December 28, 2020

CFDs or Contracts for Difference are financial derivatives (that is, trading stocks or commodities without actually supplying them) that significantly expand the arsenal of any trader. Thanks to them, in addition to currency pairs on Forex, you can work with stocks, stock indices, commodities and even cryptocurrencies. Trading accounts CFD are widely represented by the broker NordFX.

Trading CFD: What are CFDs and How They Work1

Trading CFD: How These Contracts Work

CFDs are financial instruments that allow you to buy and sell various assets quickly. As already mentioned, unlike buying real financial instruments, there is no supply of an asset. That is, for example, in the case of a transaction with oil, a trader will not have to think about where to store “black gold”, how to transport it, store it and where to put it later.

As for stocks, trading CFD means that you do not have to wait until the company's securities are registered in the depository and pass all the necessary procedures of transfer to the new owner, which usually takes a few working days. The transaction takes place instantly, so you can use a variety of strategies, including scalping.

In fact, CFD contracts resemble a bet that a trader makes with a broker as to whether the price of an asset will rise or fall. This allows you to make money not only on the growth, but also on the fall of this asset, without having it available.

Trading accounts CFD: where to find CFDs

Broker NordFX offers a large number of CFDs for trading, which allows you to diversify your work in the financial markets by choosing the most promising assets. Such trading accounts provide various terms on both spread and leverage, margin and commission. All this is detailed in the specifications on the broker's website.

How to trade CFDs

The process of trading CFD is quite simple. Let's take a look at the example of buying and selling Apple stock.

Suppose you think that the securities of this company will rise in price in the near future. Go to the trading terminal, and then you need to open a buy transaction to buy shares of this company. If the securities grow in price by a number of points, the transaction can be closed at any time and you receive the corresponding profit. If you think that the stock price will go down, you open a trade in the opposite direction, that is, to sell. As you can see, the process of trading operations is almost no different from transactions with conventional currency pairs.

But in order to profit, you will have to learn not only to open trades, but also to predict markets. This can be done with the help of technical analysis tools built into the trading terminal. NordFX also offers a calendar of macroeconomic events and analytical reviews, which will make it easier for you to make key decisions on trading CFD contracts.

« Useful Articles
Follow Us