What are CFDs and how can you trade them? Why is it easier to trade CFDs with XTrade? These are questions that we need to answer and we shall get to the bottom of them in this article.
What can XTrade tell me about CFDs?
Let’s start by explaining what CFDs are.
CFD stands for Contract For Difference. The difference between what? It is the difference between the price you open your contract at and the price you close your contract at. It really is that simple.
It does not really even matter if the market is up or down as you can “go short”, literally predicting not a rise but a fall in position. This would allow you to profit on a loss; should the index crash you should be a very rich fellow indeed.
Of course, you can use leverage, giving you significant exposure to the market. However, be careful when using leverage because it also adds to the risk of your endeavour, possibly resulting in a loss should your predictions turn on you.
The good thing about working with an XTrade account is you will be able to keep an eye on your contract at all times with the use of their mobile operating system. This means that whenever you get vital insights into something that will affect your contract, you can act on it immediately.
First Steps to Get Started on Online CFD Trading
- Find a platform that you like—and set up a free account (aka trial account). The advantage of this account is that it allows you to experience first hand the world of trading without having to worry about your money.
- Study your options. In CFD you can trade in different ways. As we mentioned earlier, XTrade’s platform allows you to go long, when the market goes up, or go short if you think that the market will dwindle.
- Set up a stop-loss. You could loose a lot of money especially when you go short, so a stop-loss point will do what it says, stop you losing more than what you have stipulated. While you “play” with the free account, you will encounter situations that will require you to make research to see how to make the right decisions. Once you have decided you can do it and you know how to do it, you can trade for real.
- Place funds in your trading account. Most companies allow you to do it in different ways. With XTrade, for example you can transfer funds using Paypal, Skrill, Credit card or wire transfer.
- Keep up to date with what happens in the financial world. A good trading platform will feed you news about financial markets so that you can draw conclusions. They will also have a “learning centre” where you can access e-courses to keep forming you to become a proficient trader.
Is there a catch?
Not really. CFD trading companies want you to succeed because they make money off the spread. If you fail and quit trading they will not have any gain in it. So find your platform and give it a go!