What types of assets can be traded with CFDs?

CFD trading enables investors to speculate on various financial markets, such as stocks, forex (foreign exchange market), indices, commodities, and cryptocurrencies . Furthermore, it is an advanced trading strategy that experienced traders generally employ and is not allowed in the United States .

What are the benefits of CFD trading?

One of the benefits of CFD trading is that you can speculate on the asset’s price movements in either direction. You buy or sell a contract depending on whether you believe the asset’s price will go up or down, opening a long or a short trade, accordingly.

What are the risks associated with CFD trading?

A disadvantage of CFDs is the immediate decrease of the investor's initial position, which is reduced by the size of the spread upon entering the CFD. Other CFD risks include weak industry regulation, potential lack of liquidity, and the need to maintain an adequate margin.

How can CFD trading be used to make profits?

CFDs allow traders and investors an opportunity to profit from price movement without owning the underlying assets. The value of a CFD contract does not consider the asset's underlying value: only the price change between the trade entry and exit.