (foreign exchange) or CFDs (contracts for difference) on margin carries a high level of risk and may not be suitable for all investors. There is a possibility that you may sustain a loss equal to or greater than your entire investment. Therefore, you should not invest or risk money that you cannot afford to lose. The products are intended for retail, professional, and eligible counterparty clients. For clients who maintain account(s) with Volity Trade Ltd., retail clients could sustain a total loss of deposited funds but are not subject to subsequent payment obligations beyond the deposited funds. Professional and eligible counterparty clients could sustain losses in excess of deposits.

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