The advantages of CFDs
Traders and investors over the last 10 years have become increasingly sophisticated and knowledgeable about managing their own finances. CFD trading has increased in popularity as investors have realised the benefits over traditional forms of investing.
Efficient use of your capital
One of the key advantages of CFD trading is that it offers ‘margin’ or 'leverage’. This means you can trade without needing to put down the full value of that position and as your money is not all tied up in one transaction, you can use it for other investments. For example, to ‘buy’ the equivalent of 1000 Telecom company shares in CFDs you may only need to deposit 20%
of the total transaction amount. If the shares cost $1.50 then you would only need to place an initial deposit of $300 plus commission with CMC Markets (20% of $1500 = $300) compared to the full value of $1500 plus commission. For a more detailed example, visit the CFD trading example.
Trading on margin means you can magnify the returns on your investment but it is important to remember that losses too will be magnified. However, there are many ways of managing your risk with a range of flexible orders including stop losses, limits and OCOs (one cancels other) orders. These orders can be placed online and are free to use.
Potentially profit when markets fall as well as rise
Access to more markets
With CFD trading, you can trade on the price of an instrument going down as well as the price going up. It doesn't matter which way the markets are going, you can back your judgement either way, exploiting selling opportunities just as easily as buying opportunities.
Trade directly on the price of Gold, Oil and Currencies as well as Shares and Indices. All across one real-time trading platform. Plus CFDs open up easy access to the world’s financial markets. Trade European and Asian instruments alongside Canadian and US markets.
