Online CFD trading has gained a lot of popularity in the investor community at XFR Financial Ltd (XTrade) over the past few years. After all, there are very few other instruments that offer such high level of leverage and various other benefits offered by CFDs. It stands for Contracts for Difference.
It is a derivative product where investors can speculate on movements in various underlying assets including foreign currencies, stocks, stock indices and commodities among others. There are a number of advantages of online CFD trading with XFR Financial Ltd (XTrade).
What Kind of Advantages Online CFD Trading Offers
One of the biggest advantages of online CFD trading is that it offers a lot of leverage. A trader can open a position without the need to put up the full underlying value. For instance, many brokers require investors to put up a deposit or margins ranging from 1% to 20% of the total contract value. In simple terms, if an investor wants to trade for $100,000, he or she may be required to put up an amount ranging from $1000-$20,000. In other words, there is no other instrument that offers such high level of leverage.
Another big advantage of CFD trading is that it allows investors to make money in a rising market as well as falling market. While it is true that there are various other means to short an asset, most of those methods are expensive and inconvenient. On the other end, shorting through CFD trading is easy and inexpensive.
One of the ways in which CFD differs from other derivative instruments is that it has no fixed expiry date which means that investors are free to close the position whenever they want. As long as the position is open, their account with the broker will get credited or debited depending on the rise or fall in price of the underlying asset.
One of the reasons of the rising popularity of CFD trading at brokers like XFR Financial Ltd (XTrade) is that it offers traders an opportunity to trade in a wide variety of markets and in a range of trading instruments that include commodities as well as foreign equity indices among others. There is no other financial instrument that allows traders to take position on such wide variety of underlying assets in such a huge number of markets.
Platforms XFR Financial Ltd (XTrade) Offers Make the Trades Easier
Many of the brokers offering online CFD trading also offer trading platforms for equities, commodities and forex which means that an investor does not need to learn too many things as CFD can be traded on the same platform and using the same tools that traders are already familiar with.
CFD trading is extremely flexible as there is no fixed lot size with XTrade of at your account at XFR Financial Ltd. Traders have absolute control when it comes to picking the size of the trade positions. Since this is a derivative instrument, it does not require an investor to own the underlying asset.
Overall, there are a number of advantages of CFD trading. However, traders have to be careful and learn the everything they can about this derivative instrument to profit from it.