© Copyright Acquisition International 2025 - All Rights Reserved.

Article Image - Why CFDs Are Worth Your Time, Attention, and Trades
Posted 10th July 2020

Why CFDs Are Worth Your Time, Attention, and Trades

While some markets are struggling with an economic downturn, investors have been keeping busy. During the first half of 2020, there has been an uptick in trading activity across the world’s markets. In particular, significant growth was seen in stock and index trading, cryptocurrency, and CFDs.

Mouse Scroll AnimationScroll to keep reading

Let us help promote your business to a wider following.

Why CFDs Are Worth Your Time, Attention, and Trades
stocks

While some markets are struggling with an economic downturn, investors have been keeping busy. During the first half of 2020, there has been an uptick in trading activity across the world’s markets. In particular, significant growth was seen in stock and index trading, cryptocurrency, and CFDs.

Even if you’re familiar with stocks, indices, and cryptocurrencies, CFDs may be something new to you. If that’s the case, don’t worry, we are here to explain what CFDs are, how you can trade them, and what the benefits of trading in CFDs are.

What is a CFD?

A CFD, or ‘Contract for Difference’ is a contract between two parties, the buyer and the seller. The contract states that the buyer will pay the seller the difference in value between the current value of an asset and its value at the time of the contract. Should the difference become negative, the seller pays the buyer instead of the buyer to the seller.

Originally developed in the UK during the 1990s, CFDs were originally used by hedge funds and traders to gain exposure to stocks cost-effectively. They were suitable for this purpose as the required margin was small and no actual shares changed hands. At the time, it was also a nifty way of avoiding stamp duty in the country.

CFDs are considered an advanced trading strategy. They allow investors to trade on the fluctuating value of securities in the short term. They are also popular in forex trading and commodities.

How do you trade CFDs?
trading

Trading in CFDs is a great way for investors to expand the versatility of their portfolio, as well as their understanding of the market. It isn’t wise, however, to just jump in feet first.

  1. First of all, you need to find a CFD broker so you can execute the trades through a proper platform. There are plenty of CFD broker platforms out there, but not all are created equally. CFD broker comparison sites, however, give you an easy to navigate the best CFD brokers and their features. Then you can make an informed decision on which will work for you and can help you yield the best results.
  2. You then need to consider which market you want to trade on. It is best to familiarise yourself with the market – look at previous fluctuations and read up on market trends and predictions.
  3. Next, decide whether you will buy or sell. If you think the price of the asset will increase, you buy. If however, you think that the market will fall in value, you will sell.
  4. Then it is time to decide how many CFDs you want to trade. For example, one CFD is equivalent to one physical share in equity trades.
  5. You should also consider putting in place what is known as a stop loss. This is an automatic order that will close your position, should the price of the CFD move too far against you.
  6. Once you have decided on the above and executed the CFD trade, you can keep track of the fluctuations of its value in your broker platform. Should you wish to close the trade at any time, you just click and it is closed.
 
Why would I want to trade CFDs?

There are a number of benefits of trading in CFDs. If you trade in CFDs, your investment capital can go much further as you only deposit a small portion of the trade’s value. This increases your purchasing power as you are trading on leverage. With only a low value of capital, you can gain exposure of up to 10x or even 40x on different assets. You are also able to go with long or short: when you buy stocks, you can only make money when the value goes up, but with CFDs, you can speculate on the value rising (long) or falling (short).

Picking a good CFD broker will give you global access to the world’s main markets – over 4000 of them – around the clock, all in one place. It is also worth noting that the CFD market is not required to specify a minimum amount of capital for day trading, as is the case in other markets.

The last word

For seasoned traders, CFDs offer a new and exciting way to trade. A different approach combined with leverage and margin means there are plenty of opportunities for success. Of course, as with any kind of trading, the markets are unpredictable and nothing is guaranteed. But by teaming up with a good online CFD broker and doing your background work, you can improve your chances of success.

Categories: Finance


You Might Also Like
Read Full PostRead - Eye Icon
Accountancy Firms Must Evolve and Innovate to Survive Says ICAEW
Finance
17/03/2015Accountancy Firms Must Evolve and Innovate to Survive Says ICAEW

The accountancy landscape is changing – new technologies, competition, regulations and client expectations are making the future of the profession uncertain, says ICAEW.

Read Full PostRead - Eye Icon
Working From Home Can Slash Payback Periods for EV Drivers
Finance
10/11/2022Working From Home Can Slash Payback Periods for EV Drivers

According to insight from the Office for National Statistics (ONS), more than 38% of the UK workforce now enjoy either a part-hybrid or totally remote role. While sceptics have suggested that this trend will begin to fall in-line with retreating COVID-19 cases

Read Full PostRead - Eye Icon
All you Need to Know About Who Can Apply for Business Acquisition Loan
News
24/05/2022All you Need to Know About Who Can Apply for Business Acquisition Loan

Being a business owner does not always have to come from starting your own business. You can become a business owner by purchasing another business. But even the latter requires that you have some money. So, what do you do if you want to take advantage of such

Read Full PostRead - Eye Icon
Kenya: Ensuring Economic Growth
Finance
12/10/2015Kenya: Ensuring Economic Growth

Mohammed Muigai is a leading law firm based in Kenya’s capital, Nairobi. Comprising six partners and five associates, allied to the finest legal and administrative support staff, the firm’s reputation as a market leader derives from a tradition of excellen

Read Full PostRead - Eye Icon
The Crucial Role of Custom Store Signs in Small Business Success
News
03/07/2023The Crucial Role of Custom Store Signs in Small Business Success

In the cutthroat world of commerce, standing out and winning over clients can be a real struggle for small businesses. Custom store signs are a powerful instrument that can make a big difference. They’re often the initial touchpoint with potential custom

Read Full PostRead - Eye Icon
How to Better Navigate Your Team Through a Merger or Acquisition
Leadership
19/07/2022How to Better Navigate Your Team Through a Merger or Acquisition

2021 was a record year for mergers & acquisitions (M&A) activity. In the US alone, M&A accounted for $581 billion. Yet according to the Harvard Business Review, studies repeatedly show that between 70 – 90% of mergers and acquisitions fail. A lack of support

Read Full PostRead - Eye Icon
How Will the Autumn Budget Affect Small Businesses?
News
18/11/2024How Will the Autumn Budget Affect Small Businesses?

How Will the Autumn Budget Affect Small Businesses? The Autumn Budget is here, and small business owners are wondering what the new measures mean for them. From tax rates to energy relief, these changes will likely impact your day-to-day operations and bottom

Read Full PostRead - Eye Icon
Helping The Elderly To Live Freely
Innovation
11/01/2021Helping The Elderly To Live Freely

On a mission to help all people take control of their aging, LiveFreely is a highly innovative company that provides seniors and their caregivers with the necessary tools to be able to proactively age. LiveFreely has been recognized in this issue of Acquisitio

Read Full PostRead - Eye Icon
$6 Billion Possible Money Laundering being Investigated by Deutsche Bank
Finance
08/06/2015$6 Billion Possible Money Laundering being Investigated by Deutsche Bank

Deutsche Bank AG is currently undergoing an investigation into the potential money laundering by Russian Clients



Our Trusted Brands

Acquisition International is a flagship brand of AI Global Media. AI Global Media is a B2B enterprise and are committed to creating engaging content allowing businesses to market their services to a larger global audience. We have a number of unique brands, each of which serves a specific industry or region. Each brand covers the latest news in its sector and publishes a digital magazine and newsletter which is read by a global audience.

Arrow